Health Care Products

Multi-level Marketing and Pyramid Selling

A multi-level marketing company distributing health care products sought an advisory opinion in September 2003 on whether a proposed multi-level marketing plan would raise concerns under the Competition Act.

The Competition Bureau examined the proposal under the multi-level marketing and pyramid selling provisions of the Competition Act, sections 55 and 55.1. Based on its understanding of the facts, the Bureau determined that if the company implemented the plan as proposed, the Commissioner would have sufficient grounds to commence an inquiry for the following reason:

The company made income and lifestyle representations in its Business Plan which could give the impression that participating in the plan would allow a person to significantly increase his or her income and improve his or her lifestyle. However, the Business Plan did not contain any information about the compensation a typical participant could actually or likely receive, as required by section 55(2) of the Competition Act.

For the above reason, the Bureau provided the opinion on December 22, 2003, that the proposed plan if implemented, would give the Commissioner grounds to commence an inquiry under the multi-level marketing provisions of the Competition Act.

(3059913)