TAMING THE CONTEST BEAST:How to Avoid Contest Catastrophes and
Create a Winning Promotion!
CMA’s Regulatory Affairs Conference for MarketersToronto, Ontario
September 22, 2005
Taming the Contest Beast – September 22, 2005
Participants
ModeratorBill Hearn, Partner, McMillan Binch Mendelsohn LLP
PanelistsSteven A. Kahansky, Associate General Counsel, Tim Hortons
Duncan McCready, Executive Vice President, IC Group Inc.
Pierre Savoie, Partner, Legault Joly Thiffault
Rick Shea, Director, Marketing & Client Services, Resolve Corporation
Vandana Taxali, Advertising and Marketing Lawyer
Materials prepared by Jeff Scanlon, McMillan Binch Mendelsohn LLP
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Taming the Contest Beast – September 22, 2005
AGENDA
• Legal Framework in a Nutshell • Interactive Panel Discussion (Contest
Scenarios)• Questions
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Taming the Contest Beast – September 22, 2005
TOOLBOX OF MATERIALS
• Contest Law Primer• Appendices
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Taming the Contest Beast – September 22, 2005
THE STARTING POINT
• Primary objectives are usually to sell products and services, drive traffic to websites and develop consumer databases
• Creative is King!• But don’t give short shrift to legal compliance
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Taming the Contest Beast – September 22, 2005
THE STAKES ARE HIGH!
• Canada: Rogers Video – Win a Film Fantasy
“whisked off to a secret training base” where “contract mercenaries and Green Berets teach you all the skills you’ll need to survive a 3-day paramilitary covert mission in hostile territory.”
• United States: Pepsi – “Play for a Billion Dollars” Sweepstakes
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Taming the Contest Beast – September 22, 2005
CONTESTS AND THE CRIMINAL CODE
The Skill-Testing Question
• Paragraphs 206(1)(a) to (d) of the Criminal Code prohibit schemes for disposing of property by “any mode of chance”
• Supreme Court of Canada has clarified that only games of “pure chance” are prohibited
• A proper skill-testing question converts a game of pure chance into a game of mixed chance and skill
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Taming the Contest Beast – September 22, 2005
CONTESTS AND THE CRIMINAL CODE
“No Purchase Necessary”Section 206(1)(f) of the Criminal Code makes it an offence to
dispose of any goods, wares or merchandise by any game of chance or any game of mixed chance and skill in which the contestant or competitor pays money or other valuable consideration
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Taming the Contest Beast – September 22, 2005
CONTESTS AND THE CRIMINAL CODE
• PenaltyIndictable offence punishable by imprisonment for a term not exceeding two years
ORsummary conviction offence punishable by a fine not exceeding $25,000
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Taming the Contest Beast – September 22, 2005
CONTESTS ANDTHE COMPETITION ACT
• Full Contest Rules: Adequate and Fair Disclosure
Number and approximate value of prize;Area or areas to which they relate; andAny fact within the knowledge of the contest sponsor that materially affects chances of winning.
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Taming the Contest Beast – September 22, 2005
CONTESTS ANDTHE COMPETITION ACT
• Short List Disclosure in Ads:PackagingPoint-of-SaleBillboardsTVRadioInternet
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Taming the Contest Beast – September 22, 2005
CONTESTS AND THE COMPETITION ACT
• Competition Bureau’s Program of Binding Written Opinions
$1,000 fee2 weeks for “simple” contests6 weeks for “complex” contests
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Taming the Contest Beast – September 22, 2005
CONTESTS AND THE COMPETITION ACT
• Current PenaltiesIndividuals:
- Up to $50,000 for the first infraction- Up to $100,000 for subsequent infractions
Corporations: - Up to $100,000 for the first infraction- Up to $200,000 for subsequent infractions
Publication order/notice• Proposed Penalties
Individuals – up to $750,000Corporations – up to $10 millionRestitution for consumer loss
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Taming the Contest Beast – September 22, 2005
CONTESTS AND QUEBEC
• Additional RequirementsAll materials for Quebec residents must be in FrenchNotice of the contest, together with the applicable duties, a copy of the contest rules, and the text of any advertisement used in the contest must be filed in advance with the RégieDuties based on the value of prizes available to Quebec residents must be paid in advanceThe contest rules must contain certain prescribed informationIn certain cases, a security bond with the Régie may be required
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CONTEST SCENARIOS
Rick SheaDirector, Marketing &
Client Services Resolve Corporation
Duncan McCreadyExecutive Vice-President
IC Group Inc.
Vandana TaxaliAdvertising and
Marketing Lawyer
Steven A. KahanskyAssociate General Counsel
Tim Hortons
Pierre SavoiePartner
Legault Joly Thiffault
ModeratorBill Hearn
Partner McMillan Binch Mendelshon LLP
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Taming the Contest Beast – September 22, 2005
SCENARIO ONE
Contest sponsor would like to charge contestants a fee or force a purchase to enter its contest.
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Taming the Contest Beast – September 22, 2005
SCENARIO ONEDiscussion Points
• R. v. Balance Group International Trading Ltd.(Ont. C.A., 2002)
“Crane Game” case Trial judge held that crane game was mixed game of chance and skill
Ontario Court of Appeal affirmed
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Taming the Contest Beast – September 22, 2005
SCENARIO ONEDiscussion Points
• Test for defining games of mixed chance and skill set out in R. v. Ross, Banks and Dyson, SCC 1960:
“…when the statute speaks of chance as opposed to skill, it is clear that it contemplates not the unpredictables that may occasionally defeat skill but the systematic resort to chance involved in many games such as the throw of dice, the deal of cards.” (Per Pigeon J.)
• Remember: paragraph 206(1)(e) of the Criminal Code applies to games of pure skill!
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Taming the Contest Beast – September 22, 2005
SCENARIO TWO
Contest sponsor has heard stories of contest disasters and wants to manage contest risks prudently.
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Taming the Contest Beast – September 22, 2005
SELECTED CONTEST MIX-UPS
• Ultramar (Canada) 2001
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Taming the Contest Beast – September 22, 2005
SELECTED CONTEST MIX-UPS• McDonalds (US and Canada), 2001
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Taming the Contest Beast – September 22, 2005
SCENARIO TWODiscussion Points
• Promotional partnership agreements• Contest rules• Other promotion risk management
processes and products
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Taming the Contest Beast – September 22, 2005
SCENARIO THREE
Contest sponsor is designing an online contest for which all Canadians are eligible to enter. There is no “age of majority” eligibility threshold. The contest sponsor is collecting information from entrants such as their address, age, profession, shopping habits and income bracket. The entry form provides that entrants will receive an additional entry if they “tell a friend” about the contest.
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Taming the Contest Beast – September 22, 2005
SCENARIO THREEDiscussion Points
• PIPEDA in force in Ontario since January 1, 2004
• CMA Code of Ethics and Standards of Practice re Marketing to kids and teens
• Quebec’s An Act Respecting the Protection of Personal Information in the Private Sector
• Depending on structure, “tell-a-friend” schemes raise consent issues under PIPEDA
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Taming the Contest Beast – September 22, 2005
SCENARIO FOUR
Contest sponsor is running a contest to award a car prize that is open to all Canadians. Entrants can participate only by filling out a ballot at participating stores located in Ontario. There is no on-line method of entry.
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Taming the Contest Beast – September 22, 2005
SCENARIO FOURDiscussion Points
• When must a contest sponsor file with the Régie?
• Main requirements for Quebec contests
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Taming the Contest Beast – September 22, 2005
SCENARIO FIVE
Contest sponsor does not want to clutter creative in contest ads with legalese and so is reluctant to include contest details on packaging or other ads.
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Taming the Contest Beast – September 22, 2005
SCENARIO FIVEDiscussion Points
• Competition Bureau’s “Short List” Disclosure Requirements:Number and ARV of prizesRegional Allocation of PrizesChances of Winning Skill-Testing Question Date Contest ClosesNo Purchase NecessaryWhere Full Contest Rules Available
• Space permitting, other items may be included for good reasons other than compliance with Competition Act
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Taming the Contest Beast – September 22, 2005
Radio Short-Form Disclosure
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Taming the Contest Beast – September 22, 2005
Tim Hortons “Roll Up the Rim to Win”
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Taming the Contest Beast – September 22, 2005
Esso Contest – Recent Contest
At Roadside At Pump31
Taming the Contest Beast – September 22, 2005
Esso Contest – Recent Contest
At Counter32
Taming the Contest Beast – September 22, 2005
SCENARIO SIX
Contest sponsor wants to drive traffic to its website and so wants to run a sweepstakes where entrants may only enter on-line.
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Taming the Contest Beast – September 22, 2005
SCENARIO SIXDiscussion Points
• Same basic laws apply• Bureau’s February 2003
Information Bulletin re: Representations on the Internet
• Special risks to manage:jurisdictional issuesglitch disclaimerlimit number of entries and eligibility
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Taming the Contest Beast – September 22, 2005
WRAP-UP
• Contest scenarios are not exhaustive• Money other hot spots, such as
deceptive prize noticescross-border contests involving US residents
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Taming the Contest Beast – September 22, 2005
WRAP-UP
• Avoid common hazards• Address regulatory concerns• Address contractual concerns• Skipping legal advice may be false
economy
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Taming the Contest Beast – September 22, 2005
Questions?
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