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December
4, 2002
$500 Canadian Fee Hike?
By Cory Lewis, C.A.E., B.A., LL.B., LL.M., Barrister & Solicitor
_______________________________________
Canada May Close Window of Opportunity for MLM
Acting Now Might Save You $500
Canada's Competition Bureau has proposed increasing their fee
for multilevel marketing plan advisory opinions from $500 to $1,000 effective
January 2003! If your company intends, or hopes, to use Canadian distributors
or sell products or services in Canada in the future, then act now to avoid the
risk of this potential cost increase.
The proposal is still subject to discussion at public forums in
December.
Canada's Competition Act governs multilevel marketing plans in
Canada and is enforced by Canada's Competition Bureau. Penalties for violation
include both substantial fines and imprisonment. Companies wishing to operate
multilevel marketing plans with Canadian distributors selling products or services
in Canada are able to obtain advisory opinions from Industry Canada. The process
can involve retaining Canadian legal counsel to review a plan and provide advice
to tailor the plan to meet Canadian Competition Act legal requirements prior to
submitting the plan to the Competition Bureau for review. The advisory opinion
is desirable for the following reasons:
1. It provides some assurance that the Competition Bureau views
your plan as not raising any issues under the relevant Competition Act sections.
2. Canadian provincial direct selling regulators may ask to see
such an advisory opinion prior to issuing provincial direct sellers licenses to
you and your distributors.
3. In some instances the Royal Canadian Mounted Police may, when
deciding whether to investigate a company's plan for violation of the Canadian
Criminal Code pyramid provisions, communicate with the Competition Bureau to learn
whether Industry Canada has expressed an opinion regarding the plan.
The proposal is described as related to cost recovery and a switch
to binding opinion status. Whether this size of increase is necessary for cost
recovery and how the binding status changes the current situation are debatable.
There are now few days remaining before January 2003. As the process
of preparing a marketing plan for submission can take some time, it is advisable
to begin the process as soon as possible.
For additional legal information about operating multilevel marketing
plans in Canada, about this proposed fee increase, for assistance seeking your
Industry Canada advisory opinion prior to the fee increase, or for other legal
requirements relating to MLM and direct selling in Canada, contact Cory Lewis,
C.A.E., B.A., LL.B., LL.M., Barrister and Solicitor, in Winnipeg, Manitoba, Canada
at telephone (204) 792-9982, e-mail cory@havenport.com,
or url: http://www.havenport.com/Law/lhome.html
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