Canada May Close Window of Opportunity for MLM

Acting Now Might Save You $9,500

Cory Lewis, C.A.E., B.A., LL.B., LL.M., Barrister & Solicitor

Canada’s Competition Bureau has proposed increasing their fee for multilevel marketing plan advisory opinions from $500 to $10,000 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.

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:

It provides some assurance that the Competition Bureau views your plan as not raising any issues under the relevant Competition Act sections.

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.

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 fewer than 90 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

Cory Lewis, C.A.E., B.A., LL.B., LL.M., Barrister and Solicitor, practices law with preferred areas of practice in multilevel marketing and direct selling law. He can be reached in Winnipeg, Manitoba, Canada.

Telephone: (204) 792-9982
Website: http://www.havenport.com/Law/lhome.html
E-mail: cory@havenport.com