Deck 24: Consumer Protection and Competition Law

Question 1

The Competition Act seeks to ensure commercial customers are free from unfair differential treatment that could seriously reduce competition in the marketplace.Which of the following is intended to be positively influenced by this legislated policy objective?

A) criminal offences
B) channel power
C) reviewable matters
D) number of competitors

Answer 1

B

Question 2

What are the possible implications of a corporation being convicted under the Competition Act of false or misleading claims?

A) up to two years' imprisonment and/or a fine of $100 000
B) up to 10 years' imprisonment and/or a fine of $1 million
C) up to 14 years' imprisonment and/or a fine of $10 million
D) a stop order issued by the court

Answer 2

C

Question 3

Which statement best describes the goal of consumer protection legislation?

A) imposing terms on all contracts for the sale of goods
B) prohibiting unfair market manipulation
C) imposing obligations on businesses and consumers
D) protecting consumers

Answer 3

D

Question 4

What is the name of the unlawful practice of using a headline price in advertisements,but when all the additional fees or charges are added,the real price is much higher?

A) pyramid selling
B) unattainable pricing
C) tied selling
D) drip pricing

Question 5

What purpose does Advertising Standards Canada (ASC)serve in the marketplace?

A) to promote public confidence in advertising
B) to regulate advertising in the marketplace
C) to impose mandatory rules for advertising
D) to educate the public

Question 6

Ramsha obtained several quotes from fencing companies in his area of the city but found that there was little variance between them.He contacted fencing companies outside his residential area and was rewarded with a number of competitive quotes.Which of the following would be required if Ramsha were to forward a complaint to the Competition Bureau regarding the fencing quotes received from contractors in his area?

A) proof of lessening of competition by agreement
B) proof of undue lessening of competition
C) continuing proof of an ongoing offence
D) proof that key personnel initiated the offence

Question 7

Jackson Industries recently enacted a new policy in which it will refuse to sell its line of cleaning products to a major chain of hardware stores,even though it has sufficient inventory and the chain is willing to meet its usual conditions of sale.What is the name of this type of practice?

A) tied selling
B) refusal to deal
C) pyramid selling
D) bait and switch

Question 8

Which of the following is a distinguishing characteristic of the Consumer Product Safety Act?

A) It imposes strict liability on manufacturers of faulty goods.
B) It requires manufacturers,importers,and sellers to report dangerous incidents and product defects.
C) It is only valid in provinces that expressly "opted in."
D) It provides for penalties of up to $10 million.

Question 9

Six gas retailers were recently found guilty of agreeing to increase prices in tandem with one another.What is the name for this type of anticompetitive practice?

A) price fixing
B) abuse of dominant position
C) price manipulation
D) bid rotation

Question 10

What distinguishes a door to door salesperson from a telemarketer?

A) Licensing requirements for telemarketers are regulated by anticompetition legislation.
B) Consumer protection legislation requires individual licences for each telemarketer.
C) Licensing requirements for door to door selling are regulated by consumer protection legislation.
D) Anticompetition legislation requires licensing of door to door sales forces.

Question 11

Which of the following would support a retailer's claim that the price of a particular product is the "regular price"?

A) that the product's "regular price" was printed on price tags affixed to the goods
B) that the product's "regular price" has been advertised
C) that more than 50 percent of the stock was sold at that price
D) that 30 percent of the stock was sold at that price

Question 12

Which of the following is a broad concept designed to generate sales,information requests,and store or website visits that is regulated by the Competition Act?

A) tied selling
B) telemarketing
C) direct marketing
D) door to door selling

Question 13

Which of the following is a distinguishing feature the Competition Act?

A) reviewable practices under the Act are all criminal in nature
B) provincial legislation
C) origins in antitrust legislation first passed in 1889
D) reviewable practices under the Act are all civil in nature

Question 14

The Competition Tribunal is investigating a claim that a group of businesses has entered into an agreement in order to control prices in the market.What is the name of the offence the tribunal is investigating?

A) price fixing
B) predatory pricing
C) price maintenance
D) abuse of dominant position

Question 15

What competing concerns does consumer protection and competition law attempt to balance?

A) the desire for low prices without sacrificing quality
B) the desire to protect consumers from high prices and the desire to reduce competitive pressures on businesses
C) the desire to promote the free market while providing regulations in order to ensure fair competition and protect consumers
D) the desire to set prices and the desire for a free market economy

Question 16

The Competition Bureau is investigating a complaint involving allegations of refusals to supply retailers that sell below the producer's recommended retail price printed on the product package.Why is the Competition Bureau concerned with this practice?

A) Protections for consumers lie in the criminal and civil price maintenance provisions.
B) It is considered a serious criminal offence under the Competition Act.
C) It attempts to prevent competition and discipline the marketplace.
D) Interfering with consumers' right to the lowest possible price is a criminal offence.

Question 17

Natasha noted that the discounted price of an advertised item failed to register as the item was scanned.She had difficulty enforcing her right to receive a $10 reduction off the correct price on account of the retailer's scanning system error.What code has been promoted to consumers as providing their right to receive this compensation from the retailer for this pricing infraction?

A) Canadian Council of Grocery Distributors Scanner Code
B) Canadian Retail Association Scanner Accuracy Code
C) Canadian Retail Council Voluntary Scanner Code
D) Scanner Price Accuracy Voluntary Code

Question 18

In order for the Competition Bureau to intervene in circumstances where a distributor appears to have set prices that are unreasonably lower than those of one or more competing suppliers in the market,which of the following must be established?

A) Losses will be recouped by the discounter using subsequent price increases.
B) The civil burden of proof must be met to attract penalties.
C) Differences must be shown to be a direct reflection of cost differentials.
D) Upward pressure is being exerted on the retail price of goods.

Question 19

Which of the following represents an example of direct marketing?

A) grocery store display
B) catalogue sales
C) tied selling
D) door to door selling

Question 20

Which statement best describes the use of testimonials as part of one's advertising campaign?

A) Such ads are strictly prohibited.
B) Tests are only required if the ad claims the product will provide a savings to consumers.
C) Such ads are regarded as "puffery" and do not attract scrutiny of regulatory authorities.
D) Using a well known personality will attract close scrutiny by regulatory authorities.

Question 21

What will be the result if a retailer sells a substantial volume of its product at $2.40 within a reasonable period of time after offering the same item at a $1.85 sale price for two weeks?

A) The ordinary price will be established by the time test.
B) It proves that the mistaken lower price was immediately corrected.
C) An investigation by the Competition Bureau for a reviewable offence will ensue.
D) The ordinary price will be established by the volume test.

Question 22

How could a multi level marketing scheme for the sale of cookware through house parties constitute a pyramid scheme?

A) if the pricing of the product is unreasonably low
B) if the participants are prohibited from engaging in door to door or Internet sales
C) if participants must pay money for the right to receive compensation for recruiting new participants
D) if the participant is prohibited from selling other products

Question 23

Which of the following bodies has jurisdiction to administer the Consumer Packaging and Labelling Act?

A) Competition Bureau
B) provincial regulators
C) Canadian Association Advertisers
D) Advertising Standards Canada

Question 24

Alphabet Toys is considering a large scale promotional contest in which customers will be invited purchase a ticket for $1 in exchange for a chance to win $3000 dollars' worth of product.What legal concern does this scheme raise?

A) that Alphabet is attempting to run an illegal lottery
B) that the contest will be seen as manipulation of the market
C) that the contest will constitute "tied selling"
D) that Alphabet is engaging in predatory pricing

Question 25

What is the source of legal risk associated with environmental claims and warnings on product labels?

A) product and distribution
B) price and distribution
C) promotion and price
D) product and promotion

Question 26

Which term refers to a marketing scheme where participants are distributing products or services and also recruiting others to become involved in distribution?

A) tied selling
B) multi level marketing
C) inventory loading
D) collusion

Question 27

What is the recommended source for acquiring knowledge of the standards that must be met for both the production and labelling of goods produced by a manufacturer?

A) trade association and specialized professional advisors
B) Trade Association Conformity Continuum Guidelines
C) the Competition Bureau
D) the Competition Bureau's immunity program

Question 28

Ramsay Group Insurance Inc.has been advised by a major insurance underwriter that it must carry a number of the underwriter's less popular products and refrain from carrying any competitor's products.What type of offence has the insurance underwriter committed?

A) tied selling
B) exclusive dealing
C) refusal to deal
D) anticompetitive behaviour

Question 29

An agreement with a consumer which results from an unfair practice may be rescinded by the consumer.

Question 30

Drake Hot Tubs is considering a strategy of offering consumers ultra low prices for one year in order to drive its competitors out of the marketplace.What is the name given to this type of pricing strategy?

A) price rigging
B) predatory pricing
C) price maintenance
D) bait and switch

Question 31

In what way are the practices of predatory pricing and exclusive dealing similar to each other?

A) Both are the consequence of distribution policies.
B) Both are subject to criminal sanctions.
C) Both reduce or eliminate competition.
D) Both may be subject to remedial court orders.

Question 32

To which of the following are the existence of a genuine selling opportunity and a realistic opportunity to expand relevant with respect to distributorships?

A) the upward payment of fees
B) the legality of a multi level marketing plan
C) pyramid selling schemes
D) the timely disclosure of earnings

Question 33

With respect to managing legal risks that often accompany marketing practices,contracting out of express terms versus implied terms and multi level selling are sources of legal risk associated with which of the following?

A) the contract of sale and product
B) the distribution and promotion of a product
C) the product performance claims and pricing
D) the contract of sale and distribution

Question 34

What is the most significant consequence when a seller refuses to sell to a purchaser on the same terms as those that are offered to the purchaser's competitors?

A) exclusive selling is a reviewable matter under the Competition Act
B) refusal to deal is a reviewable matter under the Competition Act
C) a surplus supply of product
D) damage to the reputation of the business

Question 35

Which of the following best practices for managing legal risk may also result if a producer establishes an informed and properly responsive customer relations process?

A) early warning system regarding flawed design and production techniques
B) directives targeted at providing a maximum selling price
C) insurance coverage to address the majority of expected risks
D) employees will understand the implications of contractual terms

Question 36

Fop Beverages Ltd.is a wholesaler of bottled soft drinks.Unfortunately,it overestimated interest in a new beverage called Fizzy Grapefruit and now wants to unload its surplus product by requiring its retail customers to purchase a few cases of Fizzy Grapefruit with their orders of other products.In light of the Competition Act,why would this be of concern?

A) This practice may constitute a multi level marketing scheme.
B) This practice might constitute a refusal to deal.
C) This practice may constitute exclusive dealing.
D) This practice may constitute tied selling.

Question 37

What type of criminally offensive product distribution plan fails to provide participants with the ability to return products on reasonable commercial terms?

A) multi level marketing
B) pyramid selling
C) tied selling
D) telemarketing

Question 38

Which of the following is recommended in addition to best practices for managing legal risks that require basic shipping terminology to be defined to facilitate employees' understanding of the implications of contractual terms?

A) avoid structuring anticompetitive distribution channels
B) have standard practices that transfer all risk
C) completely disclose anticompetitive criminal activity
D) create a corporate compliance program

Question 39

Which of the following would strongly influence the ability of the Competition Bureau to apply both the volume and time tests?

A) The due diligence defence offers protection to reasonable sellers.
B) Relevant sales data for the entire market must be reviewed.
C) There is a high burden of proof for the criminal predatory pricing offence.
D) Complaints regarding inflated "regular" prices are commonplace.

Question 40

In Canada,what distinguishes a pyramid scheme from a legitimate selling scheme?

A) a genuine selling opportunity
B) timely disclosure
C) a genuine business activity
D) multi level marketing

Question 41

One of the goals of consumer protection law is to give small and medium sized businesses the ability to compete in the marketplace.

Question 42

Tied selling is reviewable provided that the action lessens competition substantially.

Question 43

In most provinces,a consumer who has entered into a contract for a product or service as a result of a misrepresentation is not entitled the right to rescind the contract and may only sue for damages.

Question 44

Drip pricing arises when competitors conspire to fix the prices charged for goods or services.

Question 45

A producer's failure to provide similar pricing terms and conditions to competing wholesalers or retailers for equivalent volume sales at an equivalent time is recognized as a criminal offence under the federal Competition Act.

Question 46

Most packaging and labelling legislation is federal and therefore applies throughout the country.

Question 47

Pyramid selling is considered a criminal act if participants pay money for the right to receive compensation for recruiting new participants.

Question 48

The Competition Bureau is particularly concerned about differentials between prices posted on store shelves and those stored in automatic price scanning systems,as infractions result in the criminal offence of double ticketing.

Question 49

False,misleading,or deceptive advertising or claims are sources of legal risks that arise from marketing promotion activities.

Question 50

In many provinces,privity of contract cannot be raised as a defence against the ultimate consumer.

Question 51

Price discrimination involves a producer's attempts to drive the final retail price of goods upward and the imposition of recriminations upon noncompliant retailers.

Question 52

Sources of marketing legal risks that require management include the rules that govern the transfer of title and delivery of goods aspects of the contract of sale.

Question 53

When a seller agrees to sell to the purchaser only if the purchaser buys from it exclusively,that seller has committed a reviewable offence for anticompetitive behaviour known as refusal to deal.

Question 54

The Scanner Price Accuracy Voluntary Code requires that clear and legible labels must be affixed to the shelf next to the product.

Question 55

Consumer protection regulations relating to door to door selling require that consumers must have the benefit of a cooling off period during which they may cancel the contract.

Question 56

From time to time,the Competition Bureau participates in class action settlement agreements on behalf of consumers impacted by false or misleading advertising claims.

Question 57

It is considered reviewable conduct to buy up one's products to prevent the erosion of price levels.

Question 58

When a dominant company or group of companies engages in anticompetitive behaviour to unduly prevent or lessen competition,the Competition Tribunal may order corrective action for the reviewable offence of abuse of dominant position.

Question 59

Competition law tries to achieve a balance between wholesalers and retailers,dominant market players and minor players,and public and private interests.

Question 60

Describe how the provinces typically regulate online retail sales.

Question 61

What is predatory pricing and when does it constitute a reviewable matter?

Question 62

Define "refusal to deal" and "exclusive dealing."

Question 63

Briefly describe how mergers,acquisitions,and takeovers are regulated by the Competition Bureau.

Question 64

Identify and briefly describe the conditions under which a producer may refuse to sell to retailers that are selling its products at unreasonably low prices.

Question 65

Discuss when an advertiser may legitimately claim a price to be the "ordinary price" of a product.

Question 66

How are promotional contests regulated and under what circumstances are they permitted?