Chat with AIExam 25: Government Regulation of Business
Old West Inc exports Texan chili mix and other southwestern food products into Canada from its manufacturing plant in San Antonio,Texas.Canada is its only foreign (ie non-US)export market because Canadian tastes are similar to those of Texans and because marketing and distribution practices are the same.Old West does not modify its design or packaging for the Canadian market and does a thriving business.Nevertheless,it one day finds itself the subject of a complaint from Ontario consumers who notice that Old West products do not contain bilingual labelling.Old West is potentially in contravention of the
(31) 
VerifiedA
Flower Inc produces a brand of energy drink originally developed in Japan that has been introduced in Canada in the past two years.It is aimed at the youth market and has several Canadian and international competitors.Flower's traditional retailers are health food and sporting good stores,but Flower's supplier is anxious to build market share and so provides hefty "slotting allowances" to larger stores that carry the brand and not its competitors' brands.Several chains then introduce Flower at heavily discounted prices to attract a younger crowd into their aisles.What competition offence might this constitute,and what can be done about it?
(30) VerifiedThis question asks students to distinguish between permitted strategies for growth in a market and anti-competitive tactics that are evidence of an abuse of dominant position.Section 79 of the Competition Act defines an abuse of dominance as activity wherein an entity that "substantially or completely controls" a class or species of business engages in a practice of anti-competitive acts,and the practice has had,is having,or is likely to have,the effect of preventing or lessening competition substantially in a market.Section 78 of the Act lists several examples of abuse of dominant position,including the use of "loss leaders" to discipline or eliminate competitors.This kind of behaviour is a reviewable offence and can be pursued civilly by the Commissioner of Competition before the Competition Tribunal.
In this question,however,it is not clear that Flower is in a dominant position within the industry.The facts indicate that Flower has "several Canadian and international competitors" and that it is anxious to build market share.This does not necessarily translate into a dominant position or to a contravention of the Act.The Competition Bureau has not taken enforcement action where the market share of an allegedly dominant firm was less than 85 percent.If Flower was a dominant firm,the practice of granting slotting allowances may be anti-competitive and an abuse of dominance because it is designed to exclude the products of Flower's competitors.
Terrecore is an oil extraction company based in Fort McMurray,Alberta.It is contemplating the purchase of a property in downtown Calgary to house its local office and a showroom of its oil extraction equipment.The Calgary site it is most interested in is an old building dating from the 1950s that Terrecore would have to tear down and rebuild according to modern design and specifications.What environmental aspects of the potential purchase should it be concerned about?
(28) VerifiedOwnership liability arises because of a corporation's legal relationship to contaminants.In recent years,the extent of ownership liability has increased significantly under most provincial laws due to growing environmental awareness.Governments have decided to cast the net of responsibility far and wide,with potentially onerous results.Owners now find themselves liable even though they never participated in polluting activities or because of the behaviour of a remote tenant on the property,sometimes decades and several owners in the past.
Terrecore would be wise to verify the status of Alberta environmental legislation with respect to ownership liability for property and make sure that the sale of property is conditional on a clean environmental assessment of the property being obtained,with insurance coverage for both the inspection and any subsequent environmental liability.Terrecore may want to obtain an indemnity in the contract of sale stating that the previous owner shall remain liable for environmental damage found to arise out of previous uses and will reimburse Terrecore for any expenses it has to pay.
Manitoba decides that it would like to levy a charge on all telephone calls that traverse its provincial boundaries.Thus,a call from Kenora,Ontario,to Prince Albert,Saskatchewan,crossing Manitoba would incur a levy to be paid to the provincial government.The measure is likely to be struck down in court as an infringement of federal jurisdiction.
(35) The Merex 200E is a new sports coupe designed to appeal to the highest bracket of consumer.Each coupe costs at least $100 000.Mitch is a young stockbroker in Toronto who notices the Merex 200E in an ad in the subway.It says,"0 to 60 in 2 seconds." Mitch sees the Toronto Merex dealer,takes the car out for a test spin,but does not have an opportunity to test the acceleration.The sales representative assures him that the acceleration promised in the advertisement has been verified by an independent testing agency.Mitch,relying on the representative's pitch,buys a hot red 200E and tries several times to take the car up to 60 mph in 2 seconds,but with no success.Moreover,he discovers that the engine stalls dangerously when accelerating rapidly.Which of the following is most likely TRUE?
(39) To protect against potential environmental liability that may be incurred from the site they are buying,Trees Inc,a Miramichi,New Brunswick-based greenhouse operation should negotiate a lender liability agreement with its bankers.
(38) Kimo runs a chain of health food supermarkets in Victoria,British Columbia.His stores offer a number of products that other major grocery retailers have not stocked in the past,meaning that Kimo has enjoyed a loyal and steadily growing clientele.Recently,however,he has noticed that the major grocery retailer in Victoria,Global Foods,is offering several of his products,such as dried rice snacks,organic herbs,and shiatsu oils,at cut-rate prices that he cannot possibly match without losing money.Kimo suspects that Global is selling these items below their cost in order to drive him out of business.What kind of anti-competitive behaviour might Global be engaged in?
(29) There are several types of offences under the Competition Act.Which of the following statements is TRUE?
(38) It can be said that the "trade and commerce" power of the federal government
(34) Marissa is the CEO of Motormax Inc,a generic auto parts manufacturer that does business with several large auto manufacturers.Parts manufacturing is a highly competitive business.Several years ago she was contacted by the CEO of a competitor who asked whether Motormax would like to "go in with them." Marissa did not understand what he meant at the time and replied in the negative,but the more she thought about the incident over the years she realized that the rival's CEO was proposing a conspiracy to reduce competition.She has begun to notice that the pricing of her competitors' products is always suspiciously the same as hers.Which of the following is TRUE?
(29) Federal legislation always prevails over provincial legislation.
(39) Broadly speaking,under the Competition Act,some matters are criminal offences,others are reviewable practices that may be the subject of an application to the Competition Tribunal by the Commissioner and misleading advertising may be dealt with as a criminal offence or a reviewable practice.
(34) In Canadian law,an abuse of dominant position requires a firm to have a monopoly in some class or species of business.
(40) Ultra-Brite is a new brand of clothing detergent introduced in the Canadian market in the past year following heavy promotion and advertising.It is specially formulated to take heavy dirt out of white and other light-coloured clothing.Sales have climbed substantially with the catchy new slogan "Ultra-Brite,Always White!" However,recently a small,but growing,number of complaints have been received by the Competition Bureau alleging that Ultra-Brite is in fact engaged in deceptive advertising: the use of Ultra-Brite on clothes does not always return them to a pristine,white condition like the advertising and slogan suggest.Instead,clothes washed with Ultra-Brite often have a used,faded look about them.Discuss what action could be taken against the company,and what defences would it have?
(42) Common law approaches to environmental protection are often inappropriate because
(35) A business may NOT be able to challenge an action by a regulatory body that adversely affects the business on the basis that
(39) Alpha Corp and Beta Inc recently merged.Prior to the merger,both companies manufactured tools.The merged company continued to do so after the merger.Technically speaking,the parties were involved in a
(30) Government's role in the regulation of business in Canada is limited by key legal principles.Discuss with reference to three principles encountered in Chapter 25.
(25) 
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