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

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

Answer 2

B

Question 3

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

Answer 3

C

Question 4

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 5

In Canada,what distinguishes allowable business mergers,acquisitions,and takeovers from harmful,monopolistic expansion activities using the same merger,acquisition,or takeover methods?

A) a genuine selling opportunity
B) timely disclosure
C) a fine line
D) multi-level marketing

Question 6

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 7

Which of the following statements 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

Question 8

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 9

What aim is met by regulating prices set between producers/growers and users?

A) to manage exposure to legal risk in the context of marketing
B) to create a distinction between criminal offences and reviewable matters
C) to ensure consumers receive the lowest possible fair market price
D) to protect the right to negotiate prices through a supply chain

Question 10

Five engineering consulting companies were recently found guilty of conspiring together to "take turns" submitting bids to the provincial government on major projects.What is the name for this type of anticompetitive practice?

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

Question 11

What is the term for a specialized form of conspiracy by producers/suppliers to manipulate a market through price that can result in a fine and/or imprisonment?

A) bid rigging
B) tied selling
C) abuse of dominant position
D) predatory pricing

Question 12

Which of the following is a distinguishing feature of the offence of price discrimination in the market?

A) the criminal burden of proof
B) an upward drive of the final retail price
C) the culpability of both parties
D) a unilateral ability to affect pricing

Question 13

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 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

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 16

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 17

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 18

What are the possible implications of being convicted under the Competition Act of price fixing?

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 $25 million
D) a stop order issued by the court

Question 19

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 20

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 21

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 22

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 23

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 24

Which of the following are common characteristics associated with anticompetitive behaviour?

A) reducing prices substantially and taking over a major customer
B) providing a conditional supply of product that limits the ability to carry competitors' products
C) providing an adequate supply of product and refusing to deal on usual trade terms
D) generating sales,information requests,or website visits via direct marketing

Question 25

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 26

Which of the following is a feature of Canada's new anti-spam legislation?

A) It strictly prohibits spam in all circumstances.
B) It regulates the unauthorized installation of computer programs.
C) It authorizes spam provided it is directed at commercial enterprises and not consumers.
D) Violations of the Act may result in imprisonment.

Question 27

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 28

Why is a business's market dominance typically intolerable to Canadian consumers?

A) distribution practices discriminate against customers
B) marketing plans identify risks involving a business and its customers
C) corporate compliance programs ensure consumers pay the lowest price
D) unfair and discriminatory higher consumer pricing practices usually result

Question 29

Which of the following has jurisdiction to regulate unsolicited telemarketing communication as a result of the Canadian National Do Not Call List becoming operational on September 30,2008?

A) Competition Bureau
B) provincial privacy legislation
C) Canadian Association of Internet Providers
D) Canadian Radio-television and Telecommunications Commission

Question 30

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 31

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 32

Which of the following statements is correct regarding 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 33

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 34

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 35

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 36

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 37

What is the term for a marketing scheme where participants are knowingly being sold unreasonable quantities of products or products?

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

Question 38

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 39

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 40

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 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

The practice of setting unreasonably low prices to eliminate competition is known as price discrimination.

Question 43

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 44

Pyramid selling typically involves a scheme where participants are knowingly sold commercially unreasonable quantities of a product or products.

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

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

Question 47

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

Question 48

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 49

Canada's new anti-spam laws also contain extensive anti-spyware and anti-malware provisions.

Question 50

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

Question 51

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

Question 52

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 53

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

Question 54

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 55

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 56

The CBSC has developed specialized codes,such as those related to sexual stereotyping and violence.

Question 57

"Tied selling" occurs when a seller refuses to sell to a purchaser on the same terms that were offered to the purchaser's competitors.

Question 58

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 59

"Pyramid selling" refers to multi-level marketing that requires participants to pay money for the right to receive compensation for recruiting new participants.

Question 60

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 61

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

Question 62

List the sources of legal risks in marketing that relate to price.

Question 63

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 64

Outline the key features of Canada's new anti-spamming legislation.

Question 65

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

Question 66

What are the goals of Canada's competition laws?

Question 67

How should a producer of products designed for children effectively manage its exposure to legal risks?

Question 68

Briefly discuss abuse of dominant position,and describe the anticompetitive acts involved in this offence.

Question 69

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

Question 70

Briefly discuss the regulation of door-to-door selling.