Deck 24: Sales and Marketing: Price, Distribution, and Risk Management

Question 1

Which of the following would a Competition Bureau investigator most likely indicate as the reason for seeking a remedial order from a judge?

A) discouraging distribution through exclusive regional dealerships
B) meeting a higher burden of proof due to the serious consequences of a finding of guilt
C) finding evidence of a product line being used as a loss leader
D) failing to reach a voluntary agreement resolving a reviewable matter

Answer 1

D

Question 2

What prohibits the sale of a product at a price that is higher than the advertised price?

A) a voluntary agreement between the offending party and the Competition Bureau
B) a penalty carrying a maximum 14-year jail sentence and/or fine of $25 million
C) a criminal provision of the Competition Act
D) a civil provision of the Competition Act

Answer 2

D

Question 3

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.

Answer 3

B

Question 4

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

Question 5

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 6

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 7

The Competition Tribunal is investigating a claim that a group of companies with ample control of the market is actively carrying out anticompetitive acts. What is the name of the offence the tribunal is investigating?

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

Question 8

Which of the following is considered to be a valid criticism of the pricing code launched in 2002 by several Canadian retail associations in order to avoid legislated regulations relating to the accuracy of automatic scanner pricing?

A) the absence of retailer accountability
B) uncertainty as to whether the Competition Act is strengthened by the code
C) the absence of retailer awareness
D) uncertainty as to whether voluntary codes effectively replace regulation and enforcement

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

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 11

Even though EcoGreen Ltd. sold the same bulk amount of organic fertilizer to both Sunny Garden Centre Ltd. and Remple Garden Centre, Remple will pay more than Sunny. Which of the following reasons would explain how EcoGreen has avoided committing an anticompetition offence?

A) The price differential is due to first-time customer pricing.
B) The price differential is due to an involuntary market dominant position.
C) The price differential is due to an adjusted cost of delivery expense.
D) The price differential is due to loss leader 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

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 14

How is it possible for either a seller or a customer to commit a criminal pricing offence through their direct market contact?

A) double ticketing
B) pyramid selling
C) tied selling
D) multi-level marketing

Question 15

Which of the following is synonymous with the terms, "on sale," "reduced," and "clearance"?

A) a lesser price than the ordinary price
B) auto-scan system faulty pricing
C) a lower price based on extensive sales data
D) products promoted in catalogue sales

Question 16

Which of the following is a valid criticism of the Competition Bureau's recent changes relating to anticompetitive activities that are intentionally designed to drive the final retail price of goods upward?

A) There is a lack of penalties to serve as a deterrent.
B) The onus of strict burden of proof is placed on the customer.
C) The double ticketing offence is decriminalized.
D) Consumer protection is limited to misleading advertising.

Question 17

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 18

Why would Sarafal raise concerns during a marketing strategy meeting regarding lines that may be crossed in relation to the pricing and distribution aspects of the marketing plan?

A) to implement a premium pricing strategy
B) to promote high product quality
C) to avoid needless legal risks
D) to avoid being used as a loss leader

Question 19

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 20

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 21

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 22

Which of the following is applicable to direct-marketing practices?

A) Market dominance cannot be allowed to interfere with Canada's markets.
B) There is strong public interest in ensuring that businesses compete fairly.
C) Laws have evolved to address some of the issues that are of concern.
D) Both federal and provincial regulations apply to the practice.

Question 23

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 24

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 25

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 26

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 27

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 28

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 29

Which of the following is the result of the online industries' need to establish principles for protecting e-commerce customers?

A) Canadian Association of Internet Providers Voluntary Code of Conduct
B) Canadian Code of Practice for Consumer Protection in Electronic Commerce
C) Project FairWeb and CA Webtrust Electronic Commerce Third Party Seal Programs
D) Personal Information Protection and Electronic Documents Act

Question 30

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 31

Which of the following would most strongly support the adoption of best practices by a producer to minimize its exposure to sources of legal risk?

A) Reasonably foreseeable risks are preventable.
B) Products and services must perform as intended.
C) One preventable injury can destroy the viability of a product line.
D) Promises must not exceed what it is possible to deliver.

Question 32

Which of the following is a distinguishing characteristic of the Personal Information Protection and Electronic Documents Act?

A) Failing to disclose full contract terms is an offence.
B) The absence of a similar provincial law allows the federal act to be applied provincially.
C) All provinces have endorsed the disclosure of specified goods and services information.
D) All provinces regard the failure to provide a copy of a contract as an offence.

Question 33

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 34

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 35

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 36

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 37

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 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

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 40

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 41

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 42

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

Question 43

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 44

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 45

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 46

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

Question 47

Convictions for unfair pricing offence under s. 45 of the federal Competition Act have occurred despite the fact that most offenders entered not guilty pleas.

Question 48

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

Question 49

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 50

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

Question 51

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

Question 52

"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 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

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 55

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

Question 56

The reviewable matter of a seller refusing to sell to a purchaser on the same terms as those that are offered to the purchaser's competitors is known as exclusive dealing.

Question 57

Multi-level marketing is an illegal form of multi-level selling under the Competition Act.

Question 58

Evidence of suppliers conspiring to fix the bidding process in a manner that suits their collective needs or wishes is recognized as a serious criminal offence that attacks the heart of the competitive process.

Question 59

The regulations affecting telemarketing do not extend to faxes, Internet communications, or automated, prerecorded messages.

Question 60

The Personal Information Protection and Electronic Documents Act is federal legislation that requires all organizations to obtain consent for the use or disclosure of personal information for any purpose, including direct or targeting marketing or even market research.

Question 61

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

Question 62

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

Question 63

Discuss the criticisms surrounding the Scanner Price Voluntary Code.

Question 64

Briefly explain why a distribution policy may be found to discriminate unfairly, what is the nature of the infraction, and what is the consequence of a positive finding of the commission of the offence by the Competition Bureau.

Question 65

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

Question 66

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

Question 67

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

Question 68

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 69

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

Question 70

Define the pricing policy offence under s. 45 of the Competition Act and indicate what the penalties are for a conviction of this offence.