Rod, Chalk one up for the little guys

Several weeks ago I submitted the article warning of a proposal by the Canadian government to increase the government fee for multi-level marketing plan advisory opinions from $500 CDN to $10,000. In response to submissions (presumably others submitted comments in addition to my own) received since that proposal the government has changed the proposal from $10,000 CDN to $1,000 CDN. This change was released to the public today. The proposal is still subject to discussion at public forums in December. If you forwarded my earlier note to folks in the industry please forward notice of this change as well.

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

Ed Note:  Thanks to those of you I talked to and emailed.  Your letters and emails certainly helped to turn the tide on this one.  I salute you Canadians!

First warning
Canada May Close Window of Opportunity for MLM By Raising Fees
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:

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

2. 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.

3. 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.

This article and other MLM Canadian Law Articles by Cory Lewis C.A.E., B.A., LL.B., LL.M.


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