Deck 25: Government Regulation of Business

Question 1

Nefarious Inc and Jaffar together control 90 percent of the market for artificial hearts. Nefarious and Jaffar have committed an offence under the Competition Act if they

A) agree to limit their production of artificial hearts for the purpose of driving up prices of their products.
B) agree in advance on the bids each will submit for a contract to supply artificial hearts to a hospital.
C) agree to limit their sales of artificial hearts for the purpose of driving up prices for their products.
D) agree on the prices that they will charge their customers.
E) all of the above.

Answer 1

E

Question 2

In some provinces due diligence is

A) a defence or a duty, that is, if it is claimed as a defence it cannot then be asserted as a duty.
B) never a defence.
C) a defence and a duty.
D) a duty but not a defence.
E) not something that corporations need to worry about.

Answer 2

C

Question 3

Andy owns a chain of dry- cleaning stores in the Toronto area. Business is good and continues to grow, but Andy is concerned about holding costs down. The Environmental Protection Act makes it an offence to knowingly release a contaminant, like dry- cleaning fluid, which contains dangerous cancer- causing polychloral biphenals (PCBs), into the environment. Instead, all used dry- cleaning fluid must be stored and recycled in a provincially monitored "closed system" of disposal. Andy contravenes the law by flushing several hundred litres of used fluid down the drain, causing death to hundreds of waterfowl that nest near Toronto municipal reservoirs. Andy becomes subject to investigation after provincial officials correlate the mysterious bird deaths with his underreporting of deposits to the provincially monitored disposal scheme. A prosecution under the law ensues. Which of the following is TRUE?

A) Andy is liable even if he was careful to avoid the release of the contaminant.
B) Andy is not liable if the birds would have died even if the contaminant had not been released.
C) Andy is liable only if he knowingly violated the law.
D) Andy is not liable if the release of the contaminant was by one of his employees and not him personally.
E) None of the above.

Answer 3

A

Question 4

A business may be able to challenge an action by a regulatory body that adversely affects the business on the basis that

A) it violates the Charter.
B) the affected business did not have an opportunity to respond to the concerns that resulted in the action.
C) the action was outside the jurisdiction of the regulatory body.
D) the action was taken without notice to the affected business.
E) all of the above.

Question 5

Which of the following statements is TRUE?

A) The federal government has power to legislate in relation to transactions in real property.
B) The federal government has power to legislate in relation to property and civil rights.
C) The provincial governments have power to legislate in relation to coinage and currency.
D) The provincial governments have power to legislate in relation to international trade.
E) The federal government has power to legislate in relation to trade and commerce.

Question 6

Cavannelle Ltd is a new entrant in the smokeless cigarette market. It believes that its smokeless cigarette product, "Cavan A+", will do well in Canada given smoking bans enacted recently by many municipalities and growing public awareness about the health effects of regular smoking. The company therefore plots a pan- Canadian advertising campaign to promote its product. Just before the rollout date, however, Health and Welfare Canada announces a prohibition on new cigarette advertising. Cavanelle will

A) not be able to rely on the Canadian Charter of Rights and Freedoms at all.
B) be able to rely on the Canadian Charter of Rights and Freedoms to argue that its freedom of expression has been curtailed.
C) be able to rely on the Canadian Charter of Rights and Freedoms to argue that its advertising must be permitted in a free and democratic society.
D) be able to rely on the Canadian Charter of Rights and Freedoms to argue that its property has been taken.
E) be able to rely on the Canadian Charter of Rights and Freedoms to argue that the advertising ban is discriminatory contrary to its equality rights.

Question 7

Which statement is MOST accurate?

A) Businesses in Canada are not protected by the Canadian Charter of Rights and Freedoms.
B) The Canadian Charter of Rights and Freedoms offers limited protections for corporations where corporations fall within the defined class of protected persons and the purpose of the protection includes the protection of corporations.
C) The Canadian Charter of Rights and Freedoms protects natural persons alone.
D) The Canadian Charter of Rights and Freedoms protects private property and, to that extent, offers limited protections to business.
E) None of the above.

Question 8

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

A) diversification merger.
B) parallel merger.
C) fusion merger.
D) vertical merger.
E) horizontal merger.

Question 9

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?

A) Conscious parallel pricing by parts manufacturers is a criminal offence.
B) Agreements to fix prices are only reviewable if the price is lower than the cost of production and the intention of the parties to the agreement is to drive competitors out of the market.
C) The actions of the other parts manufacturers is a criminal office only if an agreement to lessen competition unduly can be proven.
D) Any agreement to fix prices is a reviewable practice but not a criminal offence.
E) Any agreement to fix prices is a criminal offence.

Question 10

It can be said that the "trade and commerce" power of the federal government

A) permits the federal government to regulate local works and undertakings.
B) permits the federal government to regulate all insurance contracts.
C) allows the federal government to regulate any area of business activity.
D) potentially conflicts with the provincial power over "property and civil rights."
E) never permits the federal government to regulate transactions taking place exclusively within a province.

Question 11

What do the following business sectors have in common: investment, government procurement, labour mobility, consumer- related measures and standards, agricultural and food products, alcoholic beverages, natural resource processing, energy, communications, transportation, and environmental protection?

A) They are all areas of exclusive federal jurisdiction.
B) They are immune from liability under the Competition Act.
C) They are governed by the Agreement on Internal Trade.
D) They are all areas in which Canada has a competitive advantage.
E) None of the above.

Question 12

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 from 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 salesman assures him that the acceleration promised in the advertisement has been verified by an independent testing agency. Mitch, relying on the salesman'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?

A) Merex could be prosecuted for the offence of misleading advertising, but only by the Commissioner of Competition.
B) If Merex were prosecuted for the offence of misleading advertising, it could rely on a defence of due diligence since it had retained an independent testing agency that had verified the promised acceleration.
C) Merex could not be prosecuted for misleading advertising because accelerating so quickly is dangerous.
D) Merex could not be prosecuted for the offence of misleading advertising.
E) None of the above.

Question 13

Excise taxes are taxes on

A) exercise products.
B) non- essential goods, like cigarettes and alcohol.
C) essential goods, like food.
D) exported goods.
E) none of the above.

Question 14

Demita Inc. runs a bakery in La Ronge, Saskatchewan, that sells bread, rolls, cakes, and pastries. Demita bought the bakery from King's Bakery Inc. In the sale agreement, Demita agreed not to sell bakery products outside La Ronge. Business is good and Demita wants to expand. Demita is not interested in competing with King's which now sells its products exclusively in Regina, Saskatchewan. It wants to sell in other markets. Demita wants to know if there is any way that she can successfully challenge the restriction on selling outside La Ronge as a restraint on trade?

A) Probably not. Restraints of trade are dealt with exclusively as criminal matters by the Commissioner of Competition under the Competition Act.
B) Probably. The requirement constitutes a deprivation of property contrary to the Canadian Charter of Rights and Freedoms.
C) Probably. The requirement is not linked to any valid public purpose but only the private benefit of King's.
D) Probably. The requirement is a regulatory offence.
E) Probably. Restraints on trade are permissible, but they are scrutinized by the courts to ensure that they do not unduly restrict competition. Here restricting Demita to selling bakery products in La Ronge is more restrictive than necessary to protect the commercial interests of King's.

Question 15

Helena is president and the sole director of a small garment- making company in Markham, Ontario which specializes in preliminary assembly of garments such as underwear, blouses, jackets, and suits. To cut costs, one way in which many clothing companies are putting together clothes these days is "fusion," a process which involves the use of glue. Helena's company uses fusion techniques and therefore stores a considerable amount of glue on site. Helena wonders what her duties as president and director are with respect to the glue and its storage and use. Her lawyer should advise her that under Ontario law

A) she can avoid liability by ensuring that she does not find out about any violation of the law.
B) her responsibility will not be an issue.
C) she must do everything possible to ensure that no employee violates the law.
D) she has a responsibility to take all reasonable care to ensure that the corporation complies with the law. What is reasonable will be determined by reference to the position that she holds.
E) she has a responsibility to take the degree of care that any reasonable person would take.

Question 16

Janelle Inc is an importer of luxury European fabrics based in Montreal. Because it must fill containers with fabric in order to make them worthwhile to import, Janelle requires that all of its retail customers buy two fabrics: one that they choose and one chosen by Janelle. If Janelle is a major supplier in the market and its practice has an adverse effect on competition, under the Competition Act, the practice may constitute

A) a conspiracy to reduce competition unduly.
B) tied selling.
C) multi- level marketing.
D) exclusive dealing.
E) market restriction.

Question 17

The Competition Bureau has long suspected HAL Corp of abuse of dominant position. After a recent investigation, the Bureau commenced proceedings against the company. Which of the following statements is most likely to be TRUE?

A) Because of the need to promote healthy competition, HAL would not be engaged in an anti- competitive act if it was buying up products to prevent the erosion of price levels.
B) The Bureau may rely on the concept of "superior competitive performance" to prove that, as a result of committing a practice of engaging in anti- competitive acts, HAL has increased its market share.
C) HAL cannot be held liable for abuse of dominant position unless it enjoys a monopoly with respect to at least a part of the market.
D) HAL has engaged in an anti- competitive act if it sells its products for a price that is lower than their cost for the purpose of eliminating a competitor.
E) The Bureau will be concerned about anti- competitive acts by HAL if HAL has more than 20 percent of the relevant market.

Question 18

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 nor 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 labeling. Old West is potentially in contravention of the

A) Hazardous Products Act.
B) Canadian Charter of Rights and Freedoms.
C) Textile Labelling Act.
D) Food and Drug Act.
E) Consumer Labelling and Packaging Act.

Question 19

Marianne Menzies, president of MenzTel Inc, fears that her principal supplier may be up to no good in denying her access to its latest hot telecommunications technology. She notices a number of new models available through her supplier's retailer arm that are not available to her and that are depriving her of business opportunities because there are no suppliers of competing products with the same features. The supplier has told Menzies that it will not sell to MenzTel. Menzies may

A) apply directly to the Competition Tribunal to address the supplier's refusal to deal, if MenzTel is directly and substantially affected in its business due to its inability to obtain supply of the product.
B) not apply directly either to the Competition Tribunal or a court concerning the matter.
C) commence a court action seeking immediate injunctive relief that compels her supplier to sell her the new models.
D) commence a court action against the supplier for damages related to lost sales.
E) pursue arbitration.

Question 20

The Constitution's "trade and commerce" clause

A) allows the federal government to legislate national standards.
B) prevents provinces from regulating business at the local level.
C) gives jurisdiction over "property and civil rights" to the federal government.
D) gives jurisdiction over commercial matters to the provinces.
E) gives jurisdiction to the federal government over all business activities in Canada.

Question 21

Which of the following statements is TRUE with respect to the relationship between federal and provincial jurisdiction under the Constitution?

A) The division of powers in the Constitution means that there are never conflicts or overlaps in authority.
B) The federal and provincial governments never have concurrent jurisdiction over an area.
C) The doctrine of paramountcy says that, if validly enacted federal and provincial statutes conflict, the provincial law prevails.
D) The doctrine of paramountcy says that, if validly enacted federal and provincial statutes conflict, the federal law prevails.
E) A law enacted by one level of government may not incidentally regulate a matter that is under a head of power allocated to another level of government.

Question 22

At present, one flaw with the Agreement on Internal Trade is that

A) trade between Canada's provinces remains limited and there are few opportunities to challenge existing provincial practices.
B) its dispute settlement mechanism can only be invoked by governments.
C) decisions under its dispute settlement mechanism are not legally binding.
D) it has not been adhered to by all the provinces.
E) coverage is limited to a few areas, but many more must be negotiated.

Question 23

There are several types of offences under the Competition Act. Which of the following statements is TRUE?

A) The Competition Act does not allow for private actions.
B) It sometimes is possible to appeal a decision of the Competition Tribunal to the Federal Court.
C) Dual matters involve the commission of more than one offence by a single offender.
D) A reviewable matter is a type of offence that can only trigger an investigation by the Competition Bureau, and cannot result in any relief.
E) Every type of offence can lead to an award of damages.

Question 24

Lincoln is thinking of building a new warehouse for his shipping company near the airport in St. John's, Newfoundland, on a site that he suspects was previously the location of a paint factory. Lincoln believes this because a preliminary survey of the property revealed moderate concentrations of lead and other chemicals in the soil as well as a number of old paint bottles and jars. The site is attractively located close to the main terminal and Lincoln would like to buy the property and build. However, he is worried about potential environmental liability. His best bet is probably

A) to have a full environmental survey and impact study done, and then if the risk of liability is small, buy the property.
B) buy the property and clean it up.
C) to have a full environmental survey and impact study done, and to seek comfort letters from federal and provincial environmental authorities before buying the property.
D) to buy the property, and then locate and sue the owners of the paint company.
E) to complain to federal and provincial authorities.

Question 25

Monopoly is related to abuse of dominant position

A) because abuse of dominant position occurs when conduct results in even a minor reduction in competition.
B) because both are subject to the defence of due diligence.
C) because monopolization requires conspiracy and an intent to monopolize.
D) because both are considered criminal matters under the Competition Act and are referred to the Attorney General for prosecution.
E) because for an abuse of dominance to occur, a firm must have substantial control over a class or species of business and monopoly is one example of such control.

Question 26

Edgardo runs a fish store in Toronto's Kensington Market that purchases its products from a wholesaler and sells to the public. Edgardo knows the market well and offers low prices. Consequently, his store is always full of clients. Lately, he has been having difficulty getting wild, as opposed to farmed, salmon. His wholesaler tells him that he will not sell to him because his low prices are making other retailers look bad. In other words Edgardo is too much of a competitive threat to the industry. Under the circumstances it is MOST likely that Edgardo could complain to the Competition Bureau about

A) the criminal offence of price maintenance.
B) the reviewable practice of price maintenance because the wholesaler is trying to influence upward the price at which Edgardo sells his fish but only if the actions of the wholesaler are having an adverse effect on competition in the market.
C) the reviewable practice of refusal to deal, whereby other fish retailers are trying to match his prices so that they can drive him out of the market.
D) a criminal conspiracy to drive him out of the market.
E) the reviewable practice of market restriction

Question 27

The federal government has responsibility for

A) aviation and telecommunications.
B) banking, inter- provincial commerce, and coinage.
C) inter- provincial transport.
D) criminal law.
E) all of the above.

Question 28

Mergers that are most likely to reduce competition are?

A) mergers between suppliers and their customers.
B) vertical mergers.
C) diversification mergers.
D) horizontal mergers.
E) mergers between firms of the same size.

Question 29

Common law approaches to environmental protection are often inappropriate because

A) they do not protect the rights of property owners.
B) they are prohibited.
C) they are permitted only with prior authorization from the provincial or federal governments.
D) they require court action, they do not account for damage to public property, and it is often difficult to prove causation.
E) proving foreseeability is frequently problematic.

Question 30

Under the Competition Act, reference to "dual" category matters is taken to mean

A) purely regulatory offences.
B) matters involving a combination of either criminal or civil offences and an alleged violation of the Canadian Charter of Rights and Freedoms.
C) matters that may be pursued criminally or civilly at the discretion of the Commissioner of Competition.
D) matters that are civil in nature, but are subject to criminal penalties.
E) matters that are criminal in nature, but are subject to civil penalties.

Question 31

Horst Koehler is a German citizen who, like many Germans recently, has purchased cottage property in the Annapolis Valley of central Nova Scotia. He is keen to enjoy the unspoiled nature of the environment far from noisy, crowded Europe. The property he purchases features some streams which run onto his land from adjacent properties that are farms. Unfortunately, after the purchase Horst finds that the streams are heavily contaminated by pesticide usage at nearby farms and by progressive pollution of the water table by a hog- farming operation. He may

A) sue under federal environmental law.
B) not sue in nuisance because he does not drink the water from the streams.
C) not sue in tort because it is not likely that pesticide or other agricultural usage on the adjacent properties would lower the value of his property.
D) sue in nuisance.
E) not sue in tort because environmental damage may only be pursued under environmental legislation.

Question 32

Under Canadian competition law, a private person can complain to the Competition Tribunal regarding conduct of a business that violates the Competition Act

A) only when the conduct is a criminal offence.
B) any time the conduct is a criminal offence or a reviewable matter.
C) any time the conduct is a criminal offence, a reviewable matter or a dual category matter.
D) in no circumstances.
E) any time the conduct is a criminal offence, a violation of an order of the Competition Tribunal or constitutes certain reviewable practices.

Question 33

The Ether Store Inc is trying to break into the potentially lucrative world of online retailing. Given the competitive nature of the field, it believes that the key to success is advertising and promotion. It therefore has asked you to review and assess several proposals that it has developed. Which of the following statements is TRUE?

A) Misleading advertising is not committed under the Competition Act unless the court is satisfied that at least one customer was actually misled.
B) Deceptive telemarketing is an offence.
C) Although there have been calls for reform, the Competition Act does not yet regulate telemarketing.
D) A due diligence defence is never available in connection with advertising offences.
E) Because it is considered relatively less harmful than other sorts of offences, misleading advertising is always treated as a civilly reviewable matter under the Competition Act

Question 34

Government regulation of business involves recognition of the fact that

A) federal laws are always preferable to provincial regulation.
B) cost- effectiveness is the sole goal of regulation.
C) government power to regulate is unlimited.
D) regulation must take into account the burden of regulation on the businesses that must comply.
E) unlimited competition is necessary for markets to function effectively.

Question 35

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?

A) the criminal offence of bid- rigging.
B) the reviewable practice of price maintenance.
C) the criminal offence of misleading advertising.
D) the reviewable practice of abuse of dominance.
E) the criminal offence of conspiring to reduce competition.

Question 36

Low- Valu Inc owns and operates a number of discount mega- stores. Because of increasing competition, it has engaged in a number of improper business practices. It was recently accused of a "bait and switch" practice in one of its stores. Which of the following statements is TRUE?

A) "Bait and switch" is expressly prohibited by the Sale of Goods Act.
B) The alleged practice occurs when a store places two price tags on one item, and then charges the customer the higher amount.
C) The alleged practice is a criminal matter under the Competition Act.
D) The phrase "bait and switch" refers to the fact that the alleged offence originally arose in connection with general stores in the nineteenth century, who sold, among other things, hunting supplies.
E) Low- Valu engaged in a bait and switch if it advertised a product at a very low price but told customers who came to its stores to buy it that none of the product was available but a higher priced alternative was available instead.

Question 37

A comfort or no- action letter

A) is a document, usually illegal or unenforceable, that is written by a consumer and that assures a retailer or manufacturer that a product that caused an injury or loss will not be the subject of a claim in tort or contract.
B) is a formal document written by one level of government to another that provides an assurance that the constitutional validity of a piece of legislation will not be questioned on the grounds of ultra vires.
C) is a document, written by a government official, assuring two or more businesses that their proposed merger is lawful.
D) is a document that is written by a government official and that assures the parties to a proposed sale of land that the land will not be the subject of environmental litigation.
E) none of the above.

Question 38

Lucinda is the sole shareholder and president of NailCo, a corporation that owns a chain of nail and pedicure salons in the lower mainland of British Columbia. She visits most of NailCo's outlets weekly. She comes to you, her lawyer, to confess that over the past few months she has witnessed several of NailCo's employees dump nail polish down the drain on a number of occasions. Lucinda is now concerned that she and NailCo may be liable for the environmental consequences of these actions even though she personally did nothing. You would most likely advise Lucinda that

A) she will have to comply with provincial legislation in future.
B) the corporation may be held liable for the environmental damage caused by its agents and employees in the course of their duties and that the corporation only has a due diligence defence if someone, like Lucinda, who is a directing mind and will of the corporation took reasonable steps to avoid the offence.
C) the company is not vicariously liable for the environmental damage caused by its agents and employees.
D) Lucinda should sue her employees.
E) she should do nothing. Lucinda is not answerable for the independent actions of her staff.

Question 39

Primex is a discount broker with offices across Canada. In recent years it has grabbed more than 90 percent of the market for discount brokerage services through a number of innovative practices. It's on- line services are second to none. The company also has a policy of filling orders almost instantly. Other discount brokers are irked by what they see as Primex's abuse of its dominant position. They are worried Primex is grabbing more and more market share by taking advantage of its presence in every significant town across Canada. If a complaint was made that Primex was engaged in an abuse of dominance, Primex could potentially rely on

A) no defences, and Primex's behaviour would be considered an abuse of dominant position.
B) the defence that it does not control the market because it does not have 100 percent of the discount brokerage business.
C) the defence of superior competitive performance.
D) the defence of vicarious liability.
E) the defence of due diligence.

Question 40

The threshold for pre- merger notification in Canada for certain transactions is met if

A) the value of the target firm or the assets being acquired exceeds $40 million or where the combined revenues of the entities involved exceed $400 million per year.
B) the entities involved are worth more than $100 million or their combined revenues exceed $400 million per year.
C) the entities involved are engaged in bid- rigging and their combined revenues exceed $400 million per year.
D) there is an abuse of dominant position and the combined revenues of the entities involved exceed $400 million per year.
E) the value of the target firm or the assets being acquired exceeds $70 million and the combined assets or revenues of the entities involved and their affiliates exceed $400 million per year.

Question 41

Who regulates the environment in Canada?

Question 42

Federal legislation always prevails over provincial legislation.

Question 43

H2O Canada Inc is a Burnaby- based water company that seeks to export water from Canada in bottled form. To do so it will most likely have to comply only with federal legislation since the water is for export alone.

Question 44

Individuals and businesses can bring action against discriminatory government practices under the
Agreement on Internal Trade, but the results of this process are non- binding.

Question 45

Only the federal government is entitled to impose income taxes.

Question 46

Tesco Inc is a large British supermarket chain which is considering entering the Canadian grocery market. The industry is characterized by high- quality service, entrenched competitors, and razor- thin profit margins. Tesco knows that in order to successfully compete it will have to offer a level of service superior to that of existing grocery retailers. It will also have to differentiate its services to a considerable degree in order to distinguish the company in the Canadian consumers' mind. From previous experience in other markets Tesco knows that it will have a maximum of two years to begin making a profit. Otherwise, its investment will be lost. Tesco management notices that Sunday closing legislation is still in effect in the Maritime provinces and, by opening a flagship store in Halifax, wonders whether it can use the Canadian Charter of Rights and Freedoms to contest this measure, perhaps gain publicity, and have an extra day to make money each week. A successful challenge could be the difference between profit and loss. It plans to argue that Sunday closing is discriminatory to its
non- Christian workers, many of whom would prefer to work on Sundays and have other days off for rest and worship. Discuss the chances of its success.

Question 47

The Charter protects property rights.

Question 48

In Canadian law, an abuse of dominant position requires a firm to have a monopoly in some class or species of business.

Question 49

Arturo Inc recently began to manufacture canned curry sauces at a factory in Toronto to compete against some of the more expensive imported curry sauces that Canadian consumers traditionally buy. However, Arturo Inc's products do not contain ingredients on their labels and do not state a "best before" date. As a result, Arturo Inc may be in violation of the federal Food and Drug Act.

Question 50

Zoe¨ receives a set of knives in the mail from Grandsoire´e Inc. She did not order the knives and has never heard of Grandsoire´e. Zoe¨ is obliged to pay for the knives.

Question 51

Daphne runs a foodservice company, Le Monde Cafe´, and believes that key suppliers are refusing to deal with her on critical items she needs for the business. Assuming that the requirements for the reviewable practice of refusal to deal under the Competition Act are satisfied, she can obtain a
cease- and- desist order against the suppliers through a private action before the Competition Tribunal with leave of the Tribunal.

Question 52

The Canadian Radio- television and Telecommunications Commission (CRTC) revoked the licence of CBA Broadcasting based on allegations from a competitor that CBA had breached the terms of its licence. CBA received no notice of the hearing on this allegation and had no opportunity to respond to the allegations. CBA can challenge the CRTC decision in the Federal Court.

Question 53

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.

Question 54

Xorox Inc is a pharmaceutical manufacturer in Sillery, Quebec. Its management learns that the federal government is granting low- interest loans to pharmaceutical companies that establish operations in the Maritime provinces. Xorox mounts a legal challenge to the loan program claiming that it violates Xorox's equality rights under s 15(1) of the Canadian Charter of Rights and Freedoms. Xorox's claim will be successful in court.

Question 55

Silverdome Plating Co runs a silver plating operation in Sarnia, Ontario. An employee of the company accidentally spills several hundred litres of plating fluid containing high concentrations of dangerous chemicals into the St Clair River. If the provincial authorities decide to prosecute this act as a strict liability offence, Silverdome will be able to invoke the defence of due diligence.

Question 56

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.

Question 57

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.

Question 58

Joe Fortino wants to open a large nightclub on the waterfront in Windsor, Ontario which he calls The Evil Eye. It is supposed to have a large terraced area for drinks, beach volleyball in the summer, a skating rink in winter, and an indoor stage that will feature the hottest bands around. The club opens and is immediately successful, but two weeks later Joe learns that Windsor City Council has recently passed a bylaw prohibiting the operation of clubs on the waterfront. The Council is allegedly concerned about noise, but Joe suspects that some other club owners are jealous of his success and "leaned" on Council to close The Evil Eye down. Joe comes to you, his lawyer, claiming that the bylaw is a deprivation of private property under the Canadian Charter of Rights and Freedoms and that its operation impinges on his and the club's "freedom of association." Will Joe prevail?

Question 59

Why are mergers reviewed by the Competition Bureau?

Question 60

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.

Question 61

One of the key elements of consumer protection under provincial laws is mandatory disclosure of contractual terms. Describe the main features of provincial laws requiring disclosure to consumers.

Question 62

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?

Question 63

Both the federal and provincial governments have powers over business regulation in Canada. Explain how conflicts between these powers are resolved and which level of government takes precedence.

Question 64

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?

Question 65

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?

Question 66

Seva Inc is a pharmaceutical manufacturer in Montreal which is about to launch a new cancer- fighting drug, Floror. The drug works by inhibiting the growth of new cells at specific body sites. Clinical trials and careful economic analysis have convinced Seva that Floror will be a hit in the therapeutic market. Nevertheless, Seva officials learn that two other rival pharmaceutical makers have their own cancer inhibitors in the works. Seva officials worry that if these drugs hit the market at the same time as Floror they will eat into Seva profits. After some deliberation over the matter, Seva's Chief Financial Officer decides to open secret discussions with the two rivals that confirm his fears and prompt him to enter into a market- sharing arrangement in which the competitors will delay their products' entry into the market for the first five years of Floror's life in the Canadian market. In exchange, Seva will share some of its profits with its competitors, which they can use to further refine and improve their drugs. In so doing, would Seva's CFO have done anything wrong?

Question 67

In the context of environmental offences, what has to be established for a corporation to rely on a "due diligence" defence?

Question 68

For years Mandy has owned a chain of six delicatessens in and around Calgary. She is very proud of the products her stores carry, but she has always wanted to get Pantry Pride Meats, Snacks, and Fruits as part of her line. This has been difficult because, as she learned early on, Pantry Pride products are only sold through authorized dealers who follow Pantry Pride's "pricing guidelines." These are meant to reinforce consumer perceptions of Pantry Pride's superiority over other brands. Mandy wonders whether there is anything under the Competition Act that would help her get Pantry Pride items?

Question 69

Copyright includes the right to make copies of some particular form of expression, usually in the form of written work (ie a book or article), musical recording, film, or software program. In Canada, copyright is expressly protected by laws and users must pay royalties for use of a copyrighted work. Because paying for individual use of copyrighted works would in many instances be cumbersome and inefficient, copyright often is entrusted to collective- administration societies in Canada that look after the collection and payment of revenues. Thus, every time you listen to a song on the radio a small tariff is paid by the radio station, which ultimately makes its way back to the artist through the collective administration society. A federal Copyright Board, located in Ottawa, is entrusted with the task of setting the rates to be paid for the use of copyrighted work.
The Society of Composers, Authors and Music Publishers of Canada (SOCAN) is a collective rights administration society. It administers performing rights in musical works on behalf of Canadian composers, authors, and publishers as well as affiliated societies representing foreign composers, authors, and publishers. If it objects to a copyright rate set by the Copyright Board. How and where can it seek to have this decision overturned?

Question 70

Zetra Inc is a packaging company that manufacturers a wide range of bins, boxes, and coverage materials for use in industry. It has developed a distinct box- style shape for beverages that permits it to save weight and space over traditional packaging. Walking through a wilderness area near London, Ontario, one day an Ontario provincial environmental officer comes upon a stash of used Zetra beverage packages which he immediately recognizes because of their distinctive shape. He wants to charge Zetra with pollution or improper waste disposal under s 14 of the Ontario Environmental Protection Act. Would he be successful in securing a conviction?