Deck 32: Government Regulation of Business

Question 1

One way to protect consumers is through the licensing, for control purposes, of certain types of businesses. Which of the following require licensing for the protection of consumers?

A) restaurants
B) collection agencies
C) door- to- door sellers
D) travel agencies
E) all of the above

Answer 1

E

Question 2

The municipality put up under separate bids the construction of five rural bridges. In advance, three dominant bridge contractors met and decided on how they would each bid on the contracts. Are they in violation of the federal Competitions Act?

A) Yes, since jurisdiction on local bidding is left to the municipality.
B) Yes, since bid- rigging is specifically mentioned in the Act.
C) No, because a damaged third party would need to bring the action.
D) No, since this does not constitute the lessening of competition.
E) No, since bidding is not mentioned in the Act.

Answer 2

B

Question 3

The War Veterans League sent Martha five sheets of labels with her name and address on them. The enclosure also had a request for a $5.00 payment. If Martha is going to use the self- addressed stickers, is she legally required to send in the payment?

A) No, since legislation prohibits the sending of unsolicited goods.
B) No, since this would be a gratuitous donation anyway.
C) No, since consumer protection statutes expressly state that use of goods does not amount to an acceptance of a seller's offer.
D) Yes, because there is a moral obligation when benefits are obtained.
E) Yes, since use gives the consideration for a binding agreement.

Answer 3

C

Question 4

Which statement is TRUE regarding the Consumer Packaging and Labelling Act?

A) The Act requires the trade names of any textile fabric used.
B) The Act requires the quantity to be given in both English and metric systems.
C) The Act requires the identifying of products by their generic name.
D) The Act requires all products to be in standard package sizes.
E) The Act governs the labelling of industrial as well as consumer products.

Question 5

The four companies that sell bulk- rate diesel to farmers in the Blaine area have consistently moved together (up or down) with the same prices. It has been suggested that they have conspired together to keep prices the same. Might they be prosecuted under the Competitions Act?

A) Yes, since this is a good example of conscious parallelism.
B) No, because their intent must be proved.
C) Yes, since there is prima facia evidence of a conspiracy.
D) Yes, because an agreement can be inferred from the actual behaviour.
E) No, because the conspiracy cannot be implied.

Question 6

The Constitution has given Parliament the jurisdiction over

A) those matters strictly within the province.
B) trade and commerce.
C) property and civil rights.
D) trucking and road transportation.
E) stock exchanges and securities transactions.

Question 7

Since this characteristic is so essential to an efficient market economy, governments intervene in order to preserve it. What is this characteristic?

A) business cooperation with government
B) business opposition to regulation
C) government support of business endeavor
D) competition among businesses
E) the profit motivation

Question 8

When it comes to selling practices, is there federal or provincial jurisdiction?

A) The separation is defined in the Constitution.
B) There is an overlap of federal and provincial jurisdiction, their powers are concurrent.
C) The division is clearly defined by the applicable statutes.
D) This question is to be decided by the Supreme Court.
E) The jurisdiction for selling practices is entirely provincial.

Question 9

Under contract law, a provision in the contract for restricting trade will be struck down by the court if it

A) is a business partner competing with a former associate.
B) prevents a former employee from going into business for himself in competition with his previous employer.
C) has no consequence.
D) reasonably protects the new owner of a business against the former owner.
E) unreasonably restricts competition and is contrary to the public interest.

Question 10

The need for the government to protect consumers from the harshness of the marketplace, is a modern development. The old common law remedies are now inadequate. Which of the following developments contributed to this need?

A) Use of credit by consumers has become a norm.
B) Products are so complex the retailer can no longer detect defects, let alone remedy them.
C) Large enterprises have virtually ended any equality of bargaining power between buyer and seller.
D) Products are now shipped in sealed packages, with little opportunity to assess the quality or the suitability for the intended use.
E) all of the above

Question 11

Ali needs to take out a new car loan. Regarding the loan costs, Ali is able to compare the dealer's suggested financing plan with that of his Bank's by virtue of the fact that

A) all sellers must disclose the financing details to any customer.
B) the Canadian Banking Act regulates sources of consumer loans.
C) each is required to supply a detailed statement showing the true annual interest and each associated cost of the proposed loan.
D) disclosure requirements have dated back to the 1960's.
E) each lender must conform to federal lending guidelines.

Question 12

In the U.S., AT&T has made a practice of offering residential customers a one low- rate long distance telephone service, but only to those that ask for it or to those that have switched or threaten to switch long- distance carriers. Under the Canadian Competition Act this would be called

A) predatory pricing.
B) resale price maintenance.
C) discriminatory pricing.
D) regional price discrimination.
E) none of the above

Question 13

Regarding government regulations, a distinction is sometimes made between direct regulation and social regulation. Which of the following would be a social regulation?

A) standards of safety at amusement parks
B) production levels of utilities
C) pricing of brokerage services
D) import quotas on textiles
E) rate of return on deposits

Question 14

Each of the provinces as well as the federal government has legislation addressing itself to misleading advertising. The name of the most dominant of the federal statutes is the

A) federal Consumer Protection Bill.
B) Competition Act.
C) Trade Practices Act.
D) Misleading Advertising Act.
E) Trade and Commerce Act.

Question 15

A cooling- off period in door- to- door selling

A) only applies to sales over $100.
B) departs from an established common law rule.
C) applies to goods but not services.
D) has the same provisions throughout Canada.
E) is for a period of 48 hours.

Question 16

Which of the following is NOT one of the five classes of consumer protection legislation?

A) regulation of misleading advertising
B) regulation of quality standards affecting labelling, safety, or performance
C) disclosure of the effective cost of credit
D) protection of the public through licensing and bonding requirements
E) inspection of "books of record" of institutions that deal with the public

Question 17

An administrative act or decision may be challenged on a number of grounds. Which of the following is NOT grounds for a challenge?

A) procedural unfairness
B) constitutionality
C) the decision or act was done arbitrarily
D) procedural irregularity
E) lack of authority

Question 18

With reference to the Competition Act, which of the following is most likely to lessen market competition "unduly"?

A) imposing limits or quotas on production
B) agreeing that each firm produce a different type of product
C) sharing markets on a territorial bases
D) practicing conscious parallelism
E) conspiring to set prices

Question 19

A year ago, Lawrence purchased $6500 worth of furniture on time. In April he failed to make his payment and suddenly discovered that the entire balance of the loan was due. Unless there is a provincial stature to limit the use of this kind of term, Lawrence is caught by

A) a self- help repossession remedy.
B) a negotiable instrument.
C) a standard form exemption clause.
D) a conditional sales contract.
E) an acceleration clause.

Question 20

Carla owns Nifftee Dry Cleaners. If she is guilty of misleading advertising, who is the most likely to report her?

A) a class action law suit
B) the Services Act of the province of jurisdiction
C) provisions of the Competition Act
D) a disgruntled consumer using provincial legislation
E) a government agency with the power to prohibit such advertising

Question 21

On what basis can the courts challenge the legality of administrative acts and decisions?

Question 22

Which of the following statements is TRUE concerning environmental protection?

A) So far, only a few of the provinces have general environment protection laws.
B) This subject- matter has concurrent jurisdiction between federal, provincial, and municipal governments.
C) Major environmental disasters have failed to make the public aware of the dangers associated with man's interaction with the environment.
D) The most important legislation is the Unified Canadian Environmental Protection Act which has been adopted by each province.
E) Common law has many applications to pollution problems.

Question 23

Regarding quality and suitability, what protection do consumers have under the Sale of Goods Act?

Question 24

Jack owns a shoe store in a mall. A few months later, another shoe store opens in the mall. A month later, Jack notices that his sales figures have dropped considerably. He conducts an investigation and determines that the other store has been selling his shoes at unreasonably low prices. This conduct is called discriminatory pricing.

Question 25

The Canadian Constitution provides for a division of powers between federal and municipal governments.

Question 26

Discriminatory pricing is an example of a conspiracy.

Question 27

Price fixing is an example of a conspiracy.

Question 28

Resale price maintenance is

A) where loss leaders and bait- and- switch tactics are permitted.
B) only defended with the argument that adequate service needs to be provided.
C) an offence where the supplier has no defences.
D) sanctioned by the Competition Act.
E) where the supplier tries to force the retailer to sell at a higher price.

Question 29

Jack owns a shoe store in a mall. A few months later, another shoe store opens in the mall. A month later, Jack notices that his sales figures have dropped considerably. He conducts an investigation and determines that the other store has been selling his shoes at unreasonably low prices. This conduct is called bid- rigging.

Question 30

Bid rigging is an example of a conspiracy.

Question 31

Tied- selling is an example of monopolizing.

Question 32

For the merger of two large competing companies to be approved, there must

A) be no evidence of foreign competition in the market.
B) be good economic health in the target firm.
C) be barriers to prevent new competitors from entering the market.
D) still be effective competition after the merger.
E) have been a pre- notification to Parliament.

Question 33

Concurrency as it relates to consumer protection refers to the idea of shared powers between federal and provincial governments concerning consumer protection.

Question 34

Parallel pricing is an example of monopolizing.

Question 35

Explain the concept of federal paramountcy.

Question 36

In the event of a conflict between federal and provincial laws regarding consumer protection, municipal law applies.

Question 37

Paul is a licensed plumber who provides residential plumbing service. He advertises in the yellow pages and the classified section of the local newspaper. It is claimed that his advertising is deceptive. Is he subject to the provisions of the federal Competition Act? Explain.

Question 38

Why is it essential in our free market economy to have competition?

Question 39

Which of the following is not involved in an environmental impact assessment review procedure?

A) Public hearings are held in the communities likely to be affected.
B) The developer submits an environmental assessment of the proposed project.
C) The project is subject to a public review by an independent review board.
D) A court agendum order is obtained.
E) The review board submits its findings to the Minister responsible, or to the whole Cabinet.

Question 40

To enforce environmental protection laws is no small or easy matter. The enforcement usually involves

A) the common law tort of nuisance.
B) the responsibility of corporations since they are the major polluters.
C) requiring polluters to refrain from harmful activities, to remedy existing situations, and to pay for the costs of clean- up.
D) where public authorities are over zealous with a wide variety of enforcement mechanisms which they apply abusively.
E) primarily a private matter but where government agencies are empowered to enforce.

Question 41

How does the Food and Drug Act protect consumers?

Question 42

In door- to- door selling, most provinces have imposed a cooling- off period. Define what is meant and explain why these laws are needed. Also, explain why these laws are anti- contract and how they might be looked at as "big brother watching over us"?

Question 43

What does it mean when distribution practices such as exclusive dealing, tied selling, and market restriction are said to be "reviewable"?

Question 44

In relation to price fixing, what is meant by conscious parallelism?

Question 45

On what basis can a merger be approved, even though it has been shown that it will substantially lessen competition?

Question 46

Why is it important that a consumer, who has financed a purchase, have the same rights against the finance company as against the merchant who sold the goods? What law gives the consumer this assurance?

Question 47

Regarding deceptive advertising, which is better: to give government agencies the power to prohibit such advertising and impose fines against sellers, or to give consumers an arsenal of remedies for stopping such advertising?

Question 48

Nearly all businesses need a local business license just to open their doors to the public. However, there is an enhanced category of business license that is meant to help regulate their respective industry. Why is it necessary to have this separate category of business license and give an example of an industry where such licenses are required?

Question 49

What are some of the modern developments that have made it necessary for the government to protect consumers?

Question 50

Why would certain groups of professionals be exempt from the anti- competitive sections of the Competition Act?