Adult Products Distributor

A company that distributes and sells adult products sought an initial advisory opinion in May 2004 on whether a proposed multi-level marketing plan would raise concerns under the Competition Act.

Following an initial negative opinion by the Bureau, the company made certain changes to their marketing plan and then sought a second opinion in August 2004.

The company made the following changes to their marketing plan:

• A bonus paid to participants who recruited and trained new participants was eliminated from the plan. It was the Bureau's opinion that such a bonus could raise concerns as a disguised payment for recruitment of new participants under paragraph 55.1(1)(a) of the Act.
• The company agreed to include a disclosure of the earnings of typical participants in the plan and to include this disclosure at relevant points in the plan's materials in order to avoid potential problems under paragraph 55(2).

The Competition Bureau provided a subsequent and positive opinion on November 15, 2004.

(3092760)