Telecommunications Services

In April 2005, a company marketing third-party telecommunications services sought a written opinion on whether its proposed multi-level marketing plan would raise concerns under the Competition Act. Subsequent to the Bureau's negative opinion issued in May 2005, the company revised its marketing plan and sought a second written opinion. In August 2005, the Bureau provided a positive opinion on the grounds that the revised plan appeared to comply with the requirements of sections 55 and 55.1 of the Act. The following revisions were reflected in the proposed marketing plan:

• the company agreed to include a disclosure of the earnings of typical participants in the plan at relevant points in the plan in order to avoid potential problems under section 55(2) of the Act ;
• participants were required, as a condition of becoming active members, to make a minimum of three sales (including one to a customer other than themselves and one to a customer not in the same domicile);
• movement in the plan was to be based on the personal sales volumes of participants and those of other participants recruited into the plan;
• participants in the plan would earn bonuses based on their sales volume; and
• the company agreed to eliminate direct monetary payments to participants who recruited and trained new participants. Trainers would be remunerated based on a commission tied to the sales made by the trainee within 90 days of the conclusion of any training session.