Page 19 - ILCO March 2016 Newsletter
P. 19
CANADA’S ANTI-SPAM LEGISLATION:
CONSIDERING CASL IN BUSINESS TRANSACTIONS
By Anne-Marie Naud, Kirsten Thompson and Nicolas Bertrand, McCarthy Tétrault LLP
Since coming into force on July 1st, 2014, Canada’s Anti-Spam While CASL provides for the existing business relationship to be
Legislation (“CASL”) has created new concerns and risks that must be transferred following the sale of a business to a purchaser, it does not
addressed in business transactions. This post reviews those concerns in specifically state the consents that flow from that relationship and held
the context of asset acquisitions, specifically the risks associated with by the business may be transferred as well. Therefore, a significant
the transfer of CASL consents for the purposes of sending marketing CASL issue to be addressed when dealing in an asset acquisition
messages to business customers. Given the volume of marketing and involves obtaining and maintaining the consents of customers to
customer contact conducted by retailers and consumer products receiving CEMs on this basis. When purchasing private information
distributors, this may be of particular concern in acquisitions of used to distribute CEMs, the purchaser must ensure that the consents
consumer facing businesses or businesses that manufacture consumer being purchased from the seller are validly held and transferrable under
products. A retailer or distributor that fails to address these issues at the CASL (and privacy laws).
time it obtains CASL consents, or prior to the transaction, could find
a significant portion of the transaction value eroded by its inability to Industry Canada’s Regulatory Impact Analysis Statement (“RIAS”)
transfer customer contact lists. states that (emphasis added) “express consents will transfer upon
the sale of a business, should the contract of sale include a provision
COMMERCIAL ELECTRONIC MESSAGES transferring these as a business asset.” It must be noted, however, that
the RIAS only represents Industry Canada’s interpretation of CASL
CASL deals primarily with “commercial electronic messages” or and is not the law. In addition, the RIAS only provides guidance on
“CEMs”.[1] A CEM is an electronic message that has, as one of its the transfer of express consents; the direct transfer of implied consents
purposes, the encouragement of participation in a “commercial (such as those arising from an existing business relationship) is not
activity”. This encompasses e-mails sent to the electronic addresses addressed.
of customers for promotions, contests and advertisements, as well as
instant message alerts or some types of social media messages used to The Canadian Radio-television and Telecommunications Commission’s
market to and communicate with existing and/or potential customers. (“CRTC”) Guidance on Implied Consent (the “Guidance”) adds a
Importantly, the commercial aspect does not have to be the sole, or further layer of interpretation (emphasis added):
even dominant, purpose of the message – the context matters and
links, footers and logos may be sufficient to turn an otherwise non- “When a business is sold, the purchaser can rely upon express consents
commercial message into a commercial one. obtained by the seller if the contract of sale of the business includes a
provision transferring the list of email addresses for which consents
Many businesses send CEMs using customer distribution lists. The have been obtained as part of all its assets. Therefore, the new owner
transfer of these valuable marketing tools in the context of an asset will be able to continue sending CEMs to the recipients that gave
acquisition presents certain risks to purchasers, as it is subject to strict express consent, as long as the other requirements of CASL are met.
consent requirements, both privacy consent requirements (i.e. to CASL also specifically indicates, at section 10(12) that, with the sale of
collect, use and disclose personal information such as an email address) a business, any existing business relationships (EBR) are considered to
and CASL consents (i.e. to send CEMs to the email address that has now be with the new owner of the business.”
been collected) . If customer distribution lists, or any form of personal
information used to send CEMs, are transferred in violation of CASL The foregoing, however, still does not explicitly address the transfer
or privacy legislation, a purchaser could expose itself to significant of implied consents.
penalties after closing.
An example given by the CRTC in the Guidance seems to suggest
TRANSFERRING CONSENTS implied consents do not transfer per se, but rather the exemption from
consent created by a valid existing business relationship may be relied
Pursuant to CASL, all businesses are required to obtain the consent upon by an acquiring business. However, the onus is on the purchaser
of recipients in order to send them CEMs. Consents may be express to ensure such underlying business relationships are, in fact, valid.
(e.g. check here to receive CEMs) or implied on the basis of there
being a qualifying relationship. One of these types of relationships An important consideration here will also be which entity gets the
which grounds implied consent is an “existing business relationship”. benefit of the existing business relationship – the Guidance states that
An existing business relationship arises, for instance, where a person “with the sale of a business, any existing business relationships (EBR)
has purchased a product or service from the sender within two are considered to now be with the new owner of the business”. In other
preceding years of receiving the CEM, or has made an inquiry to the words, Guidance suggests that such relationships are not divisible,
business within the preceding six months, and in either case has not creating an all-or-none situation.
unsubscribed from receiving CEMs.
VALIDITY OF CONSENTS:
CASL further stipulates that if a business has an “existing business KEEPING TRACK OF THEM ALL
relationship” with another person, and the business is sold, the
purchaser of said business is considered to have assumed the same Assuming that consents to receive CEMs are transferable, issues may
“existing business relationship”, allowing the purchaser to continue arise with respect to the way that such consents are documented. A
sending CEMs to individuals until they expressly opt-out or the purchaser should conduct proper enquiries to ensure that the seller has
relationship reaches the time limit specified in CASL. kept detailed records of how, when, and for what purpose the
LAW CLERKS’ REVIEW, MARCH 2016 19
CONSIDERING CASL IN BUSINESS TRANSACTIONS
By Anne-Marie Naud, Kirsten Thompson and Nicolas Bertrand, McCarthy Tétrault LLP
Since coming into force on July 1st, 2014, Canada’s Anti-Spam While CASL provides for the existing business relationship to be
Legislation (“CASL”) has created new concerns and risks that must be transferred following the sale of a business to a purchaser, it does not
addressed in business transactions. This post reviews those concerns in specifically state the consents that flow from that relationship and held
the context of asset acquisitions, specifically the risks associated with by the business may be transferred as well. Therefore, a significant
the transfer of CASL consents for the purposes of sending marketing CASL issue to be addressed when dealing in an asset acquisition
messages to business customers. Given the volume of marketing and involves obtaining and maintaining the consents of customers to
customer contact conducted by retailers and consumer products receiving CEMs on this basis. When purchasing private information
distributors, this may be of particular concern in acquisitions of used to distribute CEMs, the purchaser must ensure that the consents
consumer facing businesses or businesses that manufacture consumer being purchased from the seller are validly held and transferrable under
products. A retailer or distributor that fails to address these issues at the CASL (and privacy laws).
time it obtains CASL consents, or prior to the transaction, could find
a significant portion of the transaction value eroded by its inability to Industry Canada’s Regulatory Impact Analysis Statement (“RIAS”)
transfer customer contact lists. states that (emphasis added) “express consents will transfer upon
the sale of a business, should the contract of sale include a provision
COMMERCIAL ELECTRONIC MESSAGES transferring these as a business asset.” It must be noted, however, that
the RIAS only represents Industry Canada’s interpretation of CASL
CASL deals primarily with “commercial electronic messages” or and is not the law. In addition, the RIAS only provides guidance on
“CEMs”.[1] A CEM is an electronic message that has, as one of its the transfer of express consents; the direct transfer of implied consents
purposes, the encouragement of participation in a “commercial (such as those arising from an existing business relationship) is not
activity”. This encompasses e-mails sent to the electronic addresses addressed.
of customers for promotions, contests and advertisements, as well as
instant message alerts or some types of social media messages used to The Canadian Radio-television and Telecommunications Commission’s
market to and communicate with existing and/or potential customers. (“CRTC”) Guidance on Implied Consent (the “Guidance”) adds a
Importantly, the commercial aspect does not have to be the sole, or further layer of interpretation (emphasis added):
even dominant, purpose of the message – the context matters and
links, footers and logos may be sufficient to turn an otherwise non- “When a business is sold, the purchaser can rely upon express consents
commercial message into a commercial one. obtained by the seller if the contract of sale of the business includes a
provision transferring the list of email addresses for which consents
Many businesses send CEMs using customer distribution lists. The have been obtained as part of all its assets. Therefore, the new owner
transfer of these valuable marketing tools in the context of an asset will be able to continue sending CEMs to the recipients that gave
acquisition presents certain risks to purchasers, as it is subject to strict express consent, as long as the other requirements of CASL are met.
consent requirements, both privacy consent requirements (i.e. to CASL also specifically indicates, at section 10(12) that, with the sale of
collect, use and disclose personal information such as an email address) a business, any existing business relationships (EBR) are considered to
and CASL consents (i.e. to send CEMs to the email address that has now be with the new owner of the business.”
been collected) . If customer distribution lists, or any form of personal
information used to send CEMs, are transferred in violation of CASL The foregoing, however, still does not explicitly address the transfer
or privacy legislation, a purchaser could expose itself to significant of implied consents.
penalties after closing.
An example given by the CRTC in the Guidance seems to suggest
TRANSFERRING CONSENTS implied consents do not transfer per se, but rather the exemption from
consent created by a valid existing business relationship may be relied
Pursuant to CASL, all businesses are required to obtain the consent upon by an acquiring business. However, the onus is on the purchaser
of recipients in order to send them CEMs. Consents may be express to ensure such underlying business relationships are, in fact, valid.
(e.g. check here to receive CEMs) or implied on the basis of there
being a qualifying relationship. One of these types of relationships An important consideration here will also be which entity gets the
which grounds implied consent is an “existing business relationship”. benefit of the existing business relationship – the Guidance states that
An existing business relationship arises, for instance, where a person “with the sale of a business, any existing business relationships (EBR)
has purchased a product or service from the sender within two are considered to now be with the new owner of the business”. In other
preceding years of receiving the CEM, or has made an inquiry to the words, Guidance suggests that such relationships are not divisible,
business within the preceding six months, and in either case has not creating an all-or-none situation.
unsubscribed from receiving CEMs.
VALIDITY OF CONSENTS:
CASL further stipulates that if a business has an “existing business KEEPING TRACK OF THEM ALL
relationship” with another person, and the business is sold, the
purchaser of said business is considered to have assumed the same Assuming that consents to receive CEMs are transferable, issues may
“existing business relationship”, allowing the purchaser to continue arise with respect to the way that such consents are documented. A
sending CEMs to individuals until they expressly opt-out or the purchaser should conduct proper enquiries to ensure that the seller has
relationship reaches the time limit specified in CASL. kept detailed records of how, when, and for what purpose the
LAW CLERKS’ REVIEW, MARCH 2016 19
