It has been almost a decade since the Competition Bureau sunk
its teeth into the enforcement of ordinary price claims, pursuant
to the Competition Act's
deceptive marketing practices provisions. But what is old may be
new again as recent signals from the Competition Bureau point
towards increased enforcement focus on these types of claims in the
future. As such, Canadian businesses should ensure that their
corporate compliance programs and pricing practices are in-line
with the OSP rules of the Act and the Bureau's Ordinary Price Claims Guidelines
which the Tribunal relied on heavily when analyzing past cases.In
particular, Subsections 74.01(2) and (3) of the Act set out
specific requirements for the calculation of the ordinary selling
or reference price on which savings claims are based, known as the
"volume test" and the "time test":
Volume Test– In order
to meet the volume test, the reference price must be one at which a
substantial volume of product has been sold at that price (or a
higher price), within the relevant geographic market, within a
reasonable period before or after the savings claim is made.
Time Test– In order to meet the
time test, the product has to have been offered at the reference
price (or a higher price) in good faith in the relevant geographic
market for a substantial period of time recently before or
immediately after making the savings claim.
The fundamental principle behind the ordinary price claim rules
is that an advertised savings must be bona
fide, such that the savings described are real and do
not exist in perpetuity.
Use of savings claims is a key component of virtually all
advertising in the marketplace, and can be used as a powerful tool
to attract consumers. It follows that businesses (and their
legal teams in particular) need to be vigilant about the proper use
of savings claims. By implementing compliance programs and
providing regular compliance training to marketing teams,
businesses will be able to avoid running afoul of the OSP
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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