How much did you really save in Back to School sales? Can
consumers trust a retailer's claims about its
"regular" prices and its "sale" prices?
Canada's competition law enforcer is showing renewed interest
in retailers' ordinary selling price strategies.
Retail sales promotions in Canada must comply with the deceptive
marketing sections of the Competition Act, including the
"ordinary selling price" (OSP) provisions. They apply
whether the promotions occur in-store or online, and whether the
retailer is based in Canada, in the US or EU, or elsewhere.
Canada's Competition Bureau, led by the Commissioner of
Competition, has not focused publicly on OSP for several years. But
this year, the Commissioner settled one OSP case for $3.5 million
and, in another OSP investigation, obtained court orders requiring
extensive document production and ordering questions to be
The OSP provisions are sometimes overlooked by retailers. They
are designed to ensure that retailers do not mislead consumers by
referring to inflated regular prices in promoting their products to
consumers. In Canada, retailers who compare their own regular and
sale prices must either sell a substantial volume at the regular
price or higher within a reasonable period of time before or after
a promotion, or they must offer a product for sale at the regular
price or higher for a substantial period of time before or
immediately after the promotion and set the price in good faith. If
not, the Bureau may have concerns about their OSP representations
to consumers. A similar rule applies if a retailer compares its
sale prices to suppliers generally in a market.
In the first 2015 case, Michaels of Canada, Inc. promoted its
framing services by comparing sale prices to its
"regular" prices. It also used Buy-One-Get-One (BOGO)
promotions and coupons, which presumably affected both the volume
of framing sold, and the frequency of offering it, at the regular
price. From the filed settlement agreement, it appears that
Michaels had no formal process to assess whether its
"ordinary" framing prices were comparable to other
competitors in Canada, and its prices were based on US pricing
The settlement, which referred to Michaels' "full and
timely cooperation", not only cost the company a $3.5-million
administrative monetary penalty (AMP) and $65,000 in Bureau
investigation costs, it also required all of Michaels' senior
management to take an "active and visible role" in the
"establishment and maintenance" of a compliance program
to ensure the company complies with all of the deceptive marketing
practices provisions of the CompetitionAct,
In the second investigation, the Commissioner obtained Federal
Court orders requiring two major Canadian retailers to provide
documents and answer detailed questions about their promotion and
sale of mattress sets. Obtaining such Orders is now typical in
Bureau investigations but it has been many years since the
Commissioner obtained one in an OSP investigation. Compliance is
often expensive and time-consuming for the company affected and is
usually required within 60-90 days.
The Bureau enhanced its public advocacy and technical guidance
on OSP in the years after a successful enforcement case against
Sears Canada in 2005. A large AMP and investigation Orders against
two large retailers this year may signal a new push by the
Commissioner, sending retailers and their lawyers back to school on
OSP under the Competition Act.
Andrew D. Little just rejoined Bennett Jones LLP after two
years seconded to Canada's Department of Justice, serving as
General Counsel at the Competition Bureau from 2013-2015.
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The Commissioner of Competition addressed innovation, enforcement and policy initiatives at the Competition Bureau in his keynote speech, "Strengthening Competition: Innovation, Collaboration and Transparency."
Used car listing website operator CarGurus Inc.'s attempt to force rival Trader Corporation to supply it with vehicle listing data has encountered a dead end as the Competition Tribunal denied it leave to commence a private application under several provisions of the Competition Act.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).