Putting Canadian Consumers First

ETOBICOKE, ONTARIO--(Marketwired - Dec. 9, 2014) - Industry Canada

The unexplained and often significant gap between Canadian and U.S. prices for the same products is a frustrating and all-too-familiar reality for any Canadian who has ever shopped online or travelled to the United States.

Today, Industry Minister James Moore announced new legislation to help ensure Canadians are not charged higher prices than Americans simply because of where they live.

The Price Transparency Act will help tackle the practice of geographic price discrimination, one of the key contributors to the Canada-U.S. price gap. Today's announcement provides the Commissioner of Competition with the tools necessary to investigate alleged cases of price discrimination and to publicly report situations where consumers are unfairly targeted with higher prices. The Commissioner will be authorized to seek court orders to compel the production of evidence to expose discriminatory pricing practices that are not justified by higher costs in Canada and to publicly report to consumers on the findings.

Quick facts

• Studies have shown that the prices of goods in Canada are, on average, 10- to 25-percent higher than they are in the United States.
• In 2013 the Standing Senate Committee on National Finance found that country pricing by manufacturers is one of the key causes of the Canada-U.S. price gap.
• A recent study published by the American Economic Review, which reviewed 4,000 separate products, in both Canada and the United States, concluded that distributors or wholesalers are engaging in country pricing strategies.

Quotes

"Our government believes that hardworking Canadians and their families shouldn't be charged higher prices than Americans simply because of where they live. The intentional manipulation of prices on identical goods for sale in Canada and the U.S. places an unfair burden on Canadians and is simply wrong. The Harper Government is standing up for Canadian consumers with legislation to help address price discrimination."

- James Moore, Minister of Industry

"The Retail Council of Canada and its 45,000 merchants have been strong and consistent advocates for addressing the root causes of unjustified consumer price discrepancies between Canada and the U.S. We support today's announcement by Minister Moore and believe that the Price Transparency Act goes a long way in shedding light on geographical price discrimination and on the true costs of doing business in Canada. This bill is an important step toward enabling Canadian retailers to compete on a level playing field and offer their consumers the best possible prices."

- Diane J. Brisebois, President and CEO, Retail Council of Canada

Associated link

• Competition Bureau

Follow us on Twitter: @industrycanada

Backgrounder

Price Transparency Act

It is well documented that Canadian consumers pay more than their American counterparts for identical goods. Statistics Canada estimates for 2011 revealed that Canadian prices were about 25 percent more than U.S. prices for many goods. More recent private sector estimates suggest that price differences remain high.

The causes of the price gap are complex and varied. In 2011, the Standing Senate Committee on National Finance studied the issue. The Committee's 2013 report identified a number of contributors, including the practice of country pricing, the volatility of the exchange rate, the price of fuel, customs tariffs and product safety standards.

A recent study published by the American Economic Review, which reviewed 4,000 separate products, in both Canada and the United States, concluded that distributors or wholesalers are engaging in country pricing strategies.

The Price Transparency Act introduced today will help tackle geographic price discrimination. The bill will amend the Competition Act to empower the Commissioner of Competition to use formal investigative powers to expose cross-border price discrimination that is not justified by higher costs in Canada. The changes will authorize the Commissioner to seek court orders to compel the production of confidential evidence relevant to differential pricing between Canada and the U.S. The Commissioner will be empowered, for the purposes of such inquiries, to seek court orders to compel witnesses for examination, the production of records and written returns of information.

Following an inquiry, the Commissioner will issue a report on the findings. The reports will identify the causes of the price discrepancy, exposing any price discrimination.

The bill will also enhance the Commissioner's investigative powers through amendments to section 11 of the Competition Act. These changes will help ensure Canadians are not charged higher prices than Americans simply because of where they live.

Economic Action Plan 2013 took action on tariffs, providing $79 million in annual tariff relief through the elimination of tariffs on baby clothing and certain athletic equipment. Economic Action Plan 2014 announced a plan to take action to address another identified cause of the price gap: geographic price discrimination.

Speaking Points

The Honourable James Moore, PC, MP

Minister of Industry

Price Transparency Act

Etobicoke, Ontario

December 9, 2014

Check Against Delivery

Thank you, Bernard [Bernard Trottier, MP for Etobicoke-Lakeshore], for the kind introduction.

And let me thank our host, Toys 'R' Us, for opening its doors to us this morning for this important announcement.

It's a pleasure to be here to make this announcement on behalf of Prime Minister Stephen Harper.

Our government remains committed to supporting hardworking Canadians and their families. Just a few weeks ago, Prime Minister Harper announced new measures to help make life more affordable for Canadian families.

And today I am pleased to be here to make another announcement that will benefit Canadian families.

Canada and the United States share one of the longest borders in the world.

And 90 percent of Canadians live less than a two-hour drive from it.

Canadian consumers often head south across the border to do their Christmas shopping or to buy items-from sneakers to baby strollers to televisions-because they are cheaper.

But when they look at the price of the same goods here in Canada, consumers often feel ripped off.

It has been documented that, on average, Canadians pay roughly 15 percent more for goods in Canada compared to those available in the U.S.

• A 1.5-litre bottle of shampoo-priced at roughly 30-percent higher in Canada than in the U.S.

• A 46-inch LED TV-priced 13-percent higher in Canada than in the U.S.

• An 81-milligram container of aspirin-roughly double the price in Canada.

• Sneakers-sold for noticeably less in Buffalo, New York, than at the Eaton Centre in Toronto. Or in Bellingham, Washington, than in Langley, B.C.

Canadians have a right to ask, why?

This unexplained difference between Canadian and American prices for the exact same product is a frustrating and all-too-familiar reality for any Canadian who has ever shopped online or travelled to the United States.

It is called geographic price discrimination.

It involves charging Canadians more than Americans for the exact same product simply because of where we live.

These price differences are real, and they hurt the bottom line of hardworking families.

A recent study published by the American Economic Review, which reviewed 4,000 separate products, in both Canada and the United States, concluded that distributors or wholesalers are engaging in country pricing strategies.

Today, our government tabled legislation to do something about it.

I am pleased to announce that our government has introduced new legislation to help ensure that Canadian consumers are not unfairly charged more than Americans simply because we live in Canada.

The Price Transparency Act, tabled today in the House of Commons, will give Canada's Commissioner of Competition the power to investigate price discrimination and expose it.

It will help ensure that Canadians pay a comparable price for comparable goods that they buy in Canada.

Let me be clear, this legislation will not set or regulate prices in Canada.

What it will do is create the tools necessary to investigate and expose cases of unjustified price discrimination that hurt Canadian families.

It is a reality that the prices of some goods in Canada are due to the legitimate costs of doing business on this side of the border.

Those factors do explain some of the price differences, but it is not the full story.

Geographic price discrimination is real, and it is a significant burden on the bottom line of Canadians and hardworking Canadian families.

Ultimately, consumers should know whether the differences between Canada and U.S. prices are justified.

The Price Transparency Act provides for balanced and measured action to help ensure Canadians pay the same price as Americans for the same product when there is no justification for a difference in price.

This legislation has the support of the Retail Council of Canada, which represents 45,000 retailers across Canada.

I am delighted the Retail Council's President and CEO, Diane Brisebois, could join me here today.

The Price Transparency Act is also supported by Canada's largest consumer groups, including the Consumers Council of Canada and the Public Interest Advocacy Centre.

To conclude, let me say our government knows that Canadians work hard to make ends meet and every dollar count. This announcement is another step our government is taking to put more money back into the pockets of hardworking Canadian families.

Our government is committed to putting Canadian consumers first.

Thank you to Toys 'R' Us for welcoming us here today.

Thank you all for coming.