Lawyer calls new federal price-gap legislation: ‘Scarlet Letter law’

Canadian shoppers that they typically pay more — often between 10 to 50 per cent more — for the same goods than their American counterparts. (REUTERS/Shannon Stapleton)

While Ottawa introduced its first concrete step in eliminating Canada – U.S. price gaps last month, Canadian shoppers shouldn’t get too excited. 

The new Price Transparency Act legislation doesn’t have the enforcement powers to ultimately make a difference, says a Toronto-based competition lawyer.

It’s been a long-time sore spot for Canadian shoppers that they typically pay more — often between 10 to 50 per cent more — for the same goods than their American counterparts. Cars, books, magazines, toiletries, and hundreds of other products cost more north of the border.

The federal government has said Canadians are victims of “geographic price discrimination” and has recently made several promises to close that gap.

Last month Ottawa unveiled its fledgling Price Transparency Act and Industry Minister James Moore proclaimed it would ensure Canadians pay "comparable prices for comparable goods."

However, some consumer groups and competition experts claim the legislation is unworkable, unnecessary, and unenforceable. Among them is Paul Collins, head of Stikeman Elliott’s competition and foreign investment group, who says it lacks any teeth, apart from its ability to publicly shame price gougers.

“There’s no real enforcement other than being labeled as someone who’s engaged in misconduct,” he explains. “There’s no fine, there’s no ability to order you to stop.”

Collins refers to it as a “Scarlet Letter law,” since it merely wags a finger at offenders.

Even in those cases, he says “price gouging” is very difficult to gauge as price gaps are often justifiable.

Manufacturers defend their higher prices by reasoning that Canada is a smaller market, there are higher transportation and labour costs, tariffs raise prices and it’s more costly to do business in both official languages. And as Collins points out, the legislation suffers from some ironic timing, being introduced just as the Canadian dollar was plummeting to its lowest level in five years.

Collins worries the legislation could unfairly taint some retailers or manufacturers who may charge more for legitimate reasons. Aside from “outing” businesses, he says the law doesn’t give them any avenue to defend themselves.

“Even if there’s no real enforcement implication, it’s still quite troubling to them because it’s their reputation in the marketplace and that matters a lot,” he adds. “The notion that that could happen without you having the opportunity to try the facts and moreover that there’s no ability to appeal to overturn a conclusion is troubling.”

Collins also questions the ability to investigate price-gouging complaints since the Competition Bureau isn’t receiving any expanded resources to investigate.

The legislation hasn’t yet been voted on and could still undergo some changes. Critics have said the entire premise of the law clashes with any notion of the free market and could even be illegal. 

So don’t hold your breath waiting for price-gap pain relief, it may be much farther away than Ottawa would admit.

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