Amazon.ca often has “list prices” for items that claim to be the real price you would pay for an item anywhere else. (Photo: REUTERS/Mike Segar/File Photo)
The Competition Bureau has just hit online retail giant Amazon Canada with a $1 million dollar fine over pricing practices that they found to be misleading.
The bureau started investigating the company in 2014 and concluded their investigation in 2016 finding the company’s pricing claims somewhat dishonest.
“The Bureau’s investigation concluded that these claims created the impression that prices for items offered on www.amazon.ca were lower than prevailing market prices,” read a statement from the bureau.
Amazon.ca often has “list prices” for items that claim to be the real price you would pay for an item anywhere else. Then Amazon.ca puts its own lower prices on the item, which suggests that items sold by the company were cheaper than at other companies.
There was one problem with this practice: the company didn’t verify that the list price they put for items were actually the real prices of items. Rather, it relied on their suppliers to tell them the list prices, without making sure they were accurate.
That led to unsubstantiated savings claims to which the bureau took exception, because it’s considered false advertisement. False advertisement includes the practice of false pricing, which is forbidden by the Competition Act.
One has to wonder how effective the competition bureau’s fine is actually going to be. $1 million is little to pay for a retail giant that was valued at $250 billion in 2015. Amazon Canada seems to be cooperating with the bureau by paying an additional $100,000 to resolve the dispute and changing its pricing practices but is this likely to change in the industry as a whole?
Just over a year ago, charges against Nestlé Canada and Mars Canada were suddenly dropped in an eight-year investigation in which they were accused of price-fixing the cost of sweets. This came after Hershey Canada Inc. already pleaded guilty to price-fixing in 2013 and paid a fine of $4 million.
In 2012, Canadian Tire Corp. pleaded guilty to price-fixing gas prices, which artificially pushed up gas prices in cities like Kingston, Ont. and Brockville, Ont. The company, and two others, were given a total fine of $2 million.