Sale above advertised price

Section 74.05 of the Competition Act, which is a civil provision, prohibits the sale or rent of a product at a price higher than its advertised price. The provision does not apply if the advertised price was a mistake and the error was immediately corrected.

If a court determines that a person has engaged in conduct contrary to section 74.05, it may order the person not to engage in such conduct, to publish a corrective notice and/or to pay an administrative monetary penalty of up to $50,000 in the case of a first time occurrence by an individual and $100,000 in the case of a first time occurrence by a corporation. For subsequent orders, the penalties increase to a maximum of $100,000 in the case of an individual and $200,000 in the case of a corporation.

Additional information

Section 74.05 of the Competition Act prohibits the sale or rent of a product at a price higher than its advertised price in the market to which the advertisement relates.

  1. Market may be restricted
    Subsection 74.05(3) gives the advertiser the opportunity to define the market more narrowly in the advertisement than the market which the advertisement could otherwise be reasonably expected to reach. Therefore, an advertisement in a local paper may restrict an offer to a specific store branch of a multi-store operation or even to a specific department of that branch, as long as it is clearly indicated in the advertisement. For example, an advertisement could be clearly restricted to the "bargain basement." Similarly, a business that has both catalogue and normal retail operations may limit its advertised prices to one or the other.
  2. Exceptions
    Section 74.05 does not apply in respect of an advertisement that appears in a catalogue in which it is prominently stated that the prices contained therein are subject to error, if the advertiser establishes that the price advertised is in error. Also, if an advertisement containing a price error is immediately followed by a corrective advertisement, this section would not apply.

    Where securities are sold at higher prices on the open market during a period when a prospectus relating to them is still current, the section does not apply. Finally, the section does not apply to the sale of products by or on behalf of persons not in the business of selling those products.

  3. Advertisements
    It should be noted that the section applies only to an advertisement of a product for sale or rent in a market. Accordingly, it does not appear to apply to representations in other forms, such as oral statements and most labels, as do most of the other false or misleading representations and deceptive marketing practices provisions. Of course, section 52 and paragraph 74.01(1)(a), the general provisions, may still apply.
  4. Sale flyers - Are they "catalogues"?
    The question has arisen as to whether sale flyers, such as those which appear as newspaper supplements, could be considered as catalogues and, consequently, whether the exemption relating to catalogues would be applicable.

    This special defence is not applicable to flyers since they have much shorter lead times than catalogues and there would usually be ample opportunity to publish an immediate correction.

    Many prosecutions under the former section 58 have related to advertisements by supermarket chains and their franchise operations for food items. Others have involved household, hardware, health and personal care items and automotive products.

Examples:

Airline tickets, advertised at a reduced rate of $299, but supplied at a higher price.

Coats, advertised for sale at a specified price with an accompanying illustration showing the coats to have fur collars, but in fact supplying the coats with fur collars at a higher price.

Double ticketing

Section 54 of the Competition Act, which is a criminal provision, prohibits the supply of a product at a price that exceeds the lowest of two or more prices clearly expressed in respect of the product.

Any person who contravenes section 54, is guilty of an offence and liable to a fine of up to $10,000 and/or imprisonment up to one year on summary conviction.

Additional information

The definition of "supply" includes an offer to sell. This section does not affect shelf stock revaluation if the old price is removed or is obscured so that it is no longer clearly expressed.

In the past, questions have been raised relating to whether the double-ticketing section would prohibit the pricing and sale of identical items of a product at different prices. Retailers have noted that they sometimes may have some older stock, (which may have been received at a lower cost), on display with newer, although identical, stock. They have asked whether a price sticker of $X may be affixed to items of the older stock while a slightly higher price of $Y would be affixed to the newer stock.

In the Commissioner’s view the purpose of the section is to prevent incidents which might deceive or confuse consumers about the price to be charged for a product. In the circumstances described above, it would seem to be clear to potential customers which price was being charged for particular units of the product. Consequently, the Bureau would not take enforcement action under this section where a price of $X was marked on one unit of a product and a price of $Y was marked on another, so long as each was sold at its marked price. This view is also based on the assumption that only one price is clearly expressed on each unit and that there are no other prices displayed at point-of-purchase. It should also be noted that, if the lower price has been advertised, supplying the product at the higher price would be in contravention of section 74.05 respecting sale above advertised price.

Prosecutions under this section have rarely occurred.

Scanner price accuracy

There is no federal legislation governing the question of price scanning accuracy per se. However, some types of price representations that result in overcharges to consumers may be examined under the Competition Act. In addition, it should be noted that the Bureau has endorsed the Scanner Price Accuracy Voluntary Code, which provides participating retailers of four major associations with a mechanism to provide redress to consumers when there is a scanner error. When the scanned price of an item without a price tag is higher than the shelf price, or any other displayed price, the customer is entitled to receive the item free when it is worth less than $10, or receive a $10 reduction for more expensive items. The Bureau regards scanner price accuracy as an important element of maintaining consumer confidence.

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