Setting Your Own Price
What Is the Competition Bureau?
The Competition Bureau is an independent law enforcement agency that contributes to the prosperity of Canadians by protecting and promoting competitive markets and enabling informed consumer choice. Headed by the Commissioner of Competition, the Bureau is responsible for the administration and enforcement of the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act.
What Is the Competition Act?
The Competition Act is a federal law governing most business conduct in Canada. It contains both criminal and civil provisions aimed at preventing anti-competitive practices in the marketplace.
What is Price Maintenance?
Price maintenance may occur when a supplier prevents a customer from selling a product below a minimum price by means of a threat, promise or agreement. It may also occur when a supplier refuses to supply a customer or otherwise discriminates against them because of their low pricing policy.
When Does the Competition Act Apply?
The price maintenance provisions of the Competition Act may apply when:
- a businessperson, by means of a threat, a promise or an agreement, influences upward, or discourages the reduction of, the prices charged or advertised by another businessperson, such as a customer or competitor; and/or
- a supplier refuses to supply a product to, or discriminates against, another businessperson because of that other person's low pricing policy; and/or
- any person, as a condition of doing business with a supplier, induces that supplier to refuse to supply a product to another businessperson because of that other person's low pricing policy,
and the conduct described above has had, is having or is likely to have an adverse effect on competition in a market.
Manufacturers or distributors who make suggestions regarding resale prices should state clearly that their business customers are under no obligation to accept the suggested prices. This can be achieved simply by including the statement "Dealers may sell for less" in price lists or advertisements, and adhering to this statement.
Any firm that produces, sells, rents or provides a product may be subject to the price maintenance provisions of the Competition Act. A "product" can be an article or a service. However, a firm must generally have some degree of market power in relation to the product before its practice of price maintenance will be considered to have an adverse effect on competition. Relevant factors affecting market power include, among other things, market share, the existence of barriers to entry that limit competition, and a lack of substitute products.
The following are examples of conduct that could be subject to the price maintenance provisions if it can be proven that the conduct results in an adverse effect on competition in the market:
- a retailer threatens to stop doing business with a supplier unless that supplier agrees to stop providing products to discounters;
- a supplier cuts off a retailer for selling below "suggested" resale prices.
What Happens After I Contact the Bureau to Make a Complaint?
Bureau staff will ask about your situation and market conditions to determine whether the required conditions have been met. If they have, Bureau officers may begin confidential interviews and a review of documents and other sources of information. The Bureau can also apply to the courts for subpoenas or use other compulsory means to conduct its investigation.
The Bureau conducts its investigations in private and keeps confidential the identity of the source and the information provided. However, if a source has important evidence about a violation of the Act, that person may be asked to testify before the Competition Tribunal. The Competition Tribunal is like a court, composed of judges and lay persons, and independent of any government department.
How Does the Bureau Resolve Price Maintenance Complaints?
Where appropriate, the Commissioner will initiate discussions to obtain voluntary compliance with the law. In some cases, this is all that is required to correct the situation. A more formal resolution would involve the registration of a consent agreement with the Competition Tribunal when all parties agree to a remedy that will restore competition in the marketplace.
If voluntary compliance cannot be achieved, the Commissioner may file an application before the Competition Tribunal for an order to remedy the situation. To address the effects of price maintenance activity, the Competition Tribunal may issue an order requiring that the supplier accept the customer who was refused supply, or an order prohibiting the supplier from engaging in price maintenance.
Private Access to the Competition Tribunal
The Competition Act allows a person to apply directly to the Competition Tribunal for a hearing when it believes that the actions of a supplier meet all of the requirements of the price maintenance provisions.
The Competition Bureau is an independent law enforcement agency that contributes to the prosperity of Canadians by protecting and promoting competitive markets and enabling informed consumer choice.
Headed by the Commissioner of Competition, the Bureau is responsible for the administration and enforcement of the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act.
For more information:
National Capital Region: 819-997-4282
TTY (for hearing impaired): 1-800-642-3844
50 Victoria Street
Gatineau, Quebec K1A 0C9
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