Pricing and the law

The Competition Act http://laws.justice.gc.ca/en/C-34 The federal government of Canada is responsible for monitoring price activity in Canada Ignorance of the law is punishable by this act

Ordinary Price Claims No company is able to “make a materially misleading representation to the public concerning the price at which a product or like products have been, are or will be ordinarily sold” Companies are in violation of the law when “the use of the expression would lead a reasonable shopper to conclude that the comparison price quoted is that at which the product has been ordinarily sold” In other words, sale prices have to be accurately compared to the stores ordinary price

Manufacturer’s Suggested Lice Price (MSLP) While manufacturers cannot control the retail price of their products, they often suggest a price Prices are often fair and leave an adequate profit margin, but some companies may choose to sell the product for more or less When companies use an original price, but refer to the MSLP for their sale, they have broken the law

John Deere: Controlling Prices In 2003, John Deere wanted to keep the price of its tractors high despite the wish of retailers to sell it for less By successfully manipulating prices, John Deere was found guilty and forced to rebate customers cash rebates totaling 1.1 million dollars No manufacturer can refuse to supply and discriminate companies due to low pricing strategies

Double Ticketing and Bar Code Variance Double ticketing is when an item has more than one tag When this occurs, retailers must sell it for the lower price by law Electronic bar codes has lowered this problem in the modern world but the problem has not been eradicated A study done by the Quebec Office on Consumer Protection found that 15.5% of items were scanned incorrectly. The majority favoring the retailer Study included major stores such as Canadian Tire, The Bay, Sears, Walmart, and Zellers

The Old Bait and Switch Bait and Switch is when a company offers a sale on an item in which there is not a reasonable quantity of the product People come to the store for an item and have to buy a higher priced item as the original is no longer available Such a tactic is illegal and stores must offer rain cheques if the sale item is unavailable Bait and switch tactics are subject to heavy fines

Predatory Pricing Predatory pricing is when companies lower prices to an artificially low point to force companies to close Companies such as Walmart are often accused of doing so and have been claimed for drastically impacting companies such as K-Mart Eatons Target (Canada) Despite legality issues with predatory pricing, it is extremely difficult to prove and of 550 complaints of this taking place in Canada, only one has been convicted

Price Fixing When multiple companies conspire to offer the same price on products, the Competition Act is violated Gas stations are often accused of doing so but have not been proven to do so If found guilty, huge fines and jail time are both allotted to the guilty parties