WATCH: The federal government unveiled full details of how it will fix something that drives many Canadians crazy — the price difference between Canada and the United States. But as Shirlee Engel reports, critics say the plan doesn’t go far enough.
Canadian regulators are getting new powers, Ottawa says, to investigate why many items cost more here than in the United States.
In an announcement Tuesday, Industry Minister James Moore said he is bringing in new legislation aimed at “ensuring Canadians are not charged higher prices than Americans simply because we live here.”
The legislation will allow the commissioner of the Competition Bureau to probe companies who set Canadian prices higher than what they sell the same product for in the United States.
So-called “country pricing” is a practice among international wholesalers and big retailers, who adjust product prices based on regional dynamics like currency values, income levels, shipping expenses and other factors determined by the market (including tax levels).
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‘Unfair’ pricing?
Still, Moore said big firms who sell globally will be subject to the bureau’s new powers to determine whether they “unfairly” charge Canadian retailers higher prices, and by extension, consumers.
“The changes will authorize the commissioner to seek court orders to compel the production of confidential evidence relevant to differential pricing between Canada and the U.S. The commissioner will be empowered, for the purposes of such inquiries, to seek court orders to compel witnesses for examination, the production of records and written returns of information.
The bureau will issue a report on the findings identifying the causes of the price discrepancy, “exposing any price discrimination,” Moore said.
Studies show goods in Canada can cost up to 25 per cent more than in the United States, background information provided by Moore’s department said.
Timing
Experts said the recent slide in the Canadian dollar means cross-border savings have largely been wiped out – making the current legislation less meaningful than it would have been when the loonie was at parity with the U.S. dollar.
“The timing is curious,” Robert Kavcic, a senior economist at BMO said. “Given where the Canadian dollar is now, the issue is basically irrelevant.”
The loonie is trading around 87 cents U.S., making purchases in the U.S. far more costly for consumers headed over the border.
Still, others say the new measures will save consumers some cash at home.
“This bill is an important step toward enabling Canadian retailers to compete on a level playing field and offer their consumers the best possible prices,” said Diane Brisebois, head of the Retail Council of Canada, a national trade association.
“Recent private sector estimates suggest that price differences remain high,” the minister’s office said.
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