December 8, 2014 7:10 pm
Updated: December 9, 2014 8:21 pm

Tories to take aim at Canada-U.S. price gap with new legislation


WATCH: There’s some good news for Canadian consumers. Global News has learned the federal government is finally taking action to narrow the price gap between Canada and the U.S. Jacques Bourbeau has the advance details.

OTTAWA — The Conservatives will table legislation Tuesday meant to help shrink the price gap between retail prices in the United States and in Canada, Global News has learned.

Story continues below

The government has described the price difference as “geographic price discrimination,” the result of something called country pricing, whereby a company charges more for a product in one country just because it can — not because of higher operating costs.

Ottawa will take aim at this practice by introducing a bill to give the commissioner of competition powers to investigate cases of suspected price discrimination.

READ MORE: Loblaw warns lower loonie pushing up grocery prices

It is not yet certain what powers the commissioner will have if he finds such a case.

WATCH: The government is trying to limit the practice of ‘gouging’ by manufacturers.

Industry Minister James Moore is expected to announce details at a toy store in Toronto on Tuesday.

The Conservative promise to crack down on multinational companies charging Canadians more than Americans goes back to the October 2013 speech from the throne. They repeated the pledge more recently, in February’s budget.

READ MORE: Gap between U.S., Canada retail prices may ‘widen once again’

“Price discrimination,” however, is but one of a handful of reasons Canadians pay more for certain goods than U.S. shoppers — and have for years.

Shoppers have long seen the difference on price tags hanging from all sorts of items like books, greeting cards, cars, clothing and appliances. A Dodge Challenger manufactured in Ontario, for example, can cost $1,500 more when bought in Canada than when bought south of the border, according to the prices listed on their Canadian and American websites.

In 2011, a Senate committee launched a study to find out some of the reasons Canadians pay more.

At that time, the price gap was estimated at 25 per cent. More recent studies have pegged the gap between 10 per cent and 15 per cent.

Read more: Ottawa watching to see if retailers pass price cuts to consumers

Some witnesses heard during the Senate hearings, including the Retail Council of Canada, pointed to the relatively small size of the Canadian market and import taxes as factors that play into determining retail prices.

Other witnesses said fuel costs, real estate and other overhead costs also influence the amount on a price tag.

That study wrapped up more than a year later, concluding Finance Canada  cut import tariffs and recommending Heritage Canada  conduct a cost-benefit analysis of reducing the 10 per cent mark-up Canadian distributors can apply to American prices on books.

A BMO report from 2013 showed that while the loonie was performing well alongside the U.S. dollar, the gulf between prices remained sizable.

The government that same year announced the elimination of tariffs on baby clothing and sports equipment — some of them as high as 20 per cent. Observers have been split on whether that move has resulted in lower prices for consumers.

Some groups are still urging the government to do more, for example ending the supply management on dairy that effectively hikes up the price Canadians pay for milk and cheese products, or to harmonize safety standards and other regulations that can affect a range of goods.

Here’s a look at some of the goods on which BMO compared prices:


© 2014 Shaw Media

Report an error


Want to discuss? Please read our Commenting Policy first.