Merchant Advance Blog

Blog Article: Price Gap Legislation Announced

Canadian Government Aims for Price Parity with United States

As a small business owner, you may have had to face competition from American businesses offering more attractive pricing on similar products. You may also wonder why supplies of certain goods of value to your business are more expensive to purchase in Canada than in the markets of our southern neighbours. Earlier this week, Canadian Industry Minister James Moore tabled new price gap legislation that may provide some answers to these questions by proposing measures to punish those corporate entities who engage in so-called “price gouging.”

The proposed legislation would allow Canada’s Competition Bureau to obtain important and confidential data about companies suspected of creating artificial price discrepancies. In a statement, Mr. Moore said:

“These price differences are real, they hurt the bottom line of hard-working families, and they hurt Canadian retailers who have to absorb this cost of unfair pricing.”
 

Assessing the Effects

Much as with almost any new piece of legislation aimed at the business sector, the announcement has been met with mixed reactions. The Retail Council of Canada was quick to make the following Post, lauding the Minister’s efforts. However, other major industry groups questioned the price gap legislation’s efficacy and efficiency, noting that it could take significant time, materiel, expense and personnel to fully investigate the causes of price discrepancies in any given company.

The increased importance of e-commerce in the Canadian retail landscape was also cited as a reason for the legislation’s ineffectiveness. Critics have noted that, as more and more shoppers turn online to compare and obtain the most favourable prices from anywhere in the world, prices will likely remain similar in Canada.

A quick comparison supports the conclusion that buying local is still a good plan for consumers when contrasted with e-commerce in the United States. The reduced prices of goods purchased online are quite regularly offset by tariffs, shipping costs and transaction fees. Local small businesses provide so many great services to their community – and offer the convenience of real-world expertise and tangible products in a way that online shopping does not.

We welcome your thoughts on this new government proposal! Are you for it? Against? Let us know by using the Social buttons below.

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