The federal government has announced new legislation that is meant to tackle the persistent price gap between goods in the U.S. and Canada.
The Price Transparency Act, being tabled in Ottawa on Tuesday, is designed to “name and shame” manufacturers and distributors that demand higher prices for goods sold in Canada, Industry Minister James Moore said.
“This legislation will not set or regulate prices in Canada,” he told reporters at a news conference held at a Toys R Us store in Etobicoke.
The announcement follows through on a commitment the government made in its 2014 budget, following a Senate investigation into the reasons for a persistent U.S.-Canada price gap.
The Senate committee blamed everything from high tariffs to higher Canadian costs to “country pricing” — the practice of some large multinational brands of charging Canadian retailers more than U.S. merchants for identical merchandise.
For this holiday season, the falling Canadian dollar will do some of the work for retailers. The price gap naturally shrinks when the exchange rate worsens as U.S. prices become less attractive in Canadian dollars.
The legislation would give the federal Competition Commissioner the power to collect evidence on so-called cross-border price gouging and publicly report its findings.
“We think this is an effective tool” that will result in “immediate downward pressure on prices,” Moore said. “We believe those who are engaging in this practice . . . will abandon it.”
While there are some legitimate cost differences between selling goods in the U.S. and Canada, studies have shown that Canadians routinely pay between 10 and 25 per cent more than U.S. shoppers for television sets, cars, tires, and other products.
Canadian retailers, who are often blamed — erroneously — for price gouging, support the new bill, Diane Brisebois, head of the Retail Council of Canada told reporters.
“I can assure you, for the thousands of Canadian retailers we represent . . . this is a step in the right direction,” Brisebois said.
The proposed legislation will provide the Commissioner of Competition with tools to investigate alleged cases of price discrimination and publicly report situations where consumers are unfairly targeted with higher prices, Industry Canada said in a release.
“The intentional manipulation of prices on identical goods for sale in Canada and the U.S. places an unfair burden on Canadians and is simply wrong,” Moore said in a release.
The Competition Commissioner will also have the power to file court orders to compel the production of evidence to expose discriminatory pricing practices, the government said.
That power will apply to firms that are based in the U.S. and Canada, the government said.
The furor over the Canada-U.S. gap emerged after the Canadian dollar rose above the U.S. dollar in 2007 for the first time in nearly three decades.
Also, it became easier for Canadian consumers to compare cross-border prices on the Internet as more retailers launched websites.
Consumers blamed Canadian retailers. Retailers blamed suppliers. Suppliers blame the higher cost of doing business in a smaller country.
In 2011, the late Jim Flaherty, who was then federal finance minister, asked the Senate committee on national finance to investigate the reasons for the price disparity.
The report, released in February 2013, identified a number of factors.
Ottawa’s first response was to remove the tariffs on some items, such as baby clothes and hockey gear.
- With files from Dana Flavelle