Section 74.05 of the Competition Act prohibits the sale or rent of a product at a price higher than its advertised price.
This prohibition applies only to an advertisement for a product in a particular market. As such, if sellers wish, they can define the market quite narrowly, even if the advertisement is likely to be seen by people outside that market. For example, an ad in a local newspaper can restrict an offer to a specific location of a multi-store chain or a particular portion of a store such as, the “bargain basement.” This will not raise concerns, as long as the seller clearly indicates this restriction in the ad.
Because this prohibition is specifically about advertising in a particular market, it does not apply to other ways that prices are promoted, such as on a label or in an oral statement. However, the Act contains other general provisions (for example, section 52 and paragraph 74.01(1)[a]) that prohibit sellers from presenting false or misleading information to the public using other means.
The prohibition under section 74.05 does not apply in any of the following circumstances:
- where a catalogue prominently displays a statement noting that the prices advertised are subject to error, and it is established that the price was advertised in error – flyers do not fall in this category and are not considered catalogues as the lead time to produce flyers is much shorter, making it easier to publish a correction
- an advertisement containing a price error is followed immediately by a corrective notice
- securities that are sold at higher prices on the open market while a prospectus relating to them is still current
- products that are sold by, or on behalf of, someone who is not in the business of selling those products
Remedies for non-compliance
If a court determines that a person has violated this section of the Competition Act, it may order them to stop engaging in such conduct, to publish a correction, and/or to pay an administrative monetary penalty.
For individuals, the penalty for first-time violations is up to the greater of:
- $750,000 ($1 million for each subsequent violation); and
- three times the value of the benefit derived from the deceptive conduct, if that amount can be reasonably determined.
For corporations, the penalty for a first-time violation is up to the greater of:
- $10 million ($15 million for each subsequent violation); and
- three times the value of the benefit derived from the deceptive conduct, or, if that amount cannot be reasonably determined, 3% of the corporation’s annual worldwide gross revenue
Having a credible and effective compliance program can provide benefits in dealing with the Competition Bureau to resolve a violation of one of the legislation it enforces. A compliance program can also help:
- reduce the risk of potentially illegal conduct
- protect your brand and reputation
- detect instances of potentially illegal conduct at an early stage
- identify when others might put you at risk
To find out more information on written opinions under section 124.1 of the Competition Act, contact the Bureau’s Information Centre toll-free at 1-800-348-5358 or online. If a written opinion is provided by the Commissioner, a fee will apply based upon the section of the Act the proposed conduct or practice applies to. A written opinion is binding on the Commissioner as long as the facts submitted are accurate, and it remains binding if the facts on which the opinion is based remain substantially unchanged and your conduct or practice is carried out, as proposed. All fees and service standards for written opinions are set out in the Competition Bureau Fee and Service Standards Policy.