On December 9, 2014, Industry Minister James Moore announced that the Price Transparency Act had been introduced in the House of Commons in an effort to address and expose firms that are engaged in unjustified geographic price discrimination, i.e., that sell products or services in Canada at prices that are higher than similar goods or services sold in the U.S. and which are not justified.
The proposed legislation is likely to be of significant interest to U.S.-based companies that have sales into Canada, particularly if they employ country-specific pricing strategies.
If passed, the legislation would amend the existing Canadian Competition Act to allow the Commissioner of Competition to seek court orders to require a company to produce evidence relevant to the price difference between Canada and the U.S., including production of records (such as internal strategic documents and emails) and written returns of information. The expanded investigative powers would apply to Canadian and non-Canadian affiliates of the company subject to the Commissioner’s inquiry.
Additional notable aspects of the proposed legislation include:
- The Commissioner would be required to issue a public report on the findings from such an investigation, in an effort to identify the causes of price discrepancies between the U.S. and Canada, and expose any price discrimination.
- There is no specified market share or market power threshold for an inquiry. Large and small companies alike would be subject to the Commissioner’s new investigative powers.
- There is no safe harbour or de minimis threshold in price differences for an inquiry. Any price gap between Canada and the U.S., no matter how small or large, could be subject to the Commissioner’s new investigative powers.
- The proposed legislation singles out price differences between the U.S. and Canada. Price differences between Canada and other jurisdictions are not the focus of the proposed legislation.
The Minister of Industry’s public announcement and backgrounder is available here.
The proposed amendments to the Competition Act (Bill C-49) are available here.
The Canadian government raised this issue in October 2013 and renewed this commitment in its budget announcement in February 2014. For more information, see our October 2013 Blakes Bulletin: Recent Developments in Canadian Competition Law and Foreign Investment and our February 2014 Blakes Bulletin: Competition Act Changes: Federal Budget Announcement.