The reason that many leading ‘brand name’ products never seem to be advertised at deeply discounted prices is because of a policy set by suppliers called Minimum Advertised Pricing (MAP).

A deep cut to advertised prices might attract more consumers into the store to buy other products. But many suppliers use MAP policies so that their products — often those with significant advertising support — are never perceived as ‘cheap’ or discounted.  Larger brands may supply stores only when retailers agree to the MAP terms. 

The practice was once common with higher-end appliances and luxury brands, but considerable evidence exists that these practices are now more commonplace in grocery pricing.

MAP covers advertised pricing and is different from Manufacturers Suggested Retail Pricing (MSRP). Retailers can set prices lower, but just can’t advertise that they are doing so. Shoppers who scan flyers for sales may notice unadvertised in-store specials.

Although this practice may be viewed as uncompetitive, it is considered legal in Canada under the Competition Act – provided the manufacturer is not coercing a retailer by refusing to supply the product to them, or otherwise pressuring or discriminating against them, and as long as competition in the market is not adversely affected – somethat that would require some initial evidentiary grounds and considerable resources to investigate and prove. 

Inside a grocery store, brands are competing with each other for consumer dollars, and it is difficult to prove that the pricing practices of one producer are inherently anti-competitive given that other products are available. 

Canada’s Competition Bureau — an independent law enforcement agency overseeing the Competition Act — describes MAP as a common business practice and provides the guidelines on what’s allowed and not allowed under the Competition Act. 

Its guidelines set out that price maintenance practices can be pro-competitive in many circumstances, but also gives examples of adverse effects on competition.

Andreas Boecker, chair of the Department of Food, Agriculture and Resource Economics at the University of Guelph, said it would take in-depth research and evidence to prove current practices harm competition. 

The evidence would have to include what a competitive price for a product is, which is difficult to determine because retailers and suppliers control that data. It would also have to account for complex circumstances that impact prices, such as supply chains, weather and consumer behaviour.