The Government of Canada, through Industry Minister James Moore, is to be commended for introducing the Bill creating the Price Transparency Act (C-49) into the House of Commons on December 9th. Perrin Beatty, President and CEO of the national Canadian Chamber of Commerce, badly misses the mark in his published evaluation of the Bill that would create this legislation once passed by both House and Senate and coming into force. The Bill, once it becomes law will enable the Competition Bureau of Canada to tackle cross-border price discrimination.

Here is the reality:  Canadians have been frustrated with paying higher prices for the same products for decades, even for products manufactured in Canada and which are sold in both Canada and the United States  There are many valid points of explanation for some of these pricing disparities that disadvantage Canadian consumers.  In some cases, economies of scale are an argument, in others, market conditions, in others transportation costs, in others differing tax regimes.  Nonetheless, the available explanations leave out the element of geographic price discrimination that is not justified by higher costs in Canada. Indeed, arguably, such discrimination is the missing explanatory variable.  The proposed law essentially extends the authority the Commissioner of Competition already has by authorizing the Commissioner to seek court orders to compel the production of confidential evidence relevant to differential pricing between Canada and the United States, which is the relevant comparison for Canadians, particularly the majority of Canadians who reside close to the U.S.- Canada border.

Let’s review what Mr Beatty has to say:
Mr Beatty is of course correct that it seems that all of our lives prices have been lower in the United States than in Canada. But this is no reason to continue to accept this situation, if there are explanations for this pricing that are based on anti-competitive, anti-trust or cartel-like activity which would normally be illegal, but for the cross-border context at issue here.

As far as the “government bureaucracy” that is going to get into action here, that would be the Competition Bureau of Canada which is a world class competition authority that has a proven track record of responsibly and fairly applying the Competition Act and the labelling statutes in Canada and in collaboration with other Competition Law agencies around the world where trans-border anti-competitive crimes are at play. What the new piece of law does is ensure that the Competition Bureau has the tools to deal with geographic price discrimination that harms Canadians because of  trans-border corporate behaviour  Now it is clear that many of Mr. Beatty’s members do not like the additional scrutiny of their behaviour that the new law provides — behaviour that is tied into cross-border pricing differentials that have ensured that Canadians pay higher prices than Americans pay for the same products, even when those products in some cases are manufactured in Canada.

Yes, there are many types of price discrimination that are in play, and, yes, many of these are not only legal, they are appropriately so, but this legislation provides the Competition Bureau with tools to deal with the issue of cross-border geographic price discrimination, which can harm Canadian consumers as a whole: that is, all consumers in Canada. This is quite different from government policy preferences such as lower prices for seniors or for other groups, or airline pricing discrimination relating to time, place and seating as examples.

As the Consumers Council of Canada understands it, the government is looking at and/or has acted upon other factors that can impact cross-border pricing, such as tariff reductions and reduction of high regulatory costs. Of course, the government, acting for all Canadians, still has to regulate in some fashion and still has to work on these other factors. Be that as it may, assuming that Mr Beatty got his wishes of large tariff reductions in some areas and deregulation in others, the pricing differentiation that impacts negatively on all Canadian consumers would continue to exist. And the Council must inevitably wonder how some of Mr Beatty’s members would respond to some elements of deregulation and tariffs that may impact negatively some of his members.

Governing is of course a balancing act, and there are interests that go well beyond those of Mr. Beatty and his members, to the broad base of Canadians as consumers. Theses balancing acts are undertaken daily in the context of security for Canadians versus freedom of movement and cross-border trade, health in terms of requiring inoculations to protect us against epidemics – the list of balancing acts is very long and the Price Transparency Act is another one of them.  So, we at the Council do consider the effort to achieve this legislation as serious and meaningful in the protection of the interests of Consumers in achieving the lowest possible prices for quality goods and services.
It is inappropriate for Mr. Beatty to argue that Canadians are not accountable to the government for how they conduct their businesses.  Really?  Does Mr. Beatty seriously argue that businesses can do as they please, that they can misrepresent products, that they can engage in pricing and other cartels, and misrepresent products or cheat and steal? Of course not. But these are areas in which Canadian businesses are made accountable to the Canadian people by way of the government enforcing the Criminal Code, the Competition Act and other acts governing business at the federal, provincial and municipal levels. So it is disingenuous of Mr. Beatty to argue that businesses are not accountable to governments for how they conduct their interactions with consumers, including other businesses and governments.

As for demanding explanations about behaviour, that authority is of course already in place in the Competition Act and other acts both provincially and federally, and in various regulations that are in place to ensure honest, safe, fair, transparent and competent business dealings with consumers. And one element is for consumers to be able to exercise choice, choice that is not unfairly impinged upon by inappropriate pricing discrimination and other business behaviours.  And there is nothing in the Price Transparency Act that says that the government is to fix prices, although, of course, some such regulatory regimes have existed before, as in times of war and, for example, today with the various agriculture marketing schemes.  As for the government bringing bargains to Canadians, that is not, based on the Consumer Council of Canada’s review of the proposed law, the intention.  To the contrary, the intention is to enable the Competition Bureau of Canada to have the tools to deal with inappropriate geographical price discrimination that harms Canadians as consumers.

The Consumers Council of Canada commends this legislative effort by the Government of Canada and hopes for speedy passage through the House, the Senate and then coming into force. During the Committee stages in both House and Senate there will be an opportunity to improve on what is there, if there is merit in doing so, but the law itself at its core merits speedy passage to help protect Canadian consumers.  We would hope that the majority of Mr Beatty’s members also would see the same merit for a law to enhance the protection of all Canadians from geographic price discrimination.

Don Mercer, Vice President, Federal Affairs, Consumers Council of Canada