January 15, 2020
One of the most common questions that we see and answer in our practice is whether price gouging is an offence under Canadian competition law (e.g., under the federal Competition Act). This question often arises in relation to gas prices or other high-impact consumer products (e.g., telecom/wireless services or grocery stores).
Canada’s Competition Act does not prohibit price gouging (i.e., individual companies that decide to unilaterally charge their customers high prices or prices that customers perceive to be anti-competitive) and the federal Competition Bureau does not regulate (i.e., does not determine or set) the prices of goods and services in Canada.
Price gouging (i.e., supracompetitive pricing) in Canada can, however, be evidence of market power for some of the reviewable practices under Part VIII of the Competition Act (e.g., as evidence of a firm’s market power under section 79 (abuse of dominance).
It is also a criminal offence under section 45 of the Competition Act (criminal conspiracy agreements (cartels)) for two or more competitors to fix the prices of their products or services by agreement, which is subject to a potential criminal fine of up to $25 million, imprisonment for up to 14 years, or both. Private parties can also commence private civil actions and class actions for section 45 offences (for more information, see: Competition Litigation).
Also, merely observing a competitor raise its prices and independently deciding to do the same, which can occur in many kinds of transparent markets (i.e., where product pricing is easily and publicly available such as on signs or store shelves) is not an offence under the Competition Act. The three conspiracy offences under section 45, including price-fixing agreements, all require that an agreement between two or more competitors has been formed to raise prices be proven for an offence. Or, as is sometimes said, “one cannot conspire alone”.
Having said that, the Canadian Competition Bureau has been detected illegal price-fixing in many markets in the past (e.g., in Canadian local retail gasoline markets) through its broad investigative powers, including wiretaps, complainants and Immunity and Leniency Program applicants. In this regard, evidence of so-called “facilitating practices” (e.g., the exchange of competitively sensitive information between competitors, meetings between competitors, evidence of identical pricing or lock-step price increases) can be used as evidence of an illegal price-fixing agreement under section 45 (for more information, see: Information Exchanges Between Competitors).
For more information about Canadian competition/antitrust law, see: Competition Law, Competition Bureau Enforcement, Competition Bureau Complaints, Competition Law Compliance and the Canadian competition law overview pages to the left.
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SERVICES AND CONTACT
We are a Toronto based competition and advertising law firm offering business and individual clients efficient and strategic advice in relation to competition/antitrust, advertising, Internet and new media law and contest law. We also offer competition and regulatory law compliance, education and policy services to companies, trade and professional associations and government agencies.
Our experience includes advising clients in Toronto, Canada and the United States on the application of Canadian competition and regulatory laws and we have worked on hundreds of domestic and cross-border competition, advertising and marketing, promotional contest (sweepstakes), conspiracy (cartel), abuse of dominance, compliance, refusal to deal and pricing and distribution matters. For more information about our competition and advertising law services see: competition law services.
To contact us about a potential legal matter, see: contact
For more information about our firm, visit our website: Competitionlawyer.ca
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