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A Look at Canada’s Possible Price Transparency Act

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Glenn-Maidment-TRACThe Honourable Industry Minister James Moore introduced new legislation called the Price Transparency Act, which will amend the Competition Act to empower the Commissioner of Competition to investigate price discrepancies on consumer goods and, where warranted, call manufacturers and distributors to explain and justify their Canadian pricing.

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This is all in an attempt to eliminate the practice of geographic price discrimination, otherwise known as “country pricing.”

In his remarks, Minister Moore made clear this was not an attempt to regulate prices, and he conceded some pricing differential may be reasonable given exchange rates, customs and tariffs and other factors. But, he said, Canadian consumers are feeling “ripped off” and this legislation is one way to address their concerns.

In 2013 the Standing Senate Committee on National Finance reported their findings after many months of hearings, concluding the causes of the price gap on consumer goods between Canada and the United States were varied and complex. Volatile exchange rates was one of the key items mentioned in their report, which manufacturers are now seeing played out in front of our eyes.

The Price Transparency Act is particularly difficult for a trade manufacturing association to comment on because member product pricing is just one of those topics you cannot discuss for fear of running afoul of the Competition Act. The topic is perhaps even more froth with danger for TRAC because up until very recently any story about pricing differentials between the U.S. and Canada invariably mentioned books and tires – though the topic is pretty much mute with an eighty-cent dollar.

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It’s at times like this we are reminded of a marketing quote from Sy Syms, a men’s clothing retailer back in the day, who said, “An educated consumer is our best customer.” These days there is no excuse whatsoever for not being an educated consumer. Just a few minutes online will tell you what size of tire is best for your vehicle and a plethora of tire brands, pricing and retailers near you. There are also websites that compare brands and features to help consumers narrow their choice.

Speaking of choice, in mid-2014, and for an entirely different reason, TRAC commissioned a field study to determine the number of discrete tire brands being sold in the passenger tire market in Canada. For the record, TRAC has 14 tire company members, many of which may have one or two associate brands to ensure they cover a wide audience from a pricing perspective.

The field survey identified almost 100 brands of passenger vehicle tire brands! Personally, we cannot think of another industry where consumers have more choice of products from which to choose. It seems to us that ultimately having a competitive market with lots of choice and readily available product information is the best way to ensure consumers are protected.

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Whether the Price Transparency Act is successful or not remains to be seen, but for the tire sector, the free market is alive and well.

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