Hudson's Bay to pay $4.5 million to settle Competition Bureau investigation
Bureau not taking questionable savings claims on sleep sets lying down
May 8, 2019 - OTTAWA, ON - Competition Bureau
The Hudson's Bay Company has agreed to pay a $4 million penalty and $500,000 towards the Competition Bureau's costs to resolve a proceeding relating to Hudson's Bay's advertising and pricing practices for sleep sets in Canada.
As part of a consent agreement registered today with the Competition Tribunal, Hudson's Bay will also ensure that the marketing of all sleep sets complies with provisions of the Competition Act relating to ordinary selling price and false or misleading representations. In addition, Hudson's Bay will establish and maintain a corporate-wide compliance program that will promote compliance with the Competition Act.
The Bureau took legal action against Hudson's Bay in 2017 to end what it considered to be deceptive marketing practices. The Bureau alleged that Hudson's Bay offered sleep sets at inflated regular prices and then advertised deep discounts on these prices, suggesting significant savings to consumers. The Bureau also alleged that Hudson's Bay made misleading representations as part of clearance promotions, implying that the price of sleep sets was lowered to sell the remaining on-hand inventory. In fact, Hudson's Bay did not have significant on-hand inventory, and instead ordered new products from manufacturers when consumers made purchases.
“This agreement is a victory for Canadians, and sends a strong message that the Bureau will not tolerate unsubstantiated savings claims that prevent consumers from making informed purchasing decisions.”
-Matthew Boswell, Commissioner of Competition
This settlement resolves the need for litigation that was scheduled to begin at the Competition Tribunal on May 6th, 2019.
The consent agreement has the force of a court order and will be binding for a period of 10 years. In addition to sleep sets, Hudson's Bay will ensure that the marketing of all major appliances complies with the provisions of the Competition Act relating to ordinary selling price and false or misleading representations.
The Act prohibits retailers from making reference to an inflated regular price when advertising sales. When comparisons are made between a regular price and a sale price, they must be valid.
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