It is well documented that Canadian consumers pay more than their American counterparts for identical goods. Statistics Canada estimates for 2011 revealed that Canadian prices were about 25 percent more than U.S. prices for many goods. More recent private sector estimates suggest that price differences remain high.
The causes of the price gap are complex and varied. In 2011, the Standing Senate Committee on National Finance studied the issue. The Committee's 2013 report identified a number of contributors, including the practice of country pricing, the volatility of the exchange rate, the price of fuel, customs tariffs and product safety standards.
A recent study published by the American Economic Review, which reviewed 4,000 separate products, in both Canada and the United States, concluded that distributors or wholesalers are engaging in country pricing strategies.
The Price Transparency Act introduced today will help tackle geographic price discrimination. The bill will amend the Competition Act to empower the Commissioner of Competition to use formal investigative powers to expose cross-border price discrimination that is not justified by higher costs in Canada. The changes will authorize the Commissioner to seek court orders to compel the production of confidential evidence relevant to differential pricing between Canada and the U.S. The Commissioner will be empowered, for the purposes of such inquiries, to seek court orders to compel witnesses for examination, the production of records and written returns of information.
Following an inquiry, the Commissioner will issue a report on the findings. The reports will identify the causes of the price discrepancy, exposing any price discrimination.
The bill will also enhance the Commissioner's investigative powers through amendments to section 11 of the Competition Act. These changes will help ensure Canadians are not charged higher prices than Americans simply because of where they live.
Economic Action Plan 2013 took action on tariffs, providing $79 million in annual tariff relief through the elimination of tariffs on baby clothing and certain athletic equipment. Economic Action Plan 2014 announced a plan to take action to address another identified cause of the price gap: geographic price discrimination.
