Federal Government to Tackle Canada-US Retail Price Gap on Electronics and More

Industry Minister James Moore today has announced the Federal government’s plans to take aim at the “unexplained and often significant gap between Canadian and U.S. prices for the same products,” by introducing the Price Transparency Act:

The Price Transparency Act will help tackle the practice of geographic price discrimination, one of the key contributors to the Canada–U.S. price gap. Today’s announcement provides the Commissioner of Competition with the tools necessary to investigate alleged cases of price discrimination and to publicly report situations where consumers are unfairly targeted with higher prices. The Commissioner will be authorized to seek court orders to compel the production of evidence to expose discriminatory pricing practices that are not justified by higher costs in Canada and to publicly report to consumers on the findings.

According to the government’s studies, retail prices of goods in Canada are 10-25 percent higher than the U.S., while the Standing Senate Committee on National Finance in 2013 concluded country pricing by manufacturers is a one of the primary reasons for the price discrepancies.

Also, the American Economic Review’s recent study reviewed 4,000 items in both countries and found distributors or wholesalers were the ones engaging in country pricing strategies.

Canadians are well aware of price differences between both countries. Aside from country pricing from wholesalers, the dollar exchange rate surely plays a role, along with transportation costs among others. When it comes to electronics and accessories, it’s mostly cheaper to buy in the USA, but it’s the shipping and duties to Canada that typically kills the deal.

When it comes to Apple, price differences remain between both countries. An unlocked entry iPhone 6 costs $649 US, while the same model costs $749 CAD. The differences in price jump $110 and $120 respectively for the 64GB and 128GB models.

Is this something the government will actually be able to change? Or is this just something that will drive discussion leading up to next year’s federal election? Some would argue companies forced to comply with investigations would just pass the costs onto consumers.

Founder and Editor-in-Chief of iPhoneinCanada.ca. Follow me on Twitter, and @iPhoneinCanada, and on Google+.

  • Tobi

    “An unlocked entry iPhone 6 costs $649 US, while the same model costs $749 CAD.”
    Being the rate of exchange 1USD=1.1725CAD, it works out to about even to the US. The $649USD iphone works out to about $761CAD; not a huge difference since the Canadian dollar is weakening.

    *exchange rate from scotiabank foreign rates.

  • Tim

    What Tobi said.

    Also, there will be no teeth in this initiative. It’s merely designed to make the cons look consumer friendly in an election year.

  • Nigleet

    This an utter waste of time looking at cross border price variance. Now What they should really focus on is regional price discrimination within Canada. SASK, MANITOBA, QUEBEC, GTA Phone plans are no where in comparison to the rest of Canada. 5 GB at 65, 10 at 75 (SK MB). The rest of Canada gets 500 at 80. Thats disgusting.

  • Al

    Yup. The government can’t tell me what I have to charge when I import and resell stuff. I can charge whatever I want, as can any other company. It’s up to the consumer to decide whether to buy or not.

  • Salinger

    That rate includes Scotiabank’s markup. The current straight rate is about 1.14 and that’s at least a couple of cents worse (for us) since the iPhone’s release. It works out almost spot on.

    That said, I don’t think this is targeted at things like the iPhone and others that are within reason of the exchange difference. There are numerous products that are 40%+ more expensive in Canada than the US for no other reason than “they can”.

    Target as much as admitted that when they set up shop here and were questioned why they weren’t offering the great price breaks here that they were in the US. Likewise, J Crew was charging a huge markup on the exact same products here vs the US. You can only blame taxes and higher wages for so much. 🙂

    Despite that, this is nothing more than pre-election posturing. There’s really little, if anything, the Government can do unless they find out something truly illegal is going on. The greatest thing companies react to is sustained public scrutiny and media attention.

  • Rob Raymond

    You have my vote in the next election 🙂

  • johnnygoodface

    Well it’s the first good decision this government has taken! Good for them!

  • ward09

    Here is my study:

    CANADA:
    BC GST/PST = 12%
    Alberta GST = 5%
    Saskatchewan GST/PST = 10%
    Manitoba GST/PST = 12%
    Ontario HST = 13%
    Quebec GST/PST = 15%
    New Brunswick HST = 13%
    Nova Scotia HST = 15%
    PEI HST = 14%
    Newfoundland HST = 13%
    Average Sales Tax in Canadian Provinces = 12.2%
    Tax on $650 phone @ 12.2% = $79.30

    US BOARDER STATES:
    Washington State/Local Tax = 9%
    Idaho S/L = 6%
    Montana S/L = 0
    North Dakota S/L = 6.5%
    Minnesota S/L = 7%
    Wisconsin S/L = 5.5%
    Michigan S/L = 6%
    New York S/L = 8.5%
    Vermont S/L = 6%
    New Hampshire S/L = 0
    Maine S/L = 5%
    Average Sales Tax in US Boarder States = 5.4%
    Tax on $650 phone @ 5.4% = $35.10

    Conclusion, if the government wanted to do something about price discrepancy, they don’t need to go to retailers, they could start in their own backyard.

  • Oh. No. You. Didn’t. #boom

  • ward09

    I didn’t even add the extra transportation costs in Canada (gas tax) or “eco-fees” (electronics tax). I’ll save that for next year’s edition of my study.

  • gmd

    “geographic price discrimination”

    Is this like Bell TV (satellite) allowing à-la-carte channel selection in Québec only?

  • JfromC

    “and More” more like “and Everything”. Everything costs more in Canada, but we do have “free” healthcare.

  • definingsound

    The Microsoft Store (and Steam) sells items in Canada at the same sticker price as the US. Does the Harper agenda seek to increase the prices in Canada when the exchange rate is in Canadians’ favour? That I doubt.

    The real issue is car sticker prices between the two countries, but the Harper government knows better than to mess with the auto industry. Better to say “electronics” during the xmas season to earn populist votes.

  • definingsound

    Do you have any idea how expensive it is for cell carriers to set up high speed data coverage for saskatchewan? The entire province has fewer people than Brampton, ON. Of course the GTA will have lower data prices – the cost of infrastructure is that much lower. In fact it is GTA that should be screaming “rip-off”, because the GTA is subsidizing the mobile data infrastructure across the country.

  • Nigleet

    I don’t think you understood. Im not trying to start an argument with you, but GTA has a subsidized market, though not by much. Sask and Manitoba have the lower rate plans nation wide, not GTA. Your pillar regarding the cost of infrastructure in Saskatchewan does not reflect the reality of what the market is. In-fact its the exact opposite.

    SK, MB- Higher infrastructure costs, though lowest rate plans?
    GTA – Lower infrastructure costs, though higher rate plans (Higher than SK+MB, lower than Nation-wide rates.)

    This has very little to do with infrastructure costs. Its simply price discrimination due to local competitors in the respective regions.