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.