Psst, wanna buy a TV? Canadian prices suddenly much lower than U.S.
After years on the losing end, Canadian consumers finally getting a break on cross-border items
Pushing my shopping cart dispiritedly through the LCBO, Ontario's we'll-charge-whatever-we-like monopoly on wine and spirits, I spied a confusing sight over the holidays: a bottle of good American wine priced far below what it would go for in the U.S.
In Bethesda, Md., where the state government, like Ontario, outlaws competition and forces consumers to buy most alcohol from official outlets, the wine in question — a rather delicious cabernet from California's Napa Valley — costs $34.65 US, plus nine per cent tax, for a total of $37.76.
At current exchange rates, that translates to at least $52.77 Cdn.
The very same bottle, at the LCBO, on the day I visited, cost $25.95 here, tax included. In other words, that bottle of wine costs more than twice as much in Maryland.
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The LCBO staff, informed of the difference, seemed astonished.
They're far more accustomed to hearing complaints about how much more the LCBO charges than stores in America.
At its head office, LCBO officials even have set-piece speeches for reporters about how Ontarians enjoy much greater selections than Americans (they don't) and how the monopoly helps protect Ontarians from becoming alcoholics (for which we can only be grateful).
Anyway, what's really making the difference nowadays is the weakness of the Canadian dollar. You'd think it would be killing us consumers by now. But it's not. At least not yet. Weirdly, it's actually giving us some big breaks.
Psst, wanna buy a car?
Four or five years ago, when the currencies were closer in value, I'll wager that particular wine was a lousy deal in Canada, relative to its cost in the States.
Now, though, with the exchange rate figured in, it's a steal.
The same can be said for a whole range of other products.
Take the Honda Accord. The basic "Sport" model lists here for $30,864.25 Cdn. In the U.S., the price on Honda's website is $25,975 US, or at least $36,285.05 Cdn with the exchange factored in.
That's a difference of roughly $5,700 for exactly the same car.
Here's another example. The terrifically popular Bose Wave sound system costs $649.99 Cdn for the System IV model. In the U.S., the same item costs $599.95 US, the equivalent of $838.41 Cdn.
And flat-screen televisions of all types appear vastly cheaper at Canadian Best Buy stores than in American outlets.
All this is a massive reversal from the situation just a few years ago, when the Canadian and American dollars were much closer in value, and manufacturers were gleefully gouging Canadians for every cent they could extract — sometimes 30 or 40 per cent more than they were charging Americans — while piously explaining, when questioned, that "the markets are different."
The shearing of the Canadian flock provoked so much public anger at one stage that a Senate committee spent a good deal of time and money studying the matter before concluding there was really no clear reason for the huge price differentials (except, of course, plain greed).
Certain exceptions apply
But, having pushed prices in Canada to saturation levels and made out like bandits when the dollar was at par or better, it's difficult for manufacturers to jack prices up even further now to make up for the falling loonie.
Imagine if Honda Canada suddenly started trying to charge $43,000 instead of $30,864 for that mid-level Accord Sport? How many would they sell in a country where household debt now stands at record levels?
Mind you, there are exceptions: certain industries, like airlines and telecommunications companies and agricultural producers, enjoy largely protected markets. They have more freedom to charge what they like.
Air Canada, for example, embeds in its ticket price something called a "carrier surcharge," which is a new name for the old "fuel surcharge."
A little investigation will reveal that the surcharge for two randomly selected economy-class return tickets to Italy later this year amounts to $1,253.04, driving the total cost to $3,316.44, which includes an additional $242.44 in "taxes, fees, and charges," (as opposed to "surcharges," which are presumably different).
An Air Canada spokesman, asked to explain the big fuel surcharge at a time when the price of fuel has plummeted, said that most of the airlines costs are in US dollars, and therefore must be passed on.
But Dr. Gabor Lukacs, a Halifax-based academic who has sued the Canadian Transportation Agency over airline practices and won, several times, says the "real reason is there is no sufficient competition to force lower prices. It's not a free market."
Air travel is "a distorted market," he says. "It's a quasi-monopolistic market."
A better term for the carrier surcharge, he adds, would be "bigger-profit charge."
Alas, says Bruce Cran, president of the Canadian Consumers' Association, we shouldn't expect the relative price breaks in other areas to last too long.
Basically, he says, merchandise already in the pipeline, purchased at lower prices a year or more ago (like that nice cabernet at the LCBO, no doubt) is still moving through the system.
In a year or so, he suggests, Canadians can expect automakers to introduce different model names here, with different options packages, and then begin relentless, steady price increases.
He calls it the "mystification" process: corporations introduce specious variables and name changes to make strict apples-to-apples comparisons difficult, then issue bewildering statements about price inputs and the need to keep comparisons within the same market.
"Not only with cars, but with TVs and other goods," he says.
And the Canadian government, he predicts, will do nothing: "Canada is bad. Just absolutely bad. There is no consumer protection structure here nowadays."
So, happy 2016. You're actually getting a few deals, my fellow sheep. Enjoy them while they last.
- In an earlier version of this story the name of Gabor Lukacs, the Halifax man who has challenged airline fees, was misspelled.Jan 05, 2016 1:05 PM ET