Competition Bureau urged to study cross-border price gap

The Competition Bureau should look into price differences between goods sold in Canada and the U.S., a consumer group is suggesting, with many items selling for 20 or 30 per cent higher north of the border.

Canadian consumers pay more than Americans

Shoppers carry their bags as they walk in Seattle. The Senate is looking at why significant price differences exist between the U.S. and Canada, but the Public Interest Advocacy Centre, a consumer group, says the Competition Bureau should study Canada's retail market. (Ted S. Warren/Associated Press)

The Competition Bureau should look into price differences between goods sold in Canada and the U.S., a consumer group is suggesting.

The bureau, which helps ensure a competitive marketplace in Canada, should study why so many items cost more in Canada than they do in the U.S., the head of the Public Interest Advocacy Centre told the Senate finance committee Tuesday.

"Obviously, we've had a great increase in the value of the Canadian dollar that should have been reflected in prices in the market and doesn't seem to be," Michael Janigan said.

"I think we have to figure out why that is the case. Is there some reason why that value is not being passed on to consumers?"

The Competition Bureau didn't immediately respond to a request for comment.

The Senate committee is examining, at the request of Finance Minister Jim Flaherty, why prices on some items are 20 or 30 per cent higher in Canada than in the U.S.

Bruce Cran, president of the Consumers' Association of Canada, says the dollar's value against its U.S. counterpart has gone up 50 per cent — from almost 67 cents in 2006 to parity.

"Five years ago our dollar started to rise toward parity and we’ve sort of been watching ever since," Cran told the committee.

But consumer groups say the value hasn't been passed on to Canadian shoppers.

Labour cost, taxes higher in Canada

The committee has already heard that higher labour and transportation costs add to prices, while those costs are shared among fewer consumers than in the U.S.

Bank of Canada governor Mark Carney told the committee last November that labour costs and a smaller market, lower productivity and taxes account for some of the price difference. Other factors, such as marketing costs in Canada, don't decrease when the value of the dollar appreciates because it's a service generally provided by Canadian companies.

Janigan said those factors have always existed, but if the retail environment in Canada was competitive, the increased buying power of the Canadian dollar should have been passed on to consumers.

"From our standpoint, that looks like a situation where there is some degree of market dominance being exercised, or some degree of concentration that has failed to pass on those prices," he said.

Big industry players could have set up exclusive supply agreements, restricted access for some products or made long-term distribution agreements that make it hard for new entrants to the market.

"Why aren’t these prices being passed on? Why aren’t competitors, for example, taking advantage of the difference in prices that is available to them for the exchange and passing them on to consumers?"

Melanie Aitken, the commissioner of the Competition Bureau, has previously taken on the real estate industry, credit card companies over the fees they charge retailers, and personal care products and telecommunications companies that make claims they can't back up.