December 9, 2014 / 4:53 PM / 3 years ago

UPDATE 2-Canadian bill to expose U.S.-Canada price inequities

(Adds industry reaction, quotes from analyst and economist, background)

By Leah Schnurr

OTTAWA, Dec 9 (Reuters) - The Canadian government introduced legislation on Tuesday to give the competition watchdog the power to embarrass companies that charge more for products in Canada than they do in the United States.

The ruling Conservatives had pledged earlier this year to address price discrimination as part of a pro-consumer agenda ahead of next year’s election.

But the proposed Price Transparency Act would fall short of making price discrimination illegal, an idea economists had criticized as undue interference. Instead, the bill provides a mechanism to expose price differences.

“This legislation will not set or regulate prices in Canada,” Industry Minister James Moore said.

He decried what he called “price gouging of Canadian consumers ... simply because of where they live.”

Consumer outcry over prices picked up when the Canadian dollar rose back to parity with the greenback in 2010, leading shoppers to expect roughly equal prices. The currency has since fallen back, reducing price differences.

“I would roughly estimate that the gap is almost gone at today’s exchange rate, so I almost wonder how many instances they’re actually going to be dealing with in the next few years,” said BMO Capital Markets chief economist Doug Porter.

The bill would allow the Competition Bureau to seek court orders forcing companies to hand over confidential information that could expose pricing practices not justified by higher costs in Canada. The bureau would report the findings to the public.

Benjamin Dachis, senior policy analyst at the C.D. Howe Institute think tank, was critical of the idea even without price regulation: “It’s the corporate equivalent of the government coming into our bedrooms.”

Some businesses have said higher Canadian operating costs justified higher prices. The Canadian Chamber of Commerce had said a proposal to levy fines for high prices flew in the face of free-market principles.

“That would have been a much more intrusive and difficult thing to live with,” chamber Senior Vice President Warren Everson said.

Still, competition law expert Subrata Bhattacharjee at Borden Ladner Gervais said companies selling on both sides of the border would need to pay close attention.

“This is a potentially very significant and very intrusive enforcement power,” he said.

Retailers largely cheered the bill, saying they hoped it would lead to lower wholesale prices.

“Many of our small retailers in border communities are really having a difficult time competing,” said David Wilkes, a senior vice president at the Retail Council of Canada. (Additional reporting by Allison Martell in Toronto; Editing by Jeffrey Hodgson, W Simon and Peter Galloway)

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