Traditionally, recourse under Canadian laws for excessive pricing was limited to provincial consumer protection legislation in a minority of provinces, given the lack of provisions addressing such conduct in Canada’s federal Competition Act. More recently, however, concern about price gouging in the context of the COVID-19 outbreak has led to renewed interest in excessive pricing regulation and, in Canada’s most populous province, the introduction of new powers under emergency response legislation to address such conduct.
Dealing with price gouging – Canadian provinces take the lead
In Canada, competition law does not explicitly address excessive pricing. Accordingly, recourse for “price gouging” has been left to provincial consumer protection laws and now, emergency response legislation.
Prior to the COVID-19 crisis, three provinces – British Columbia, Alberta and Saskatchewan – had explicit laws against price gouging. Consumer protection legislation in each of these provinces allows provincial authorities to seek orders to cease the conduct and potentially impose significant fines for charging prices that “grossly exceed” the prices at which similar products can be had by similar purchasers. Manitoba and Newfoundland and Labrador also have provisions in their consumer protection laws, which can be used against retailers engaged in price gouging.
However, on March 28, 2020, the Government of Ontario took steps to regulate excessive pricing in the context of COVID-19. See Premier Doug Ford’s tweet calling price gouging “un-Canadian” and wrong.
The Emergency Management and Civil Protection Act allows the provincial government to implement orders that regulate property and civil rights and mandate certain pricing practices. The March 28 order prohibits anyone from selling “necessary goods for unconscionable prices”. “Unconscionable prices” are defined as a price that “grossly exceeds the price at which similar goods are readily available to like consumers”, and “necessary goods” include:
- Masks and gloves used as personal protective equipment in relation to infections;
- Non-prescription medications for the treatment of the symptoms of the coronavirus;
- Disinfecting agents intended for cleaning and disinfecting objects or humans;
- Personal hygiene products, including soap products and paper products.
Potential penalties for violating this order include fines of up to $100,000 and one year in jail for individuals. For companies, violations can lead to fines of up to $10 million, and their individual officers or directors can be fined up to $500,000 and be sentenced to up to one year in jail.