May 2010

Minimum resale price: prohibited

By André Rochon Lawyer

In business practices, retailers are often required by suppliers to sell their products at minimum retail prices set by the suppliers themselves.

In this way, suppliers are guaranteed that their products are sold at relatively harmonized prices throughout a given region.

However, this practice infringes upon the market laws that enable retailers to sell any product at any price.

Though prevalent, this practice is prohibited by Canadian law, and the Competition Act (R.S., 85, ch. C-34) stipulates that a supplier may not impose a resale price on retailers:

76. (1) On application by the Commissioner or a person granted leave under section 103.1, the Tribunal may make an order under subsection (2) if the Tribunal finds that

(a) a person referred to in subsection (3) directly or indirectly

(i) by agreement, threat, promise or any like means, has influenced upward, or has discouraged the reduction of, the price at which the person's customer or any other person to whom the product comes for resale supplies or offers to supply or advertises a product within Canada, or

(ii) has refused to supply a product to or has otherwise discriminated against any person or class of persons engaged in business in Canada because of the low pricing policy of that other person or class of persons; and

(b) the conduct has had, is having or is likely to have an adverse effect on competition in a market.

Retailers may therefore sell products at prices of their choosing, regardless of any threat of restriction.

In addition, a supplier who engages in such practices is subject to heavy fines.

If you require further information, do not hesitate to contact your counsel.