Sears Canada, which is currently engaged in a chain-wide liquidation after declaring bankruptcy in October, is being investigated by Canada’s Competition Bureau for its sale prices. Specifically, over allegations that some prices were marked up just before the sales began, ostensibly to offset advertised discounts.
According to a CBC report from late October – just after the bankruptcy declaration – shoppers have been reporting prices higher than where they had been prior to the liquidation. The retailer denies that prices were raised before the sales, but social media is telling the tale for many customers. (Sears Canada told the CBC that the prices in question were “marked up some time ago”, before the liquidation sales.) Many shoppers have taken to Facebook and Twitter with photos of lower prices discovered beneath current sticker prices.
For example, a t-shirt priced at $9.97 during the sale had a lower price of $7.97 underneath the current price sticker. After the advertised 20% liquidation “discount”, the reduced price was… $7.97. The belief among some shoppers was that these sales were not sales at all.
The Competition Bureau sent letters to the liquidators in November about allegations that some merchandise was marked up ahead of the sales. While the Competition Bureau is refusing to comment (as the Sears Canada investigation is ongoing), a spokesperson for the watchdog did clarify that “when comparisons are made between a regular price and a sale price, they must be true.”
Some other notable examples of large companies who have faced allegations of price manipulation:
- Canadian Tire pleaded guilty in 2012 to being part of a “criminal price-fixing cartel” (along with Pioneer Energy and Mr. Gas), that inflated gas prices in two Ontario cities between May and November of 2007. The retailer agreed to pay a fine of $900,000.
- Air Canada denied accusations that it charged premium prices to Alberta residents evacuating the 2016 Fort McMurray wildfires. The airline blamed its computer system and pledged to refund affected customers the difference between the premium and standard prices. The company also donated $50,000 to the Red Cross to help with relief efforts – but did not apologize.
- This past summer, a photo of cases of water selling for upwards of $40 at Best Buy went viral in the wake of Hurricane Harvey’s impact on Houston. The retailer apologized for what it called “a big mistake.” In the wake of Hurricane Irma, the Florida attorney general’s office was flooded with thousands of complaints of price gouging.
- In January of this year, Amazon agreed to pay a $1 million penalty and $100,000 in costs after the Competition Bureau ruled that the online retailer had not verified “list price” information on provided by suppliers when it came to its Canadian site, Amazon.ca.
- Earlier in November, the Competition Bureau ended a three-year investigation into alleged anti-competitive conduct by Loblaw Cos. In a statement explaining its decision to end the probe, the watchdog “concluded that these allegations were not sufficiently supported by the full body of evidence collected… the Bureau has determined that there is insufficient evidence to conclude that the Loblaw Policies have lessened or prevented competition substantially in any relevant market.”
Whether or not the Competition Bureau finds anything untoward in Sears Canada’s practices surrounding the retailer’s current liquidation sale remains to be seen, and depending on the scope of the investigation, it may be some time until that becomes clear. In the meantime, bad social media buzz may discourage some shoppers from taking advantage of the liquidation sales being offered by the dying retailer entirely – regardless of any advertised discounts.
Justin Anderson | The Edge Blog