A shiny red sales sticker in the grocery store can woo shoppers of any age with the promise of a good bargain. 

But what if that marked down price isn’t really a deal? 

Under Canada’s Competition Act, a company that advertises a sale price in relation to a regular price — such as a percentage or dollar amount off — must be able to prove the regular price existed in the first place. 

Companies can validate the regular price of an item by either having a lot of the item sold at that price, or sold for that price before or after it was discounted. If something is off, Canada’s Competition Bureau can step in and investigate allegations of wrongdoing and enforce competition regulations around price claims.  

While the Bureau has the ability to launch its own investigations, it more commonly does so in response to a complaint. 

In one recent example of how the principles are applied, in 2023 the Bureau fined Winnipeg-based furniture company Dufresne Group Inc. $3.25 million for misleading marketing. The Bureau said the company inflated prices of some items, then sold them at significant discounts. But because the ‘regular’ price was inflated, consumers were not actually saving anything. The company’s marketing also gave a misleading impression that some deals would only be available for a limited time, when that was not true.

When it comes to grocery stores, items are frequently placed on sale, with regular prices slashed, and those discounts are often only available for a limited time.

Those stores, though, have plenty of consumers pouring through flyers and using smart phone apps who may not be easily fooled.

The Bureau has not been able to gain a legislative change that would make it easier to pursue false sales price claims, a common complaint from grocery shoppers. In its submission to the a review of the Competition Act in 2023, the Bureau wanted to change the ‘burden of proof’ requirement for sales prices issues, so that the onus would be on companies and sellers to prove there was an ‘ordinary sales price’ in cases where ‘sale prices’ were being investigated. That recommendation was not adopted by the government of the day. 

Michael Von Massow, a professor of food agriculture and resource economics at the University of Guelph thinks the Canadian grocery market, despite being dominated by a few large chains, is a “very competitive consumer retail environment.  He said consumers are much more savvy about their food costs when compared to a much less frequent purchase, like a sofa.

A study by Von Massow found Canadian grocers offer sales at twice the frequency and cut prices two times as deeply compared with those in the United States.

But those discounts do not mean Canadian stores are deceiving consumers, he said. 

“I don’t think, in most cases, Canadian specials are nefarious by any stretch,” Von Massow said. “I think that it’s a reflection of the marketplace. And I think it is also much easier for a furniture company to be deceptive on the regular price.”

While the Bureau may not take direct action to lower food prices, its 2023 study recommended provinces work together to develop standards that determine how the regular price of an item is set, and to make that information accessible to the public so they can make more informed purchases.