Amazon to Pay $1 Million Penalty Following Investigation into Ordinary Price Claims

The popular online retailer Amazon.com.ca Inc (Amazon) has agreed to pay a penalty of $1 million, and $100,000 towards the Competition Bureau’s costs, following an investigation into the price claims displayed on the retailer’s website. Amazon frequently compares the prices for items for sale on its website to regular prices for the same items, for example: “List Price: CDN$39.99, Price: CDN$29.99.” Amazon relied on pricing information provided by its corporate suppliers without independently validating the regular price to determine if this “List Price” was accurate.

Subsection 74.01(2) the Canadian Competition Act describes conditions that an advertiser must satisfy in order to represent to the public that a product has ordinarily been supplied at a particular price by other suppliers. According to the Competition Bureau’s Ordinary Price Claims Enforcement Guidelines, this representation may only be made if other suppliers have sold a substantial volume of product at this price within a reasonable time period (the “Volume Test”), or if other suppliers have offered the product at that price in good faith for a substantial period of time (the “Time Test”).

The Competition Bureau obtained information from various sources and conducted daily monitoring of the promotion of 12 Blu-ray® movies sold by Amazon and its competitors. It concluded that Amazon’s representations for these products did not meet the requirements of the Volume Test or the Time Test. It also found that Amazon repeated these claims in electronic messages, contrary to subsection 74.011(2) of the Competition Act (a provision introduced pursuant to amendments under Canada’s Anti-Spam Law). Amazon resolved the Competition Bureau’s concerns by agreeing to pay the penalty and to comply with these provisions of the Competition Act going forward.

Summary by: David Bowden