The Harper government's new scheme to crack down on cross-border pricing differences looks like a cynical ploy to woo voters. It's busy-work regulation that's not likely to have any real impact on prices.
Federal Industry Minister James Moore announced rules Tuesday giving the Competition Bureau sweeping powers to seize evidence from private companies, and to expose pricing practices "that are not justified by higher costs in Canada." To find said illegal practices, regulators will be able to compel companies to produce internal documents related to pricing and even force executives to give testimony to investigators.
Canadians have always been bugged by consumer goods that are cheaper just across the border, and economists have undertaken numerous studies proving that prices are undeniably higher. The tricky part, however, has been proving blatant, opportunistic discrimination – more politely referred to as "country pricing" – and not just price differences caused by exchange rates, tariffs, transportation costs, packaging rules and local market conditions.
Clear evidence of gouging can be next to impossible to find, even with massive document disclosure. (And what happens when Canadian prices are lower – which they sometimes are? Should Americans complain?) Investigators will have to scrutinize all of a business's factors and then try to answer an impossible question: Is the retail price "fair?" Throw in the fact that the cross-border price gap waxes and wanes, and it's hard to imagine how an honest investigation could possibly succeed.
There is no single, fair price for any good, service or product. There is no "true" price for an investigation to discover; no "real" price waiting to be found. Prices are decided by supply and demand, and goods are routinely priced differently around the world or across the street, depending on an array of local competitive factors. Is a soft drink more expensive inside the movie theater than at the grocery store? Yes. Is that a legal problem? Come on.
At best, the legislation may cause some companies to curb egregious examples of different Canadian pricing, rather than risk investigation. At worst, the new rules will deter sellers from even bothering to enter the Canadian market. Now that would be a decidedly anti-consumer outcome.