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A man walks through the doors at the Hudson's Bay Company (HBC) flagship department store in Toronto in this file photo.

MARK BLINCH/Reuters

Canada's competition watchdog is suing Hudson's Bay Co., alleging that the retailer engaged in deceptive pricing practices for four years, an accusation the company denies.

The Competition Bureau claims HBC misled customers over the prices of mattresses and box springs sold together since at least March 2013, according to a notice of application filed to the Competition Tribunal.

HBC allegedly offered sleep sets at "grossly inflated regular prices" and then advertised deep discounts on them to promote sales, the document says.

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"The regular prices of the sleep sets were so inflated above what the market would bear that sales at the regular price were virtually non-existent," reads the filing.

HBC listed a Mount Royal tight top queen sleep set at $1,998 and then a sale price of $788 in 2014, for example, but never sold one at the regular price, the agency says.

The retailer disagrees with the bureau's position and will vigorously oppose its application to the Competition Tribunal, company spokeswoman Tiffany Bourre said in a statement.

"We believe our mattress pricing process is fair, competitive and in line with industry standards and the Competition Act," Bourre said.

HBC has not yet filed a response to the bureau's notice of application, but intends do to so, she added.

The agency also alleges HBC misled consumers by suggesting it was selling its remaining inventory during clearance and end-of-line promotions, which implies the low price is permanent until all remaining inventory is sold. But HBC is alleged to have replenished its inventory during such sales by ordering new sleep sets from manufacturers.

The legal action against the retailer is about providing customers with accurate and truthful information when they're deciding what to purchase, bureau commissioner John Pecman said in a statement.

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"Savings claims must always reflect real discounts," he said.

The bureau said it wants HBC to stop such practices and pay an administrative monetary penalty of an unspecified amount.

For a first occurrence by a corporation, that can be up to $10-million, said Marie-France Faucher, a bureau spokeswoman.

The agency also wants HBC to pay the costs associated with the proceeding and any further relief the commissioner may ask for and the tribunal has the discretion to permit.

The iconic Tim Hortons chain of coffee stores has a long history in Canada, growing from a single store in Hamilton. But now thought its growth and a series of mergers, its one pillar of a huge empire of brands that will now include Popeyes.
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