OTTAWA, Ontario (Sept. 16, 2002) — Prompted by the Western Canada Tire Dealers Association, the Canadian Federal Competition Bureau has filed charges against Sears Canada Inc. for what it alleges were deceptive advertising claims leading consumers to believe the retailer was offering major savings on a variety of tire brands.
A 45-page document issued by the Competition Bureau documents numerous cases in which Sears print ads running in 1999 in various Canadian newspapers allegedly boasted “significantly inflated regular prices and subsequently made specific reference to those inflated regular prices when advertising those tires at sale prices.”
The Bureau's example in its summary was a tire that the Sears Canada advertisement said was regularly priced at $133.99 (Can.) and was on sale for $72.49. The ad claimed buyers would “save 45 percent—Our lowest price of the year.”
The Bureau contends the prices were inflated because the retailer did not sell “a substantial volume of these tires at the regular price featured…within a reasonable period of time before making the representations.”
It also claimed that Sears had no expectation to sell a certain amount of tires at its regular prices and that the so-called regular prices were not comparable—in fact were much higher—than the regular prices offered by competing tire retailers.
The Bureau document went on to point out that during 1999, some 28 lines of tires were offered in the advertisements.
“Sears Canada is very surprised by the actions taken…by the Competition Bureau,” the retailer said in a statement. “Sears Canada believes its regular prices, as represented to its customers, were not deceptive and that its regular price policies are fully compliant with federal legislation. Sears Canada is confident that it will be successful in its defense against the allegations made by the Competition Bureau.”
Sears' statement said that because the matter is before the Competition Tribunal, which is hearing the case, it could not make any further comment.
The WCTD lobbied the Competition Bureau for four years, according to an association spokesman, who declined to disclose how much it cost to pursue the matter. “But it was considerable for the size of our association,” he said.
The Bureau examined sales of several all-season tires which were said to comprise more than half of Sears' tire sales. These were the Sears Roadhandler T Plus, Weatherwise/RH Sport and BFGoodrich Plus, made by Michelin North America Inc.; Response RST Touring 2000, made by Cooper Tire & Rubber Co.; and Silverguard Ultra IV lines, made by Bridgestone/Firestone. The Bureau contends Sears sells less than 5 percent of its tires at what it claims are regular prices.
The Competition Bureau wants the Tribunal to impose on Sears Canada a 10-year ban on using this marketing approach and to undertake an advertising campaign admitting to the alleged deceptive marketing practices. It also is seeking a $500,000 fine.
In a ruling for or against Sears, the Tribunal must determine what retailers can reasonably term a “regular price.” The case is expected to be heard sometime in the fall.
The entire Competition Bureau report can be viewed at www.ct-tc.gc.ca/english/cases/ct-200204/0001a.pdf.