OTTAWA (Jan. 25, 2005) — Sears Canada Inc., which last year exited the automotive service business, violated Canada's Competition Act when it exaggerated the possible savings to consumers during a 1999 tire sale, the country's Competition Tribunal has ruled.
The Commissioner of Competition is seeking a penalty of $500,000, which the tribunal will consider at a future hearing.
The case relates back to 1999 when Sears advertised a 45-percent off sale, comparing the sale price with Sears' regular price. But the tribunal said Sears had admitted it sold less than 2 percent of the tires at the full regular price before they were advertised on sale, according to a statement from the Competition Bureau, an enforcement agency that initiated the complaint in 2002.
“The Tribunal found that Sears could not have truly believed that its regular tire prices were genuine and bona fide prices that the market would validate,” the bureau said in a statement.
The Competition Act includes provisions aimed at protecting consumers from being misled by reference to “inflated” regular prices when products are advertised on sale, the bureau said.
In a statement, Sears Canada said it was “disappointed” with the tribunal's ruling, adding it will yet determine its legal recourses. Sears said it submitted information during the proceedings that the regular prices in the ads met legal requirements, and they were consistent with manufacturers' suggested retail prices for similar tires.
Sears also said the tribunal did not find that consumers were harmed as a result of the selling price claims, though the tribunal concluded this absence was not a relevant factor in the case.
“The company takes pride in its trusted position in the Canadian retail market and actively strives to provide all customers with quality products of superior value,” the retailer said. “Sears Canada wishes to assure the public and all stakeholders that the company is committed to ensuring its advertising makes only valid claims and otherwise meets all legal requirements.”
The tire lines involved were all private brands or exclusive to Sears Canada, which last year sold its 49 auto centers and got out of the automotive service business.