In defense of Hudson’s Bay, against those busybody bureaucrats

Lee Friday – March 22, 2017

Despite the name of this federal agency, the Competition Bureau lacks an appreciation of the nature of competition and the ability of discriminating consumers to recognize uncompetitive offerings.

The Canadian Press (February 22, 2017) reports that the Competition Bureau

is suing Hudson’s Bay Co., alleging that the retailer engaged in deceptive pricing practices for four years . . .

The Competition Bureau claims HBC misled customers over the prices of mattresses and box springs sold together since at least March 2013 . . .

“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.

So, the Bay supposedly “engaged in deceptive pricing practices”, which the Bureau defines as misleading customers about prices. Nonsense. The Bureau reveals its own bureaucratic idiocy when it contradicts itself by admitting that no sales were made at the inflated price. Consumers were not misled, as evidenced by their decisions not to buy! Why did they not buy? Because they know the market. They shop around. They have done their homework. They know the prices of the Bay’s competitors. They are well informed.

Moreover, there is nothing wrong with the Bay choosing to price its products far above the market. That is their right. They are not forcing consumers to buy. What if the price was ‘inflated’ not to $1,998, but to $1,000,000? And if consumers did, of their own free will, choose to pay a cool one million dollars for a sleep set, what then? Would the Competition Bureau place the CEO in front of a firing squad?

If anyone at the Bay employs physical force to prevent competitors from entering the field, then legal action is justified, but this is not what the Bureau is alleging. In fact, it is the authoritarian government which forcibly prevents competition. It requires various permits and licences, and demands compliance with countless other regulations, all in the name of consumer welfare of course. The impetus to such legislation is the lobbying efforts of influential corporations who can afford the costs of regulatory compliance which their less wealthy would-be-competitors are unable to bear. Thus, competition is prevented (I have written about this here), and the CompetitionBureau does nothing.

More from the article:

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.

So what? I have seen other retailers do this. It doesn’t matter. Consumers know a genuine sale when they see it, just as they readily detect an inflated price. Consumers are not motivated to buy because of “clearance and end-of-line promotions”. They are motivated by price, period. And if the Bay is replenishing its inventory, that is a clear indication of consumer satisfaction.

And this:

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.

Ah, now we drop the pretence. This is all about coercively extracting revenue for the government, not consumer welfare.

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