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HBC to pay $4.5M to settle Competition Bureau investigation

 10 May 2019     Michael J. Knell 

OTTAWA – The Hudson’s Bay Company (HBC) has agreed to pay a $4 million penalty and $500,000 towards the costs incurred by the Competition Bureau during its investigation into the advertising and pricing practices for sleep sets sold by its Hudson’s Bay department store banner and its 89 stores across the country.

In a statement, the bureau said that as part of a consent agreement registered with the Competition Tribunal, Hudson’s Bay will ensure the marketing of all sleep sets complies with the provisions of the Competition Act relating to ordinary selling price and false or misleading representations. “In addition, Hudson’s Bay will establish and maintain a corporate-wide compliance program that will promote compliance with the Competition Act,” the bureau said.

The bureau launched the investigation in early 2017, stating it wanted to end what it saw as deceptive marketing practices.

Hudson’s Bay will pay the Competition Bureau $4.5 million to resolve a dispute over its advertising and marketing practices in the sale of sleep sets and major appliances.In filings made to the tribunal, the bureau alleged Hudson’s Bay offered sleep sets at inflated regular prices and then advertised deep discounts on these prices, suggesting significant savings to consumers. It also alleged Hudson’s Bay made misleading representations as part of clearance promotions, implying the price of certain sleep sets was lowered to sell the remaining on-hand inventory when, in fact, it didn’t and instead ordered new product from the manufacturer when a consumer made a purchase.

“This agreement is a victory for Canadians and sends a strong message that the bureau will not tolerate unsubstantiated savings claims that prevent consumers from making informed purchasing decisions,” Matthew Boswell, Commissioner of Competition said in announcing the settlement.

This settlement also resolves the need for litigation that was scheduled to begin before the Competition Tribunal earlier this week.

The consent agreement has the force of a court order and will be binding for a period of ten years. In addition to sleep sets, Hudson’s Bay will ensure the marketing of all major appliances complies with the provisions of the Competition Act relating to ordinary selling price and false or misleading representations.

The bureau notes the Competition Act prohibits retailers from referring to an inflated regular price when advertising sales. “When comparisons are made between a regular price and a sale price, they must be valid,” it said.

This isn’t the first time the Competition Bureau has taken the industry to task over advertising practises. In February 2018, the bureau reached a settlement with Leon’s Furniture Limited – the parent company of Leon’s and The Brick – although that dispute was more directly tied to its ‘no money down, no payment for…’ promotions.

Although not generally seen as a major player on the Canadian mattress retailer scene, Hudson’s Bay is likely to have benefitted at least somewhat from the demise of Sears Canada in January 2018. The department store has an estimated market share of between 5% and 7%, which would put its dollar volume in the $100 million range.

Its mattress assortment focuses on the upper-middle to high-end price points and on brands such as Marshall (it’s the Canadian mattress maker’s largest customer), Aireloom and Stearns & Foster. In contrast, its web site also market’s the box-in-a-box from Casper.

Tiffany Bourré, HBC director of corporate communications, said the company is also pleased to have the dispute resolved.

“Hudson’s Bay is pleased to have reached a settlement of its proceeding with the Commissioner of Competition relating to sleep set pricing,” she said. “Hudson’s Bay is committed to offering Canadian customers quality merchandise at real value that is competitive with other retailers in the marketplace. We are pleased to put this matter behind us and look forward to continuing to serve our customers, who remain our utmost priority.”

Related Story: Competition Bureau charges HBC with deceptive marketing
Related Story: Competition Bureau investigating Sears and Hudson’s Bay over mattress pricing
Related Story: LFL reaches settlement with Competition Bureau

Sealy Canada
This HGO article was written by:
Michael J. Knell
Michael J. Knell

Michael is the publisher and editor of Home Goods Online. A seasoned business journalist, he has researched and written about the furniture, mattress and major appliance industries in both Canada and the United States for the past three decades.

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