OTTAWA, July 27, 2006 — The Competition Bureau announced today that it has reached a settlement with one of Canada's largest retailers of men's apparel, Grafton-Fraser Inc., resolving the Bureau's concerns over the company's pricing practices. Grafton-Fraser operates over 180 corporate stores under the banners of George Richards Big & Tall, Grafton & Co. (Stonehouse), Mr. Big & Tall, The Suit Exchange, Timberland and Tip Top Tailors. The settlement comes in the form of a Consent Agreement which was registered today with the Competition Tribunal.
In addition to the company, Mr. Glenn Stonehouse, President, Chief Executive Officer and majority shareholder, is a party to the Agreement and subject to its terms and conditions. Among other things, the Agreement calls for the payment of an administrative monetary penalty and costs totalling $1.2 million.
The registration of the Agreement concludes the Bureau's investigation into allegations that Grafton-Fraser had significantly inflated the regular price of certain garments sold in its stores resulting in an overstatement of the savings to consumers when these garments were on sale. The Bureau found that Grafton-Fraser tagged these garments with both a regular and a sale price when, in fact, the garments were not sold in any significant quantity or for any reasonable period of time at the regular price.
"The importance of truth in advertising cannot be overstated," said Raymond Pierce, Deputy Commissioner. "Advertisers have both a moral and legal obligation to ensure that they provide consumers with accurate information upon which to make their purchasing decisions."
The 10-year Consent Agreement, which is designed to remedy the competitive and consumer impact of the practices, requires Grafton-Fraser to:
- pay an administrative monetary penalty in the amount of $1,000,000;
- pay a portion of the costs of the Bureau's inquiry in the amount of $200,000;
- when making reference to regular prices on any in-store signs and advertisements, ensure that all current and future regular price representations comply with the Ordinary Selling Price provisions of the Competition Act;
- implement a comprehensive Corporate Compliance Program designed to ensure conformity with the false or misleading representations and deceptive marketing practices provisions of the Competition Act; and
- display a corrective notice prominently in its retail stores across Canada, on any of the company's Web sites, and in designated newspapers across Canada.
The Ordinary Selling Price provisions of the Competition Act are designed to ensure that when products are promoted at sale prices, consumers are not misled as to the amount they are saving by reference to inflated regular prices.
Consumers or competitors who suspect they have been affected by such deceptive business practices or who want information on the application of the Competition Act should contact the Bureau's Information Centre at 1-800-348-5358. For more information on the Ordinary Price Provisions, please see the Backgrounder on our Web site at http://www.cb-bc.gc.ca.
The Competition Bureau is an independent law enforcement agency that promotes and maintains fair competition so that all Canadians can benefit from competitive prices, product choice and quality service. It oversees the application of the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act.
For media enquiries, please contact:
Maureen McGrath
Communications Advisor
Competition Bureau
(819) 953-8982 or (613) 296-2187 (cell)
For general enquiries, please contact:
Information Centre
Competition Bureau
(819) 997-4282
1-800-348-5358