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Chapter 24: Sales and Marketing: Price, Distribution, and Risk
Management
Price:
Generally freely negotiated when forming a contract, although a few prices
are regulated by government (utilities, agricultural marketing boards)
Criminal offence: more serious, referred to the attorney general for
prosecution and more difficult to prove because of higher burden of proof
needed
Reviewable matters: civil in nature, if not voluntarily resolved may result in
remedial order from judge or competition tribunal
Pricing practices between producer and commercial purchaser
Federal competition act prohibits unfair pricing practices , wants to create
level playing field
The act seeks to ensure that commercial customers are not subject to unfair
differential treatment that could seriously reduce competition in the
marketplace. Includes criminal offences of price fixing and bid rigging
Pricing conspiracies: working with competitor(s) to control and manipulate prices
Proper definition: every person who commits an offence who, with a
competitor of that person with respect to a product, conspires, agrees, or
arranges a) a fix, maintain, increase or control the price for the supply of the
product
Penalties: max 14 yrs and/or fine of 25 mil
To be proven, must be established that there was an agreement or a
conspiracies to set prices BUT also that the agreement lessened competition
Bid Rigging: conspiring to fix the bidding process to suit the collective needs of
those submitting bids
Done by suppliers/producers to manipulate marker through prices
Penalty: fines/imprisonment
Can take place in many forms such as agreements to submit bids on a
rotating basis or to split a Market geographically
Abuse of Dominant Position: conduct that is reviewable under the competition act
because a dominate company or group of companies have engaged in
anticompetitive behaviour that unduly prevents of lessens competition
Includes: buying up products to prevent erosion of price levels
Requiring suppliers to sell on to certain customers
Selling products below acquisition cost in order to discipline or eliminate
competitors
To take action, competition tribunal must find that the company or group of
companies substantially controls the marker under investigation, that those
under investigation have engaged in a practice of anticompetitive acts, and
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the practice has the effect of preventing or lessening competition in the
market substantially
Penalties up to 10 mil
Price discrimination: the failure to provide similar pricing terms and conditions to
competing wholesalers or retailers for equivalent volume sales at an equivalent time
Predatory pricing: the practice of setting unreasonably low prices to eliminate the
competition
Price maintenance: the attempt to drive the final retail price of goods upward and
the imposition of recriminations upon noncompliant retailers
Sale or Bargain Prices:
It is a reviewable offence for the seller to state that a price is less than the
ordinary price (on sale, reduced) when it is not. An advertiser may
legitimately claim a price to be the ordinary price if: “it reflects the price at
which suppliers generally in the relevant market area have either:
1. Sold a substantial volume of the product within a reasonable period of
time before or after making the representation (VOLUME TEST)
2. Offered the product for sale in good faith for a substantial period of
time recently before or immediately after making the representation
(TIME TEST)
“subject to error” provides protection only in the context of catalogue sales,
since they are not printed regularly
sales above advertised price: prohibits the sale of a product at a prive higher than
that advertised, unless the price was a mistake which was immediately corrected,
penalties can be as high as 200,000
double ticketing: the offence of failing to sell at the lower of the 2 or more prices
marked on or otherwise appearing with regard to the product . Extends to instore
promos and displays and prices listed on computers
Distribution (place): the movement of goods and services from producers to
customers. Includes insuring that goods get into consumers hands (shipping). Also
determines whether good will be sold in store, wholesales, door-to-door
Organizational Structure:
businesses are free to structure themselves in the manner they consider
most effective for organizing their distribution channels
mergers, acquisitions, and takeovers:
in Can. There is a fine line between allowing business to expand through
merges takeovers, etc., must make sure no negative consequences can come
from them want to avoid monopolistic behaviour
-if merger is going to lessen competition then it wont be aloud
-must notify director of their intentions
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