Forzani Group Ltd. on Thursday confirmed that Canadas Competition Bureau is commencing an investigation into the advertising practices of the Canada-based parent of the Sport Chek, Coast Mountain Sports and Sport Mart retail chains.
The company did not give details of the investigation in its release, but a report in Torontos Globe and Mail newspaper suggested that the probe may be based on charges that Forzanis had “pitched products as being on sale when they had not been sold at a regular price for a substantial time”.
Apparently, a flyer for Sport Chek promoted regular prices of “up to” a certain amount, rather than just one regular price, according to sources quoted by the paper.
According to the G&M, “to comply with the bureau's definition of a “regular” price, an item must be sold at that price 50% of the time in the six months before running a sale advertisement, with 50% of the sales volume occurring at the regular price.”
The paper also said those sources indicated the investigation had prompted “Forzani's major chains, including Sport Chek, to issue some flyers without before and after sale prices”. The report went on to say that Bill Gregson, president of Forzani, explained that the company “often switches strategies in its flyer advertising, adding the recent changes weren't linked to any investigation”.
“The company is, and always has been, committed to compliance with the advertising provisions of the Competition Act and will endeavor to satisfactorily resolve this matter as quickly as possible,” Forzani said in its release. The company was also quick to point out that the investigation should not affect its financial results.
The bureau is also apparently looking at Sears Canada under the same provision of the Competition Act for actions from sales of tires in 1999.
