Resale price maintenance (franchise)

Whether price terms in a franchise agreement, price list or advertising policy are price maintenance is a legal question: the Competition Bureau says paragraph 76(1)(a) applies only to persons listed in subsection 76(3), such as those supplying a product, and subsection 76(4) bars an order where supplier and retailer are principal and agent or affiliated.

What section 76 covers

The Competition Bureau says section 76 lets the Tribunal make a remedial order for three types of conduct that has had, is having or is likely to have an adverse effect on competition in a market. They are influencing upward, or discouraging the reduction of, another person’s selling or advertised prices by agreement, threat, promise or any like means; refusing to supply, or otherwise discriminating, because of a low pricing policy, subject to exceptions such as loss leadering; and inducing a supplier to refuse supply for that reason. Under subsection 76(5), a supplier’s suggestion of a resale price is proof of influence unless the supplier shows it made clear the retailer need not accept it and would not suffer for refusing.

What to ask

• Whether the franchise agreement or manuals fix, floor or suggest prices
• What happens to a franchisee who prices lower