"Was $80, now $40": the rules behind sale price claims in Canada
The direct answer
Under section 74.01(3) of Canada's Competition Act, a business that advertises its own regular price beside a sale price must be able to show one of two things. The volume test asks whether it sold a substantial volume of the product at that price or higher within a reasonable period before or after the claim. The time test asks whether it offered the product at that price or higher in good faith for a substantial period recently before or immediately after the claim. The Competition Bureau's Ordinary Price Claims guidelines treat substantial as more than 50%: more than half of sales at or above the reference price, looking at the twelve months around the claim, or the product offered at that price for more than half of the six months around it. The burden of proof sits with the advertiser, and a claim that is otherwise accurate in every material respect has a defence under subsection (5).
Five conclusions
The argument, compressed.
- A regular price shown beside a sale price must pass the volume test or the time test.
- Volume test: more than 50% of sales at or above the regular price, measured over the twelve months around the claim.
- Time test: offered at or above the regular price, in good faith, for more than 50% of the six months around the claim.
- The advertiser carries the burden of proving the regular price.
- A product that is always on sale has no regular price to cross out.
Working framework · 3 decisions
The regular price record
Three records that let a brand prove any crossed out price. Keep them before the promotion, since the tests look backward as well as forward.
Decision 01 / 03
Price calendar
Log every day each product is offered at full price and every day it is discounted. The time test is arithmetic on this calendar.
Two tests, and the advertiser must pass one
Section 74.01 of the Competition Act deals with ordinary price claims in two subsections. Subsection (2) covers references to the price at which suppliers generally sell a product. Subsection (3) covers a business referring to its own regular price, and it places the burden on the advertiser: the claim is reviewable unless the business establishes that it meets the volume test or the time test.
The volume test asks whether a substantial volume of the product was sold at that price or a higher price within a reasonable period before or after the claim. The time test asks whether the product was offered at that price or higher, in good faith, for a substantial period recently before or immediately after the claim. Subsection (5) adds a defence where the price representation is accurate in every material respect in the circumstances.
The Bureau's numbers
The Competition Bureau's Ordinary Price Claims guidelines, issued in 2009, put figures on the statute's words. The volume requirement is met if more than 50% of sales are at or above the reference price, and the period considered is the twelve months before or after the claim, which may be shorter depending on the product. The time requirement is met if the product is offered at or above the reference price for more than 50% of the period considered, and that period is the six months before or after the claim.
The Bureau's plain language web page describes the period for both tests as usually within a year. The six month figure for the time test comes from the guidelines themselves, so plan to the stricter number.
Good faith matters for the time test. A regular price that nobody was expected to pay, posted only so it could be crossed out, fails the test whatever the calendar says.
The half rule
Either most of your sales, or most of your days, have to be at the regular price.
What permanent sales do to a brand
The law and brand thinking arrive at the same place. A product that spends most of the year discounted has trained its customers to treat the sale price as the real price, and under the time test it has also lost the right to call the higher figure regular.
Brands that hold price most of the year and discount rarely keep both a provable regular price and a reference point customers believe. Seasonal peaks such as Black Friday then work as events rather than as the normal state of the shelf.
Where frequent promotion is part of the model, other mechanics avoid the regular price claim altogether: bundles, gifts with purchase, loyalty pricing and limited editions create urgency without a crossed out number.
- Keep each product at full price for more than half of any six months.
- Record full price and discounted unit sales by product.
- Check the tests before scheduling each promotion.
- Use bundles or gifts when a product has been on sale too often to pass.
Before you use it
Questions that can change the recommendation.
Is it legal to show a crossed out regular price in Canada?
Yes, when the business can establish under section 74.01(3) of the Competition Act that it sold a substantial volume at that price or higher, or offered the product at that price or higher in good faith for a substantial period.
How long does a product have to be at regular price before a sale?
The Competition Bureau's guidelines treat the time test as met when the product is offered at or above the reference price for more than 50% of the six months before or after the claim.
What is the volume test for sale prices?
The Bureau's guidelines treat it as met when more than 50% of sales are at or above the reference price over the twelve months before or after the claim, or a shorter period where the product warrants it.
Who has to prove the regular price is real?
The advertiser. Subsection 74.01(3) makes the claim reviewable unless the business making it establishes that one of the two tests is met.
Research record
What this guide draws from.
Each source note describes what the reference supports. Platform guidance, research findings and Branding Tatva's practical suggestions have different scopes.
- Ordinary selling price
Competition Bureau Canada
