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Volume Test (Canadian ordinary selling price (OSP) claims law).

Canada’s federal Competition Act contains “ordinary selling price” or “OSP” provisions, which are intended to prevent advertising inflated “regular” prices in relation to sales. In general, these provisions make it a reviewable practice to mislead consumers about the “ordinary” selling price of a product.

Claims relating to the ordinary or regular price of a product cannot be made unless one of two alternative tests is met: (i) a “substantial volume” of the product has been sold at the stated “regular” price (or higher) within a “reasonable period” of time before or after the claim (“volume test”) or (ii) the product has been offered for sale in good faith at that price (or higher) for a “substantial period of time” before or after the claim (“time test”).

With respect to the “volume test”, the Competition Bureau (Bureau) has taken the position that a substantial volume means more than 50% of sales at (or above) the reference price and that a reasonable period of time means twelve months before (or after) the claim (though this period may be shorter depending on the nature of the product).

With respect to the “time test”, the Bureau has taken the position that whether a product has been offered for sale in good faith will depend on a number of factors and that a substantial period of time means more than 50% of the six months before (or after) the claim is made (which may again be shorter depending on the nature of the product).

For more information about ordinary selling price (OSP) claims under the Competition Act, see: Ordinary Selling Price (OSP) Claims and Sale Claims.

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