TORONTO — Court documents are offering a window into what sparked the Competition Bureau's investigation into two of Canada's most prominent furniture retailers.
The watchdog obtained a court order last week forcing Leon’s Furniture Limited and its subsidiary The Brick Warehouse LP to hand over documents that will help determine whether the companies engaged in deceptive marketing practices.
The affidavit that helped secure that court shows the bureau began a preliminary investigation into Leon's and The Brick in July 2023, when a team scoured websites and flyers belonging to the companies, visited their stores and consulted with provincial and federal government sources and Canadian business registries.
The team's goal was to monitor prices and promotions of certain products, says the Oct. 31 affidavit from Paula Carr, a senior competition law officer with the bureau, filed with the Federal Court in Ottawa.
One of the items it zeroed in on in late September 2023 was an LG smart electric range with an air fryer
On March 30, 2024, Carr says the bureau saw the range was on sale for $1,595 on The Brick's website.
When it reviewed the previous six months, the bureau found the range was offered at a promotional price — often denoted in red — for 169 days but never at a regular price.
"The calculations led me to conclude that the representations indicating that the product was on sale or offered at a discount are likely false or misleading,” says Carr in the affidavit.
When asked about the filings made to obtain its court order, the bureau referred The Canadian Press to its Nov. 20 statement, which said it has yet to reach a conclusion of wrongdoing.
Leon's and The Brick similarly pointed to last week's statement, which said they are committed to complying with all regulatory requirements and are co-operating with the bureau's investigation. They called the court order "standard procedure for all inquiries of this nature."
Carr’s affidavit shows the bureau has also spent time looking at instances where Leon's and The Brick advertise that their promotions are "limited time only" or advertise a sale end date.
The watchdog found sometimes these promotions "continued after the represented sale end date, but with the clock icon and sale end date removed."
In other instances, Carr says, "one sale immediately follows another without reverting to a regular price; the promotional price changes to either a higher or a lower price."
In the case of an LG stainless steel fridge offered by Leon's, the bureau found 38 instances of "fake urgency cue representations," which it described as promotions being extended, renewed or immediately followed by another promotion, between September 2023 and August 2024.
Carr's affidavit says the bureau informed Leon's and The Brick that it had deceptive marketing concerns in a letter sent on Aug. 6, 2024.
The application the bureau filed to get its court order says it has reason to believe Leon's and The Brick continue to engage in the conduct laid out in Carr's affidavit.
To make a definitive conclusion, the bureau is seeking records related to the company's pricing and marketing, including how it sets and changes prices, and plans and structures marketing and promotions.
In the application, the bureau says its commissioner "has reason to believe" Leon's and The Brick have made claims about the regular price of a product, when they "have not offered certain products at regular price or higher in good faith for a substantial period of time."
The bureau says these claims "create the false or misleading general impression that certain products are on sale."
The bureau also notes that the companies appear to be making "false or misleading" representations to the public about end dates or the time-limited nature of some of their promotions.
"These representations convey the false or misleading general impression that certain promotions will end on a particular day when in fact the promotion is continued or renewed past the represented end date or is given a new, later end date," the bureau says.
This report by The Canadian Press was first published Nov. 25, 2024.
Companies in this story: (TSX:LNF)
Tara Deschamps, The Canadian Press
