Competition Bureau wants answers from Sears liquidators on alleged price mark-ups, says report

The Competition Bureau is investigating allegations that some merchandise was marked up in price for Sears Canada liquidation sales, says a report by the court-appointed monitor for the retailer.

Since Sears liquidation sales began, CBC News has heard complaints from several shoppers who found marked-up price tags. They believe prices were raised to offset advertised discounts.

The Competition Bureau has received similar complaints and on Nov. 8, sent letters to each of the liquidators conducting current sales at closing Sears stores, according to the report. 

The letters inquired about allegations involving liquidation pricing, and requested a response by Nov. 17.

"Allegations, amongst others, are that the price of certain merchandise was marked up prior to promoting 20 per cent to 50 per cent savings," said the report.

The liquidators involved in current Sears liquidation sales are Hilco Global, Gordon Brothers Canada, Tiger Capital Group and Great American Group.

CBC News reached out to the companies and Sears Canada for comment, but did not hear back in time for the publication of this story.

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The Competition Bureau refused to comment or even confirm the investigation, stating that it has an obligation to work confidentially.

It did respond to our question about why price mark-ups for a liquidation sale would contravene the Competition Act.

"When comparisons are made between a regular price and a sale price, they must be true," said spokesperson Mélanie Beauchesne in an email to CBC News.

'Extremely shady'

In response to previous media inquiries, Sears Canada has adamantly denied that any prices were raised for liquidation sales.

"This is not how we conduct business," said spokesperson Vince Power in an email to CBC News earlier this month.

But some shoppers were convinced otherwise when they found cheaper prices after peeling back current prices on items at the liquidation sales.

"It's deceptive," shopper Elizabeth MacMillan told CBC News in October.

She scoped out the Sears store in Stratford, Ont., and said she noticed higher prices on certain products compared to when she'd visited the store about three weeks earlier.

So she pulled off the $9.97 sticker price on a T-shirt she had eyed previously for her son, and found a cheaper $7.97 price underneath.

"It was very misleading," she said.

CBC News also spoke with a Sears employee who said he was ordered to mark up prices on some products shortly after liquidation sales began on Oct. 19.

"It's extremely shady," said Travis Setala, a part-time sales associate at the Thunder Bay, Ont., department store.

He said that he and co-workers raised prices on Sears brand items, including marking up a fitted twin sheet from $14.97 to $22.99 and a double one from $17.97 to $26.99.

Setala also said he raised prices by a few dollars on other products such as pillows and comforters, all of which would then be sold at 20 to 25 per cent off during the liquidation sale.

"We'd take them into the back where the customers couldn't see us and we're told to raise the prices there," he said. "It's something people should know about."

Earlier this month and in October, CBC News asked both a representative for the liquidators and Sears Canada about allegations concerning price mark-ups.

The liquidators' spokesperson never responded, but Sears did, flatly denying the allegations.

It's just seasonal pricing

Spokesperson Power said items where shoppers found a cheaper price hiding underneath had actually been "marked up some time ago, as part of a regular price increase taken as we entered a new season."

He said when employees do these routine price changes, they're supposed to remove the original price. "Someone took a shortcut," said Power.

We also asked about employee Setala's claims that he was ordered to mark up prices.

Power said, after allegations about price hikes surfaced in the media, Sears sent a note to all stores to ensure that the previous seasonal price changes had been done correctly, and that old prices had been removed.

"Any recent activity has been to make correct what should have been done several weeks ago, months ago in fact," he said on Nov. 9.

The Competition Bureau also continues to investigate if Sears Canada used deceptive marketing practices during previous mattress sales. The case was made public in 2015, and the retailer has denied any wrongdoing.