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Forzani Takes Issue With Canada's Competition Bureau

JULY 07, 2004 -- The Forzani Group, Canada's largest sporting goods retailer, entered into a consent agreement with the Commissioner of Competition and pay a $1.7 million fine, finally resolving the Commissioner's concerns with respect to certain of Forzani's advertising by its Sport Mart and Sport Chek stores. Forzani, however, disagrees with the Competition Bureau's inaccurate and misleading characterization of the settlement that has been reached between the parties after months of negotiation.

The Consent Agreement makes clear that Forzani admits no wrongdoing ,and it most certainly does not admit misleading consumers, as the Competition Bureau has incorrectly stated. In this regard, Forzani has instructed its counsel to consider all appropriate legal remedies available to it in these circumstances. Forzani has not been charged with an offence and has not been convicted of misleading advertising under the Competition Act; rather it has entered into a consent agreement which only requires it to comply with certain ordinary pricing provisions of the Act and to pay an administrative monetary penalty under the Act, and other administrative provisions.

The Competition Bureau's concerns with Forzani's advertising were twofold. First, it took issue with Sport Mart's use of "Compare at" language in its price advertising; a policy that had been in use by Sport Mart without complaint by either the Competition Bureau or consumers since long before Forzani acquired the Sport Mart chain in late 2001, and which continues to be used by other major retailers throughout Canada.

Second, the Competition Bureau took issue with Sport Chek's use of "Original Price" in its price advertising. Sport Chek used "Original Price" to compare its discounted price to the price at which its products were originally offered for sale and included a disclaimer to inform consumers that the "Original Price" did not necessarily represent the price at which the products were regularly offered for sale. The Competition Bureau took exception to the effectiveness of the disclaimer.

Forzani settled this matter in good faith on the advice of counsel to avoid the greater expense to Forzani of protracted litigation. Forzani takes exception to the Competition Bureau's mischaracterization of the nature of the settlement that has been reached and FGL will take such steps as it deems necessary to protect its reputation and the goodwill it has worked so hard over the years to develop with consumers.




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