Cineplex is appealing a Competition Tribunal ruling that found it misled theatregoers by not immediately disclosing some fees.Isabella Falsetti/The Globe and Mail
Cineplex Inc. CGX-T is headed to court Wednesday to fight a decision – and record $38.9-million penalty – that experts say should serve as a warning for other companies.
The theatre giant is appealing a Competition Tribunal decision from September last year that found Cineplex misled theatregoers by not immediately disclosing a fee up to $1.50 some customers had to pay for booking their tickets online.
The Competition Bureau, which triggered the case in 2023, said the incident amounted to drip pricing – a practice where a low price draws people in before they’re caught off guard later in the checkout process by fees that cause their final total to climb.
Cineplex, which declined to comment for this story, disagreed with the ruling, saying it was upfront about the charges, which can be avoided by purchasing tickets at the theatre.
Regardless of which side wins at the Federal Court of Appeal, experts say the competition watchdog will be hoping to make a point: if you’re drip pricing, watch out.
“It’s the bureau sending a signal to the broader marketplace that they will not and do not tolerate companies that advertise a price that isn’t actually attainable, and that’s what the Cineplex case represents at its core,” said Vass Bednar, co-author of The Big Fix: How Companies Capture Markets and Harm Canadians.
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The case is so important to the bureau because millions of Canadians paid Cineplex’s extra fees and the watchdog has a responsibility to stand up for them, but the fight could resonate well beyond the cinema industry to any sector tacking on fees in the sales process.
“These little, kind of, tricks and traps are what people are up against every single day,” Bednar said.
She uses the airline industry as an example because it’s gone through “a great unbundling of pricing” as competition has heated up.
Carriers like to tell customers they offer the lowest price, but then at checkout, often add fuel surcharges and fees for selecting a seat or bringing a bag.
“They’re kind of deceiving us in terms of what’s possible and that costs people time as well because it’s just harder to comparison shop,” Bednar said.
The problem isn’t confined to industries where tickets are sold. As the bureau has discovered, it’s cropping up in all kinds of transactions.
It’s pursued drip pricing claims against delivery service DoorDash, broadcaster SiriusXM Canada, amusement park Canada’s Wonderland, TicketNetwork and several car rental services.
The DoorDash and Canada’s Wonderland matters have yet to be heard by the Competition Tribunal and not all cases make it to that venue. Sometimes, the bureau reaches a resolution with its target without requiring the quasi-judicial body to hear the case.
SiriusXM, for example, reached an agreement to pay a $3.3-million penalty last year.
The year before, TicketNetwork shelled out $825,000 after the bureau alleged mandatory fees added more than 38 per cent on average, and in some cases more than 53 per cent, to the company’s advertised prices.
Before that, a series of drip pricing investigations involving Avis/Budget, Hertz/Dollar Thrifty, Enterprise and Discount Car & Truck Rentals Ltd. led to a total of $5.9- million in administrative monetary penalties.
Price dripping existed long before the bureau tackled these cases, but it’s had a new shine lately because people are shopping online more and the law has started to catch up, said Jennifer Quaid, a law professor at the University of Ottawa who specializes in competition.
Changes made in the last few years to the Competition Act fortified drip pricing’s status as a deceptive marketing practice and allowed more nuanced penalties to be levied.
The success it’s had since has resonated with Canadians and made drip pricing a source of “enforcement pride” for the bureau, Quaid said.
“It’s much harder for the bureau to win hearts and minds in merger law or abuse of dominance because those are huge cases that take a long time and they just don’t do enough of them,” she said. “With deceptive marketing, they’ve got a well-oiled machine on that … and it connects with people on the ground.”
The Cineplex appeal will be as important to consumers as it is to the watchdog.
“This was a big win for the bureau. They’re going want to protect that win,” Quaid said.
The stakes are just as high for Cineplex. In the last few years, its deal to sell itself collapsed and wound up in a costly court affair it won but hasn’t been able to collect on. Meanwhile, streaming platforms have continued to erode the theatre exhibition business.
Cineplex’s notice of appeal shows it will argue the tribunal “erred” in its ruling because the company discloses its online booking fee “immediately and prominently” on the first page of the sales process. The fee can be avoided by making a purchase in a theatre and thus, the case should be dismissed, Cineplex will say.
The bureau, however, said in a statement that it sees the tribunal’s ruling as “a resounding win for Canadians.” Its reply says the decision should stand because Cineplex advertised ticket prices that were “unattainable” and did not make clear that make a purchase at a theatre would waive the fee.
If the bureau gets its way, Quaid said the message to companies will be obvious: “We’re watching, and you could get caught, and we will take you to court.”
