On January 25, 2018, the Competition Bureau (Bureau) filed an application with the Competition Tribunal (Tribunal) against Ticketmaster, its parent company Live Nation, and certain other Live Nation subsidiaries (collectively, Ticketmaster), for allegedly making deceptive marketing claims to consumers when advertising ticket prices for sports and entertainment events.
The application's key issue is that Ticketmaster charges consumers non-optional fees, which are not disclosed at the beginning of the purchasing process. The Bureau investigation found that the addition of one or more of these unexpected fees often increases the price of tickets by over 20 per cent, and in some cases, by over 65 per cent of the advertised price.
Of particular concern to the Bureau is that, despite Ticketmaster knowing the amount of some or all of the fees upfront, they are only revealed (along with the final cost of the tickets) to the consumer once they have navigated through a number of steps in the purchasing process. This is a marketing technique known as "drip pricing," which may result in consumer harm (particularly when consumers feel pressured to complete a purchase or miss losing the opportunity). The application notes that Ticketmaster's Internet purchasing model could be structured to disclose the non-optional fees upfront, especially since events in Quebec, where provincial law mandates all-inclusive pricing, have the non-optional fees included in the initial advertised cost.
Since September 2017, Ticketmaster has increased the disclosure of the non-optional fees to consumers, but still continues to conceal the total amount of the fees until after the consumer has selected tickets for purchase. The Bureau contends that this increased disclosure is wholly inadequate to prevent misleading consumers.
The Bureau's application is notable for a couple reasons. First, it differs from the traditional situation where a consumer sees an advertisement and is enticed into purchasing a product or service. Here, presumably, the consumer has already done a search for the tickets with the intention (subject to price) of acquiring them. Second, it is not alleged that the consumers bought the products without knowing the price they were paying. The Bureau appears to be making the distinction between when a consumer decides to buy a product versus when he or she actually buys it. The suggestion is that Ticketmaster's conduct gives the impression of lower prices to consumers when they are initially making the purchasing decision, which misleads them as to the final cost despite the additional fees being revealed before the purchase is made.
It will be interesting to see how the Tribunal handles the underlying question of whether consumers are being misled. For example, is it appropriate for a consumer to believe there would not be any fees related to a ticket purchase and, if not, will the Tribunal create a framework for evaluating what an appropriate non-disclosed fee is?
Ticketmaster has 45 days from the date of the application to file a response with the Tribunal.
KEY TAKEAWAYS
The Bureau has filed an application with the Tribunal, alleging that Ticketmaster is engaged in deceptive marketing practices and is seeking, among other things, a prohibition order, disgorgement and a monetary penalty.
The legal action demonstrates that the Bureau continues to be active on consumer matters and is particularly focused on conduct believed to mislead consumers at the time that they make a purchasing decision.
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