The Competition Tribunal has ordered Cineplex Inc to pay nearly $39 million for engaging in drip pricing, marking a significant development in Canadian advertising law. This is the first order issued following the 2022 introduction of higher administrative monetary penalties, and also the first decision interpreting the new civil drip pricing prohibitions.
"Drip pricing" is a misleading advertising practice where an initial low price is advertised, and subsequently additional mandatory fees are added to inflate the final cost. In this case, the Tribunal has found that Cineplex's $1.50 online booking fee was deemed a hidden cost that misled consumers about the true price of tickets. Commissioner of Competition Matthew Boswell stated, "The Tribunal's decision is a resounding win for Canadians. It sends a strong message that businesses should display their full prices upfront." This case highlights the Bureau's enforcement focus on transparency in pricing to ensure fair competition.
The Tribunal's ruling not only mandates Cineplex to pay a substantial penalty—equivalent to the revenue generated from the booking fee since June 2022, but payable to the Receiver General—but also prohibits the company from engaging in similar practices for the next decade. The decision aligns with the Bureau's ongoing efforts to combat deceptive pricing in various sectors, including car rentals and online ticketing.
This ruling reinforces the increasing risk with making pricing claims, particularly in light of forthcoming amendments introducing "public interest" access to the Tribunal that are coming into force in June 2025. Now more than ever, businesses must be vigilant in complying with the Competition Act to avoid hefty penalties and reputational harm.
Cineplex has released a statement stating that it plans to appeal the Tribunal's decision, which suggests that the issue will be ongoing.
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Now more than ever, businesses must be vigilant in complying with the Competition Act to avoid hefty penalties and reputational harm.
https://harrisandco.ca/articles/cineplex-ordered-to-pay-39m-in-landmark-drip-pricing-case/
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