The federal Competition Bureau is suing Cineplex Inc. CGX-T over allegedly misleading consumers by advertising online and mobile ticket prices without including mandatory booking surcharges that appear later in the purchase process.
Canada’s biggest movie theatre chain introduced the $1.50 fee in June, 2022. The Competition Bureau said in a press release Thursday that the fee had generated “significant revenues” for Cineplex, alleging the company broke the law with misleading pricing. Ottawa amended the Competition Act last year to declare this tactic, sometimes called drip pricing or junk fees, as a “harmful” business practice.
The antitrust watchdog said it filed an application with the Competition Tribunal to force Cineplex to stop “deceptive” advertising, pay a fine, and to issue some kind of restitution for customers who’d paid the online booking fee.
“This is a concrete enforcement action on what seems like a very fake fee,” said Vass Bednar, the executive director of McMaster University’s master of public policy in digital society program and a competition law expert.
In 2019, the bureau ordered Ticketmaster Canada and associated companies to pay $4.5-million in penalties and costs over allegations of misleading pricing. It took similar action against the ticket resale website StubHub Canada in 2020.
Ottawa said in its federal budget this spring that it would work with regulatory agencies, including the competition commissioner, to potentially find other ways to fight these kinds of junk fees.
Cineplex issued a press release late Thursday night saying the Competition Bureau’s allegations had “no merit.”
“Our online booking fee is not misleading and fully complies with the spirit and letter of the law,” the company said in a press release, without naming a spokesperson. “There is no merit to the Bureau’s allegation... Our online booking fee is entirely optional and provides the convenience of advance seat selection.”
Competition Commissioner Matthew Boswell was not made available for an interview to discuss the matter. “Consumers expect to pay the advertised price,” he said in a press release. “We’re taking action against Cineplex because misleading tactics like drip pricing only serve to deceive and harm consumers.”
In a research note, Royal Bank of Canada Capital Markets analyst Drew McReynolds estimated that Cineplex earns about $5-million a quarter from the online booking fee, which the company has said it reinvests into digital initiatives.