Canada's Competition Bureau is suing Ticketmaster, the world's leading event-ticket vendor, and parent company Live Nation Entertainment Inc. over fees added to tickets later in the purchase process.
The practice, often called "drip pricing," is a long-used tactic in the ticketing industry – mandatory fees with labels such as "service fees" or "facility charges." In Ticketmaster's case, the Competition Bureau said, it easily raises prices more than 20 per cent – and sometimes more than 65 per cent – above what was advertised.
Such a practice, the bureau said in a release on Thursday afternoon, means originally advertised prices are "deceptive." The bureau first warned ticket vendors against the pricing tactic in July, but did not name any specific company. Now, it has filed an application with the Competition Tribunal against Ticketmaster hoping to, among other things, bring "an end to the alleged deceptive marketing practices" and hand a financial penalty to the company and its parent.
The bureau's lawsuit marks the formal start of a federal foray into the fight over ticketing transparency. Consumer frustration over ticket prices and demand has become a priority for Canadian governments in the past two years, ever since the Tragically Hip announced their final, emotionally charged tour with now-late frontman Gord Downie.
Ontario brought a sweeping series of ticketing rules into law in December, banning ticket-buying "bots" and mandating a price cap on resold tickets of 150 per cent of the original price. Although a date has not been set to enforce the new rules, they will require ticket sellers to be clear about the total cost of tickets, including fees and charges. Alberta began revisiting its own ticketing laws in November, promising to ban bots as well, although it stopped short of similar transparency measures.
The bureau's application argues that the vendors "earned gross revenue from sales affected by the conduct in excess of several hundred million dollars in a year in Canada." Still, it does not indicate the size of the penalty it may seek.
"To promote continued innovation and growth in the digital economy, it's critical that consumers have confidence that the prices they see online are the ones they will pay," Competition Commissioner John Pecman said in a news release.
Asked by The Globe and Mail if the bureau planned to take similar action against other ticketing websites, such as the well-known resale marketplace StubHub, a bureau spokesperson said via e-mail that it could not confirm any related investigations.
Ticketmaster sells hundreds of millions of tickets worldwide each year. In an e-mailed statement, a company spokesperson said, "Ticketmaster remains committed to getting tickets into the hands of fans and has long practiced transparency to enable informed purchasing decisions. Ticketmaster continues to work closely with provincial governments to enhance consumer protection and provide the best ticketing experience for fans."
Historically, companies have settled with the bureau over drip pricing allegations rather than proceeding with a court case, said Anita Banicevic, a partner at law firm Davies Ward Phillips & Vineberg.
In 2011, for instance, the bureau reached an agreement with Bell Canada that saw the telecom company agree to modify misrepresented prices for some of its services and pay an administrative penalty of $10-million.
Ms. Banicevic, who is chair of the Canadian Bar Association's competition law section, said one possible area of discussion in court would be Ticketmaster's role as a broker – the fact that service fees, for instance, would be a separate charge from the good being sold. There is also the issue of some provinces already asking ticketing companies to mandate this kind of transparency. "Is there anything else the bureau needs to address if the provinces are already on it?" she said.