Cineplex has been ordered to pay a nearly $39 million penalty after losing a case over an online booking fee introduced in 2022.
On Monday, September 23, the Competition Bureau Canada, an independent law enforcement agency, announced that the Competition Tribunal ruled in favour of the Competition Bureau in the deceptive marketing case against Cineplex. The agency stated that the company “engaged in drip pricing” when it added the mandatory online booking fee of $1.50.
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“The Tribunal determined that the representations on Cineplex’s website and mobile application constituted drip pricing and that consumers were deceived by contradictory and incomplete information on Cineplex’s tickets page,” reads the statement.
Drip pricing is a strategy where businesses advertise low prices only to include mandatory fees later, making the final cost higher than initially presented. This deceptive practice goes against the Competition Act, which recognizes drip pricing as “a harmful business practice.”
The company now faces a penalty of over $38.9 million, equivalent to the amount collected from consumers after introducing the fee from June 2022 to December 2023. Cineplex has also been ordered to pay for legal fees.
However, Cineplex argued that the online booking fee was an optional service presented on the website in “a clear and prominent manner.”
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“We are shocked and disagree with the decision and will appeal to the Federal Court of Appeal, including the $39 million administrative monetary penalty,” reads the company’s statement. “To clarify, this ruling has no impact on the continuation of offering this value-added service to consumers.”
Matthew Boswell, commissioner of competition at the Competition Bureau, said the ruling was “a resounding win for Canadians.”
“It sends a strong message that businesses should not engage in drip pricing and need to display their full prices upfront,” he said. “Businesses that fail to comply with the law risk significant financial penalties.”