Cineplex Inc. says it will appeal a record $38.9 million fine ordered by the Competition Tribunal after it found the theatre owner guilty of deceptive marketing practices.
The fine was embedded in a decision the tribunal issued late Monday that saw it side with the Competition Bureau in a case stretching back to May 2023. That was when the watchdog accused Cineplex of misleading theatregoers by not immediately presenting them with the full price of a movie ticket when they purchased seats online.
“The consumer is deceived or led astray by the contradictory and incomplete information on Cineplex’s tickets page, which obfuscates the existence and quantum of the online booking fee,” the tribunal said in a two-page information outlining its decision.
The online booking fee it referred to is a $1.50 online booking fee Cineplex began charging in June 2022 to many customers not enrolled in its CineClub subscription and Scene Plus loyalty programs, which saw the fee waived and dropped to $1, respectively.
The bureau alleged the fee constituted “drip pricing,” a practice when customers are drawn into a purchase without full disclosure of the final cost.
Cineplex to appeal decision
Cineplex, however, vehemently denied the accusations, saying moviegoers are promptly told about fees they may face and can avoid them all together by purchasing seats in-person at a theatre.
In the wake of the tribunal’s ruling on Monday, Cineplex said in a statement that it was “shocked” by the decision, adding that the online fee is “presented on our website and app in a clear and prominent manner.”
“We believe our guests make informed purchase decisions and remain confident our online booking fee is presented in a way that fully complies with the spirit and letter of the law,” Cineplex said. The company said it would be appealing the decision, including the monetary penalty.
The $38.9 million fine Cineplex has now been handed is equivalent to the amount it collected from consumers through the $1.50 online booking fee between June 2022 and December 2023.
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On top of the fine, the tribunal has ordered Cineplex not to engage in the same conduct that prompted the case for the next 10 years.
“It sends a strong message that businesses should not engage in drip pricing and need to display their full prices upfront,” said Matthew Boswell, the commissioner of competition, in a statement Monday. “Businesses that fail to comply with the law risk significant financial penalties.”
Fees not necessarily going anywhere
The ruling doesn’t mean that the online booking fee is going away. Cineplex clarified in its statement that the ruling doesn’t affect the “continuation of offering this value-added service to consumers.” What the tribunal found issue with was that the fee was hidden, as movie ticket prices displayed on the website and app did not factor in the booking fee up front.
“A deceptive marketing case can be a bit unsatisfactory because now they can [continue to] charge the same fee,” Keldon Bester, executive director of the Canadian Anti-Monopoly Project, told CBC News. “They just need to be clear about it.”
While the ruling will likely “have a deterrent effect” for other companies, there’s more that should be done, he said.
The phenomenon of drip pricing is also known as “junk fees,” and the Competition Bureau noted that recent amendments to the Competition Act explicitly recognize drip pricing as a harmful business practice.
To improve things for consumers, the government needs to address companies’ ability to charge these fees, not just the fees’ transparency, Bester said.
“The reason we call them junk fees is because we don’t believe there’s value associated with the costs, and that’s really what we need to go after.”
Fighting for transparent pricing does help to level the playing field so that theatregoers can accurately compare prices across different theatres. But with Cineplex accounting for 75 per cent of the box office market share in Canada, there aren’t many other options for Canadians.
The tribunal says it expects to detail the full reasons behind its decision and order next week, once the organization has worked with Boswell and Cineplex to identify “confidential or competitively sensitive information” that must be redacted.
