(Toronto) After Cineplex was fined a record $38.9 million Monday night, experts say the spotlight could turn to other companies that add fees to almost everything sold online.
Experts say Canadian regulators are likely to turn their attention to other companies after the movie theatre operator was reprimanded by the Competition Tribunal for the practice of trickle pricing, which involves enticing customers to make a purchase without full disclosure of the final cost.
The Competition Bureau’s case against Cineplex involved a $1.50 fee that many customers were forced to pay when buying tickets online, but McMaster University’s Vass Bednar said the theatre owner, which is appealing the decision, is far from the only company whose pricing practices could become fodder for the watchdog.
“Consumers are being exploited in all sorts of ways,” Mr.me Bednar, executive director of McMaster University’s Master of Public Policy program. We see a plane ticket, a train ticket, a bus ticket or a concert ticket advertised as a certain amount that attracts us, and then all these other costs […] are added together and this has a deflating effect.”
Consumers have long complained about seeing the final price of their purchase increase due to fees added at the time of payment, but over the past decade the phenomenon has attracted increasing attention from regulators.
In recent years, the Competition Bureau has taken action against several companies it said were engaging in trickle pricing, including SiriusXM Canada, Discount Car Rental and TicketNetwork.
While some may question the relevance of the Bureau investing time in cases like Cineplex where relatively small fees were charged to individuals, Mr.me Bednar says it’s important to protect Canadians and signal to businesses that the watchdog “takes enforcement seriously.”
The Bureau’s efforts were aided by amendments to the Competition Act in June 2022 designed to recognize trickle pricing as a harmful business practice.
Monday’s ruling marked the first case to be decided under the new version of the law, which increased the potential penalty for a first violation from $10 million to 3% of a company’s global revenue, said Kelly Harris, an advertising and marketing attorney at Harris + Co.
The previous record for a civil penalty in a false advertising case was $10 million billed to Bell in 2011, bureau spokeswoman Marianne Blondin said Tuesday.
The $38.9 million administrative monetary penalty imposed on Cineplex, which said it was honest about the fees, is equal to the amount the company collected from consumers through the $1.50 online booking fee between June 2022 and December 2023.
With fees being so common in business and digital means making it easier to calculate the damages they create, Mme Harris said: “I’m sure the business community is following the case with great interest, including the appeal.”