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Highlights:
- Cineplex Inc. appeals a record fine imposed for deceptive marketing practices.
- The company disputes allegations of misleading customers with online ticket pricing.
- Cineplex argues that the tribunal's penalty is disproportionate to the case.
Cineplex Inc.(TSX:CGX), one of the largest cinema chains in Canada, has taken steps to challenge a significant fine imposed by the Competition Tribunal. The fine stems from allegations of deceptive marketing practices, specifically related to the pricing of movie tickets on Cineplex's website and mobile app.
The appeal was filed with the Federal Court of Appeal, where Cineplex strongly denied the accusations of engaging in what is known as "drip pricing." This pricing strategy involves the gradual revelation of fees throughout the purchasing process, rather than upfront. Cineplex requested a stay of the fine while the case proceeds, which has been granted on an interim basis until a judicial panel reviews the matter further.
Details of the Fine and Accusations
The Competition Tribunal’s decision to fine Cineplex followed an investigation by the Competition Bureau that began in 2023. The Bureau accused the company of misleading customers by not clearly disclosing the full price of movie tickets during online purchases. The total fine imposed was nearly $40 million, which marks one of the most significant penalties for such an infraction under the Competition Act.
Cineplex, however, has maintained that its website and mobile app provided clear and prominent pricing information from the beginning of the ticket purchase process. The company emphasized that the total price, excluding taxes, was displayed immediately upon selecting the number of tickets, and thus, it believes it did not engage in any deceptive practices.
Cineplex's Response to the Tribunal’s Decision
In response to the accusations, Cineplex stated that the additional fee was an optional charge tied to an added-value service. This service allowed customers to book tickets online and secure specific seats before arriving at the theater. The company reiterated that the booking fee, which was introduced in 2022, applied only to certain customers who were not part of its CineClub subscription service or Scene Plus loyalty program. Subscribers and loyalty members enjoyed a reduced fee or complete exemption from this charge.
Cineplex also argued that the nearly $40-million fine was excessive, labeling it as "out of all proportion" to the case. The company’s defense highlights the differences between regular customers and those enrolled in its programs, who were subject to different pricing models for the online booking fee.
Competition Bureau's Stance
The Competition Bureau, however, held firm in its view, maintaining that the online booking fee constituted drip pricing. The Bureau argued that the company’s pricing page did not fully disclose the additional cost upfront, thereby misleading customers and causing confusion. The Bureau’s stance has been that such practices violate consumer protection regulations and lead customers to make purchases without having complete information about the final price.
The legal battle now moves to the Federal Court of Appeal, where Cineplex continues to fight against the penalty. The outcome of the case may have broader implications for how companies disclose pricing information online.
