Cineplex says it will appeal $38.9M fine over $1.50 online booking fee

Cineplex Inc. has been ordered to pay a record $38.9-million fine by the Competition Tribunal for deceptive marketing practices but the ruling doesn't stop the theatre owner from continuing to charge the online booking fee that sparked the case in the first place.

The tribunal issued the decision late Monday, siding 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.

Cineplex began chargingthe $1.50 online booking fee in question 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.

Ruling doesn't stop extra fees

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." The tribunal's concern 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."

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.

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."

This is the first ruling for a case of its kind since amendments to the Competition Act in 2022 explicitly recognized drip pricing as a harmful business practice and gave the Competition Bureau more power to increase maximum fines.

Franois-Philippe Champagne, minister of innovation, science and industry, championed the decision as a "win for Canadians" on the social media platform X on Tuesday, saying this is "why we reformed the Competition Act."

'Junk fees' still need tackling, some say

Some theatregoers outside the Cineplex-owned Scotiabank Theatre in Toronto were happy to hear the outcome of the case.

Nathan Maharaj told CBC News that hidden fees are "sneaky" and that businesses should put the full price up front so "we can make our decision based on what we actually know the value will be."

"I think a penalty is a good thing," he added. "I think it's a good shot across the bow of anybody thinking that might be a fun move to try on their customers some other time."

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.

But others weren't sure if the case brought any real change to their day to day.

"It's a big fine, but I'm not sure how it impacts me as a customer," Sizhao Shi said. "Am I still going to have to pay the $1.50, is it going to be in the ticket price?

"At the end of the day, right, the company gets fined, but what about us?"

While the ruling will likely "have a deterrent effect" for other companies, Bester said the government needs to address companies' ability to charge these fees, not just the fees' transparency.

"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."

Cineplex to appeal decision

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.

Cineplex has vehemently denied the accusations from the beginning, saying moviegoers are promptly told about fees they may face and can avoid them all together by purchasing seats in-person at a theatre.

Autumn Gervais always buys her movie tickets online and the news of an online booking fee comes as a total surprise, she told CBC News.

"I had no idea there was extra fees," Gervais said, speaking to CBC outside the Scotiabank Theatre in Toronto. "If I knew ahead of time, I would have been buying my movie tickets in person a long time ago."

LISTEN | How does drip pricing affect you?

Columnists from CBC Radio4:51How drip pricing affects you the consumer

Cineplex Canada is facing two class-action lawsuits for allegedly using drip pricing. What is this tactic and how does it affect consumers? The CBCs Manjula Selvarajah explains.

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.

The full details could set a precedent for exactly how and when companies have to disclose pricing and specific fees in the future.

"It will be very interesting to see what the tribunal says in its decision," Anita Banicevic, partner at the law firm David Ward, told CBC News. "It's going to be something that companies are watching closely."