Cineplex Inc. (TSX: CGX), Canada’s largest movie theater chain, has announced its intention to appeal a record $38.9 million fine imposed by the Competition Tribunal for deceptive marketing practices. The decision, issued late Monday, sided with the Competition Bureau in a case that began in May 2023.
The tribunal found that Cineplex misled customers by not immediately presenting the full price of movie tickets during online purchases. The fine amount equals the total collected from consumers through a $1.50 online booking fee between June 2022 and December 2023.
At the heart of the dispute is a practice known as “drip pricing,” where customers are drawn into a purchase without full disclosure of the final cost. The Competition Bureau alleged that Cineplex’s online booking fee, introduced in June 2022, constituted this practice. The fee applied to many customers not enrolled in Cineplex’s CineClub subscription or Scene Plus loyalty programs.
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In response to the tribunal’s decision, Cineplex issued a statement claiming that the online booking fee is an “optional, value-added service” that provides moviegoers with guaranteed tickets and seat locations before arriving at the theater. Cineplex maintains that the fee is presented clearly and prominently on its website and app.
“We are shocked and disagree with the decision and will appeal to the Federal Court of Appeal including the $39 million administrative monetary penalty,” the statement read. Cineplex asserted that the ruling would not impact the continuation of this service and expressed confidence that their presentation of the fee complies with both the spirit and letter of the law.
In addition to the fine, the tribunal ordered Cineplex to refrain from similar conduct for the next 10 years. Competition Commissioner Matthew Boswell hailed the decision as “a resounding win for Canadians,” emphasizing the importance of upfront price transparency.
The case was bolstered by June 2022 amendments to the Competition Act, which recognized drip pricing as a harmful business practice. The tribunal is expected to release detailed reasons for its decision next week, after redacting confidential information.
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