Cineplex has made almost $40 million from online booking fees in competition case
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Hey there, time traveller!
This article was published 27/02/2024 (952 days ago), so information in it may no longer be current.
TORONTO – Cineplex Inc. has made almost $40 million from online booking fees at the heart of deceptive marketing claims the country’s competition commissioner has made against the cinema chain.
An agreed statement of facts in the case before the Competition Tribunal shows Canada’s largest theatre owner made over $11.6 million in the six months after the fees were implemented in June 2022. It made another $27.3 million on the fees in 2023.
Cineplex charges a $1.50 on every ticket purchased online, but Scene+ members get a discount and CineClub members have the fee waived.
Whether the way Cineplex presents the fees constitutes deceptive marketing and drip pricing — when a company displays a price it later tacks fees onto — has been debated in recent weeks before the Competition Tribunal in Ottawa.
Competition Commissioner Matthew Boswell has claimed the fees are deceptive because moviegoers are not presented with the full price of a movie ticket on the very first page they encounter when buying tickets from Cineplex.
Closing arguments filed by the commissioner on Monday claim Cineplex discloses the existence and amount a customer will pay in online booking fees “below the fold” or off the screen for the vast majority of moviegoers, thus misleading people about the final price they will pay.
He added that Cineplex also uses a countdown timer displayed at each stage of the purchase process, which “increases pressure on consumers to focus on completing their purchase, rather than considering transaction details and thinking things through.”
When such tactics are used, “consumers tend to underestimate the total price of purchase” because they “pay less attention to additional fees than to base price information.”
“The use of these pricing practices has been shown to increase consumer demand — in this case Cineplex has increased demand for its tickets than the demand that would occur if it initially displayed a truthful price of the ticket for a consumer,” the commissioner’s filing said.
He wants the tribunal to order Cineplex to stop drip pricing, remove the countdown timer from its website and app and pay a financial penalty equal to the amount Cineplex gained from “misleading conduct.”
Cineplex has argued the commissioner’s claims are without merit and should be thrown out, with costs awarded to Cineplex, because moviegoers are told about fees they may face from the start of the purchase process.
Cineplex spokeswoman Michelle Saba said in an email to The Canadian Press that the business would not comment on the matter while it is being heard by the tribunal.
The company’s closing arguments were posted on the tribunal’s website Tuesday evening.
In the documents, Cineplex says the commissioner’s assertion that it engages in so-called drip pricing is a mischaracterization. It says there is nothing misleading about how it displays online booking fees and total online prices for customers purchasing on its website.
However, the commissioner’s submission said the fees Cineplex charges are a product of its efforts to grow its online ticket business that stretch back many years.
The submission said the chain started using reserved seating in 2017 and had expanded it to all theatres by June 2020, when the COVID-19 pandemic hastened online purchasing.
By 2021, the commissioner said roughly two-thirds of Cineplex’s tickets were sold online or through its website.
The commissioner said the online booking fees applied in June 2022 came about “as part of a direction from Cineplex’s chief operating officer for Cineplex to consider different revenue-generating ideas.”
By then, Cineplex had grappled with several health measures meant to quell the spread of COVID-19, including theatre closures and social distancing protocols, which weighed on its finances along with a failed sale to U.K. theatre giant Cineworld.
The fees were implemented the same month Canadian laws were changed to deem drip pricing to be false or misleading.
Prior to the fees, tickets booked online were advertised by Cineplex as carrying “no service fee,” the commissioner said.
“As Cineplex readied itself for launching the fee, it ordered the removal of any signs that referred to the fact that Cineplex did not have service fees,” the filing said.
“It sought to do so in a manner that would not arouse suspicion amongst staff in theatres that the policy might be changing.”
This report by The Canadian Press was first published Feb. 27, 2024.
Companies in this story: (TSX:CGX)
