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Competition - False and Misleading Representations (2). Cineplex Inc. v. Commissioner of Competition ['drip pricing']
In Cineplex Inc. v. Commissioner of Competition (Fed CA, 2026) the Federal Court of Appeal dismissed a Competition Act appeal, here brought against a Competition Tribunal finding that the appellant had "engaged in reviewable conduct by making pricing representations to the public that were false or misleading in a material respect" - and issued a cease order, an administrative fine and costs.
Here the court reviewing the Competition Act's 'deceptive marketing' provisions [under CA s.74.01], and summarizes the substantive aspects of the Tribunal case below:II. The Statutory Scheme
[12] As the Tribunal observed, the purpose of the Competition Act is to promote vigorous and fair competition in Canada, and to discourage certain types of commercial behaviour that are viewed as detrimental to Canada and the Canadian economy: Tribunal reasons at para. 224, citing General Motors of Canada Ltd. v. City National Leasing, 1989 CanLII 133 (SCC), [1989] 1 S.C.R. 641, at p. 676; R. v. Wholesale Travel Group Inc., 1991 CanLII 39 (SCC), [1991] 3 S.C.R. 154, at pp. 190, 198, 199 (per Chief Justice Lamer) and pp. 256-257 (per Justice Iacobucci); Alex Couture Inc. v. Canada (Attorney General) (1991), 1991 CanLII 3120 (QC CA), 38 C.P.R. (3d) 293 (Qué. C.A.), at pp. 320, 321b, 324c-d. See also section 1.1 of the Competition Act.
[13] Insofar as the deceptive marketing provisions contained in section 74.01 of the Act are concerned, this Court has observed that their objective is to "“incite firms to compete based on lower prices and higher quality”", so as to achieve the objective identified in section 1.1 of providing consumers with competitive prices and product choices: Canada (Commissioner of Competition) v. Premier Career Management Group Corp., 2009 FCA 295, at para. 61; Tribunal reasons at para. 227.
[14] As this Court further observed in Premier Career Management, when consumer information is distorted by misleading representations "“the proper functioning of the market is necessarily harmed, and the Act is rightly engaged, given its stated goals”" above, at para. 62; Tribunal reasons at paras 226-233, 269. See also R. v. Stucky, 2009 ONCA 151 at para. 39.
[15] It also bears noting that the Competition Act is not consumer protection legislation. While both types of statutes address false or misleading representations made to the public, they do not serve the same underlying purposes. Self-evidently, provincial consumer protection legislation is aimed at protecting the consumer. In contrast, the Competition Act is aimed at "“maintaining the proper functioning of the market in order to preserve product choice and quality”": Premier Career Management, above at para. 63. See also Tribunal reasons at para. 233.
[16] Similarly, as the Tribunal observed in Commissioner of Competition v. Sears Canada Inc., 2005 Comp. Trib. 2, (albeit in the context of the ordinary price provision in subsection 74.01(3)), the Competition Act "“seeks to encourage and maintain competition and the objective of the impugned legislation is to do this by improving the quality and accuracy of marketplace information and by discouraging deceptive marketing practices”": at para. 82. It further seeks to protect competition from the anti-competitive effects and inefficiencies that result from deceptive representations: at para. 93.
[17] Section 74.01(1)(a) of the Competition Act provides that a person will engage in reviewable conduct if they make "“a representation to the public that is false or misleading in a material respect”", if they do so for "“the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest, by any means whatever”".
[18] There was no real dispute before the Tribunal that Cineplex had made "“representations”" with respect to the price of its movie tickets, and that the purpose of these representations was to promote a business interest. There was, however, disagreement as to what should be considered to be "“the representations”". There was also a dispute before the Tribunal with respect to the materiality of Cineplex’s representations, although it did not vigorously pursue these arguments in this Court.
[19] As noted earlier, the Tribunal concluded that the way movie ticket prices were displayed on Cineplex’s website and app was false or misleading in a material respect, amounting to reviewable conduct contrary to section 74.01(1)(a) of the Competition Act.
[20] The Tribunal further found that Cineplex had engaged in a second form of reviewable conduct, namely "“drip pricing”", contrary to section 74.01(1.1) of the Act. This provides that "“[f]or greater certainty, the making of a representation of a price that is not attainable due to fixed obligatory charges or fees constitutes a false or misleading representation”". The section creates an exception for matters such as the addition of sales taxes to purchase prices, stating that drip pricing will not occur where "“the obligatory charges or fees represent only an amount imposed on a purchaser of the product referred to in subsection (1) by or under an Act of Parliament or the legislature of a province”".
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[130] It will be recalled that the general impression and literal meaning tests are a part of the analysis that the Tribunal must undertake in determining whether a representation constitutes "“reviewable conduct”" under section 74.01 of the Competition Act, whether it relates to the prohibition on false or misleading representations contained in section 74.01(1)(a) or the prohibition on drip pricing contained in section 74.01(1.1) of the Act. In both cases, the Tribunal must also be satisfied that the false or misleading representation in question "“is false or misleading in a material respect”": section 74.01(1)(a). (my emphasis)
[131] The legal test for the literal meaning of a representation is uncontroversial. The Tribunal must look at what is said and interpret the words in their ordinary sense: Tribunal reasons at para. 242, citing Richard, above at para. 47.
[132] Insofar as the materiality of a misrepresentation is concerned, the Court observed in Cogeco that a representation will be "“misleading in a material respect if an ordinary citizen would likely be influenced by that impression in deciding whether or not to purchase the product or service”": above at para. 24, citing Canada (Commissioner of Competition) v. Yellow Page Marketing B.V., 2012 ONSC 927, at para. 34, aff’d 2013 ONCA 71. See also Apotex Inc. v. Hoffman La-Roche Ltd (2000), 2000 CanLII 16984 (ON CA), 195 D.L.R. (4th) 244 (Ont. CA), at para. 16. See also Premier Career Management, above at paras. 20 (quoting Apotex), 65, 80; Sears Canada, above at paras. 333-336 (a "“material influence on the mind of a consumer”"); Gestion Lebski inc., above at paras. 154, 163, 288.
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[135] The test for reviewable conduct under section 74.01(1)(a) also requires a court to identify the general impression conveyed by the representation in question, and to then determine whether the representation is false or misleading in a material respect. Subsection 74.01(1.1) further provides that a representation will be false or misleading if it is not attainable due to fixed or obligatory charges or fees. The general impression test is thus an integral part of false and misleading advertising cases, under both the civil recourse provisions in section 74.01 of the Competition Act, and under the criminal provisions at section 52 of the Act.
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D. Conclusion as to Whether the Tribunal erred in Finding that Cineplex had engaged in Reviewable Conduct, contrary to Section 74.01(1)(a) of the Competition Act
[168] For these reasons, I conclude that the Tribunal did not err in finding that Cineplex had engaged in reviewable conduct, contrary to section 74.01(1)(a) of the Competition Act, by making a representation to the public that is false or misleading in a material respect. Here the court considers the 'drip pricing' form of deceptive marketing:V. Did the Tribunal Err in Finding that Cineplex had engaged in Drip Pricing?
[170] It will be recalled that section 74.01(1.1) of the Competition Act provides that "“[f]or greater certainty, the making of a representation of a price that is not attainable due to fixed obligatory charges or fees constitutes a false or misleading representation”". This provision thus creates a specific sub-category of false or misleading price representations and is aimed at pricing representations that have been divided into parts (or "“partitioned”").
[171] The Tribunal found that section 74.01(1.1) "“provides a specific means to support the achievement of the statutory goals: it simplifies the Tribunal’s assessment by removing any need to analyze and determine separately whether a price representation that meets the stated conditions is false or misleading under paragraph 74.01(1)(a)”". That is, representations that satisfy the requirements of the section will be considered false or misleading, thereby relieving the Commissioner of the burden of having to prove that this is so: Tribunal reasons at para. 333.
[172] Indeed, as the Tribunal put it, "“the purpose of subsection 74.01(1.1) is to facilitate proof of one of the elements of paragraph 74.01(1)""(a)”": Tribunal reasons at para. 387.
[173] The Tribunal further observed that section 74.01(1.1) advances the objectives of the Competition Act and of the deceptive marketing provisions in two ways. First, it describes the price representations that Parliament has determined are false or misleading. By doing so expressly, Parliament has provided guidance about non-permissible conduct to persons making commercial representations to the public in order to sell their products and services. The section further seeks to engender trust by consumers in the price representations that they see, through clarity and transparency: Tribunal reasons at para. 333.
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[177] In examining whether Cineplex’s price representations were "“not attainable due to fixed obligatory charges or fees”", as contemplated by section 74.01(1.1) of the Competition Act, the Tribunal engaged in a careful analysis of the statutory provision, having regard to the text, context and purpose of misleading advertising provisions of the Act generally, and section 74.01(1.1) in particular. The Tribunal was, moreover, mindful of the fact that this was the first time that section 74.01(1.1) had been applied in a proceeding heard on the merits: Tribunal reasons at paras. 328–335.
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[178] The Tribunal concluded that section 74.01(1.1) "“does not create a separate reviewable practice for the purposes of section 74.1”": Tribunal reasons at para. 331. Rather, the provision replicates the two elements required for a finding of reviewable conduct under section 74.01(1)(a): the making of a representation, and the requirement that the representation be false or misleading. As noted earlier, section 74.01(1.1) contemplates that if certain factual conditions are met—that the represented price is "“not attainable due to fixed obligatory charges”"—then the second element of the reviewable conduct in paragraph (1)(a) will have been met, and the representation will be found to have been false or misleading.
[179] The Tribunal concluded, however, that given the scope of sections 74.01(1)(a) and 74.01(1.1) and the broad and diverse range of commercial representations to which they may apply, it should not endeavour to define the contested terms in the abstract, or for all possible purposes. Rather, the Tribunal decided that it should use a fact-based, contextual approach in assessing whether the requirements of the section had been met, grounding its analysis in its factual findings: Tribunal reasons at para. 335.
[180] That is, the Tribunal turned to the detailed evidentiary record before it to examine whether the Online Booking Fee was fixed and obligatory, and whether Cineplex’s represented prices were attainable in the channel in which they were made. These are determinations that are based on the Tribunal’s interpretation of the evidence as a whole.
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[190] In my view, the Tribunal interpreted and applied section 74.01(1.1) in a manner that would promote market function, which is one of the purposes of the Competition Act. It carefully considered all of the evidence before it, as well as the context in which the representations were made—namely, the online setting.
[191] The Tribunal’s findings are, moreover, amply supported by numerous factual findings that it made, including its determination that the Tickets Page was designed to promote conversion to yield a ticket sale transaction online. Indeed, the Cineplex website and app give no indication to consumers that the prices that are displayed online do not apply to purchases made in the very medium in which the representations are made.
[192] The Tribunal further found that neither the literal meaning nor the general impression conveyed by the price representations on Tickets Page A of the Cineplex website and app would suggest to customers that the prices displayed on the website and app were only available where tickets were purchased at movie theatres, and that they did not apply to online purchases: Tribunal reasons at para. 380.
[193] The Tribunal came to the logical conclusion that when determining whether Cineplex’s represented prices were "“attainable”" (i.e. whether consumers were able to purchase tickets online for the price represented by Cineplex on its website and app), the analysis should focus on the impugned price representations and the channel in which the representations were made. The prices displayed on the Cineplex website and app are represented to be the prices that consumers must pay to purchase a ticket in those same channels, as that is where the price representations are made, where they are seen and where they may be acted upon: Tribunal reasons at paras. 379–380 [my emphasis].
[194] As a result, the Tribunal concluded that the fact that the prices represented on the Cineplex website or app for movie tickets were attainable if the consumer bought them in person at the theatre was not relevant to the question of whether they were "“attainable”" under section 74.01(1.1) of the Competition Act in the channel where the price representations were made: Tribunal reasons at para. 381.
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[197] As the Commissioner observes, consumers must be able to trust that the price representation that they see online is the price they will pay when they purchase the ticket in that channel. I further agree with the Commissioner that the Tribunal’s finding that the ticket prices represented on the Cineplex website and app are unattainable is logically consistent with the purpose of subsection 74.01(1.1), which is to engender consumers’ trust in the price representations they see, through clarity and transparency.
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[204] While it was not prepared to define the word "“fixed”" as it appears in section 74.01(1.1) for all purposes by trying to anticipate every possible kind of charge or fee that may be levied by a person making a price representation, the Tribunal was nevertheless satisfied on the evidence before it that Cineplex’s Online Booking Fee is a "“fixed”" charge or fee: Tribunal reasons at para. 348.
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[215] The Tribunal further found on the evidence that the Online Booking Fee charged for ticket purchases made on Cineplex’s website or app was an "“obligatory”" charge or fee under subsection 74.01(1.1) of the Competition Act: Tribunal reasons at paras. 365, 375. This is a finding of mixed fact and law to which deference is owed by this Court.
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D. Conclusion as to Whether the Tribunal erred in Finding that Cineplex had engaged in Drip Pricing
[232] As noted earlier, this Court is required to defer to the Competition Tribunal on factually suffused questions of mixed fact and law, and may only interfere where there is a palpable and overriding error on the part of the Tribunal that goes "“to the very core of the outcome of the ""case”": Rogers Communications Inc., above at para. 7.
[233] The Tribunal’s application of section 74.01(1.1) to the facts before it was careful and deliberate. It took all the evidence presented into account and provided a considered response to an issue of mixed fact and law. There is no palpable or overriding error in its analysis with the result that its finding with respect to drip pricing must stand.
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