Executive Summary: Key Legal and Evidentiary Issues

• The Federal Court of Appeal dismissed Cineplex Inc.’s appeal and upheld the Competition Tribunal’s findings that Cineplex’s online ticket price representations were false or misleading in a material respect under section 74.01(1)(a) of the Competition Act.

• The Court confirmed that Cineplex’s Online Booking Fee, added to tickets purchased on its website and app, met the statutory definition of “drip pricing” under section 74.01(1.1) because the represented prices were not attainable online due to fixed obligatory charges or fees.

• On the evidentiary record, the Tribunal found—and the Court accepted—that Cineplex’s website and app design (including “above the fold” content, the floating ribbon and countdown timer) discouraged scrolling and “shrouded” the Online Booking Fee from the ordinary consumer.

• The Court agreed that, for purposes of the general impression test, the relevant representation was the pricing information visible above the fold on the Tickets Page, which conveyed that consumers could purchase tickets online at the displayed per-ticket prices, subject only to taxes.

• The Online Booking Fee was held to be a fixed per-ticket charge (with specified amounts for regular and Scene+ members and no fee for CineClub members) and an obligatory charge for consumers purchasing tickets online, rendering the advertised prices unattainable in that channel.

• The Court upheld the Tribunal’s remedial orders, including a 10-year prohibition on the impugned conduct and an administrative monetary penalty of $38,978,000, finding no error in the Tribunal’s application of the statutory factors or in its exercise of remedial discretion.

Factual background and Cineplex’s online ticketing model

Cineplex Inc. operates in the film entertainment and content, amusement and leisure, and media sectors and “is Canada’s largest and most innovative film exhibitor.” As of December 31, 2023, it “owned, leased or was part of a joint venture in 1,631 screens in 158 theatres across Canada.” Consumers can buy tickets either in person at theatres (box office, concession, or kiosk) or online via Cineplex’s website (www.cineplex.com) and its mobile app, both of which display information about films, theatres and showtimes and allow online ticket purchase, advance buying and reserved seating.

On June 15, 2022, Cineplex implemented an “Online Booking Fee” that applied only to tickets purchased on its website or app. Generally, the fee was “fixed at $1.50 per ticket, to a maximum of four tickets,” with “no fee being payable for additional tickets if more than four tickets are purchased in one transaction.” No Online Booking Fee is charged for Cineplex’s “CineClub” members, and “members of the Scene+ loyalty program are charged a reduced Online Booking Fee of $1.00 per ticket.” The fee amount did not change from its introduction in 2022 and generated “just under $11.7 million” in 2022 and “$27.3 million” in 2023, the period under review.

To see ticket prices online, a customer must have a “Cineplex Connect Account.” After providing name, email and phone number and entering an authentication code sent by text or automated voice message, the customer can see ticket prices on the “Tickets Page A” of the website or app. A “floating ribbon” appears at the bottom of the screen once the consumer signs in, displaying a countdown timer, a subtotal (initially “CA$0.00”) and a “PROCEED” button. Different ticket categories (such as General Admission, Seniors and Children) are displayed with per-ticket prices.

When a customer adds one or more tickets to their online cart, the number to the right of “Subtotal” on the floating ribbon changes from “CA$0.00” to an amount equal to “the sum of the price of the ticket(s) plus any applicable Online Booking Fees.” The subtotal does not break out the ticket total and the Online Booking Fee total; consumers would need to perform arithmetic to deduce that the fee is included. The Tribunal noted that this arithmetic “is not simple,” and that Cineplex’s Chief Operating Officer “evidently struggled at the hearing to determine whether the Online Booking Fee had been included in the subtotal displayed on a sample webpage.”

Most detailed information about the Online Booking Fee (its amount, per-ticket nature, cap, and conditions) appears “below the fold” on the Tickets Page; it is not disclosed next to the per-ticket prices at the top of the page. The only above-the-fold reference is in a CineClub advertisement on Tickets Page A noting that CineClub members pay “no Online Booking Fees,” but it does not state the amount of the Fee or explain its impact on non-members.

The Tribunal proceeding and statutory framework

The Commissioner of Competition applied to the Competition Tribunal, alleging that Cineplex had breached the deceptive marketing provisions of the Competition Act by:

• making pricing representations that were false or misleading in a material respect, contrary to section 74.01(1)(a); and

• engaging in “drip” pricing contrary to section 74.01(1.1), by advertising a price “that is not attainable due to fixed obligatory charges or fees.”

Section 74.01(1)(a) provides that a person engages in reviewable conduct if, for the purpose of promoting directly or indirectly the supply or use of a product or any business interest, they make to the public “a representation to the public that is false or misleading in a material respect.” Section 74.01(1.1) states that, for greater certainty, making “a representation of a price that is not attainable due to fixed obligatory charges or fees constitutes a false or misleading representation,” subject to an exception where the obligatory charges or fees represent only an amount imposed under federal or provincial law on the purchaser.

Under section 74.1(1), once reviewable conduct is found, the Tribunal may order the person “not to engage in the conduct” for up to 10 years and may require a corporation to pay an administrative monetary penalty up to the greater of $10,000,000 (and, for each subsequent order, $15,000,000) and three times the value of the benefit derived from the deceptive conduct, or, if that amount cannot be reasonably determined, up to 3% of the corporation’s annual worldwide gross revenues.

The Tribunal held that Cineplex had (1) made false or misleading representations in a material respect about ticket prices on its website and app, contrary to section 74.01(1)(a), and (2) engaged in drip pricing contrary to section 74.01(1.1). It ordered Cineplex to cease the reviewable conduct for 10 years and to pay an administrative monetary penalty of $38,978,000 within 30 days, along with the Commissioner’s costs.

Evidence on website and app design, user behaviour and the “above the fold” question

The Tribunal heard from factual witnesses and experts. The Commissioner’s investigator, Adam Zimmerman, provided nine video recordings showing how he navigated the website and app on a mobile phone and a computer, sometimes scrolling and sometimes not, to demonstrate what a consumer would see in each scenario. The Tribunal found his evidence careful, objective, straightforward and reliable, and preferred it over that of Cineplex’s Chief Operating Officer, Daniel McGrath, whose evidence the Tribunal found required “some caution and care” due to omissions and a tendency to restate Cineplex’s position.

The Commissioner’s web design expert, Jay Eckert, was qualified in website design and development, including user experience and user interface for websites and mobile apps. The Tribunal found his evidence credible and helpful. He explained the concept of the “fold” in digital design: the point at the bottom edge of the screen where content is cut off and users must scroll to see more. Citing screen-resolution data, he testified that 69.33% of users have screens with a maximum height of up to 1,080 pixels, and that the Online Booking Fee information on Cineplex’s Tickets Page was positioned 1,330 pixels below the top of the browser—well below what typical screens would show without scrolling. Based on this, he concluded that most users would not readily see the Online Booking Fee disclosure.

The Tribunal accepted Mr. Eckert’s evidence that online marketing best practices suggest “anything of primary importance is placed in that first viewable area” above the fold, and that user attention drops dramatically at the fold. It also accepted his view that the floating ribbon at the bottom of the screen created a “false floor,” giving the illusion that the page content was complete and encouraging users to click the PROCEED button without scrolling.

The Commissioner’s behavioural expert, Dr. Vicki Morwitz, was qualified in marketing, consumer psychology and behavioural economics, with specialized knowledge on pricing, including drip and partitioned pricing. She explained concepts such as “partitioned pricing” (dividing total price into separate components) and “shrouded attributes.” She testified that the Online Booking Fee was a “shrouded attribute” because it was separated from the ticket price and presented sequentially (ticket price first, fee later). In her view, the placement of the Online Booking Fee information below the fold, the need to do arithmetic to detect its inclusion in the subtotal, the small font and the requirement to click on an information icon made the fee more difficult to notice and understand, and this structure would “lower consumers’ perceptions of the total price” and affect their buying behaviour.

Cineplex’s expert, Dr. On Amir, was qualified in marketing, consumer behaviour and related areas. The Tribunal considered his evidence less objective and less helpful than that of Mr. Eckert and Dr. Morwitz, giving it less weight and preferring Mr. Eckert on website design issues.

Based on this evidentiary record, the Tribunal made a series of factual findings, including that:

• Cineplex controlled the design and content of its website and app, including what appears above and below the fold.

• The online purchase process was designed as a “funnel” to move users quickly from film selection to ticket purchase.

• The presence of the countdown timer on the floating ribbon suggested urgency and encouraged swift completion of the transaction.

• Consumers typically spent about three minutes in total on the website when purchasing tickets.

• The website and app were designed in a way that “dissuaded” the ordinary consumer from scrolling down and “encourages the ordinary consumer to click the PROCEED button” without seeing the Online Booking Fee information below the fold.

The Tribunal concluded that, for purposes of assessing the general impression, “the information within the ‘four corners’ of the advertisement is what the ordinary citizen sees on the Tickets Page, above the fold and without scrolling.”

General impression and literal meaning of the price representations

The Tribunal applied the established approach under the deceptive marketing provisions: it had to consider both the “literal meaning” and the “general impression” of the representations. It adopted an “ordinary consumer” standard tailored to the Competition Act’s objectives, rather than the “credulous and inexperienced” consumer standard from Quebec consumer protection law.

Looking at Tickets Page A above the fold, the Tribunal found that the literal meaning of the representations was that tickets for a particular movie at a selected time, date and theatre “can be purchased at the per-ticket prices for General Admission, Seniors and Children as displayed on the Tickets Page.” The page did not distinguish between at-theatre and online ticket prices, did not state that the displayed prices were “at-theatre” prices, and did not otherwise indicate that prices would vary depending on whether the purchase was made online or at the theatre.

The Tribunal further found that the general impression conveyed to the ordinary consumer navigating Tickets Page A was that “they can purchase tickets on the website and the app for the stated prices on that page,” and that “the stated ticket prices are the whole or entire price charged by Cineplex (subject to applicable taxes).” It rejected Cineplex’s contention that consumers would understand these prices as box-office prices only, noting that Cineplex had already told consumers they could buy tickets on the website or app and that the prices were being represented in those online channels where the consumer saw them.

In addition, the Tribunal found that the later display of the subtotal on the floating ribbon (including the Online Booking Fee) “does not rescue the situation,” because the subtotal appears inconsistent with the sum of the per-ticket prices and does not explain that the difference is due to a per-ticket Online Booking Fee. The Tribunal characterized the “gap” between the displayed per-ticket prices and the higher subtotal as deceptive, and tied it directly to the omission of Online Booking Fee information above the fold and, in some respects, altogether on the Tickets Page.

The Tribunal concluded that the ticket price representations were false or misleading in a material respect under section 74.01(1)(a).

Application of the drip pricing provision: “attainable”, “fixed” and “obligatory”

The Tribunal then turned to section 74.01(1.1), which, for greater certainty, deems certain price representations to be false or misleading. It observed that this provision “provides a specific means to support the achievement of the statutory goals” by simplifying the assessment of whether a price representation is false or misleading when the conditions of subsection (1.1) are met and “facilitates proof” of that element.

Rather than attempting a broad abstract definition of the terms, the Tribunal adopted a “fact-based, contextual approach” grounded in the evidentiary record. It addressed three key questions:

1. Whether the represented prices were “not attainable” due to the Online Booking Fee.

2. Whether the Online Booking Fee was a “fixed” charge or fee.

3. Whether the Online Booking Fee was “obligatory.”

On attainability, the Commissioner argued that the ticket prices shown on Tickets Page A were not attainable online because the Online Booking Fee was added to the transaction in the website and app channels. Cineplex argued that the prices were attainable because consumers could buy tickets at the theatre without paying the Online Booking Fee, and because some online buyers (CineClub and Scene+ members, or users of certain promotions) paid reduced or no fees.

The Tribunal held that, in assessing whether the represented price is “attainable” under section 74.01(1.1), the focus must be on the channel in which the representation is made. It found that the prices on the Cineplex website and app were represented as the prices for tickets purchased in those channels and that neither the literal meaning nor the general impression suggested that those prices were only available at the theatre. Since an Online Booking Fee was added to online purchases for the vast majority of consumers, the represented ticket prices were not attainable in the online channels where they were advertised.

On whether the Online Booking Fee was “fixed,” Cineplex argued that the fee varied based on consumer type, number of tickets, and promotions, and that the four-ticket cap meant the amount could not be stated on a per-ticket basis in advance. The Tribunal noted that when the Online Booking Fee was introduced, Cineplex “set the Fee at $1.50 for regular consumers and $1.00 for Scene+ members,” and that these amounts had not changed. It also found that consumers could not see ticket prices without logging into their Cineplex Connect Account, and that once logged in, Cineplex could classify them as regular, Scene+ or CineClub members and determine, in advance of the display of ticket prices, which fee amount (if any) would apply. On this basis, the Tribunal concluded that the Online Booking Fee was “fixed” for each consumer and for each category of consumer to which it applied, notwithstanding that the aggregate fee per transaction varied with ticket quantity and that CineClub members paid no fee.

On whether the Online Booking Fee was “obligatory,” Cineplex maintained that consumers could avoid the fee by purchasing tickets in person or by choosing to become Scene+ or CineClub members. The Commissioner argued that the fee was obligatory for consumers purchasing tickets online, because they had to pay it in order to complete an online ticket purchase (unless the fee was waived). The Tribunal found that Cineplex’s argument that consumers could avoid the fee by buying in person was “completely negated” by the absence of clear and timely disclosure on Tickets Page A that the displayed prices applied only to in-theatre purchases and that online purchases would attract an additional fee. While acknowledging that consumers might know tickets could be bought at theatres, the Tribunal found that the page did not make clear that consumers faced a choice between paying an Online Booking Fee for an online purchase and paying no such fee for an in-person purchase. It framed the proper question as whether the fee was obligatory “for consumers who want to complete the purchase of a movie ticket on the website or app” and concluded that, for regular consumers and Scene+ members using those channels, the Online Booking Fee was a mandatory component of the transaction.

The Tribunal therefore held that the Online Booking Fee met the statutory criteria of a “fixed obligatory charge or fee” that made the represented prices not attainable in the channels in which they were represented, and that Cineplex had engaged in reviewable conduct contrary to section 74.01(1.1).

The appeal: standards of review and Cineplex’s challenges

Cineplex appealed to the Federal Court of Appeal under subsection 13(1) of the Competition Tribunal Act, which provides that Tribunal decisions are appealed “as if” they were Federal Court judgments. The parties agreed that the normal appellate standard of review applied: correctness for questions of law or mixed questions with an extricable question of law, and palpable and overriding error for questions of fact and mixed fact and law without such an error. Subsection 13(2) requires leave for appeals on questions of fact; Cineplex did not seek leave and characterized its grounds as legal, arguing that the correctness standard should apply to all issues.

The Court of Appeal recalled its prior cautions that grounds should not be “expressed in an artful way to make them appear to raise legal questions when they do not” and emphasized that on “factually suffused” questions of mixed fact and law, it must defer significantly to the Tribunal and may intervene only in case of a palpable and overriding error going “to the very core of the outcome of the case.”

Cineplex argued, among other things, that:

• the Tribunal wrongly confined its analysis to above-the-fold content and failed to consider the entire Tickets Page, including below-the-fold disclosures and the floating ribbon;

• the Tribunal underestimated the ordinary consumer’s familiarity with scrolling and mischaracterized the “ordinary citizen”;

• the Tribunal improperly relied on expert evidence to determine the general impression and literal meaning of the representations; and

• the Tribunal misinterpreted section 74.01(1.1), particularly the terms “attainable,” “fixed” and “obligatory.”

The Court rejected these arguments. It held that the Tribunal’s decision to treat above-the-fold content as the effective “four corners” of the representation in this case was grounded in detailed factual findings about the design and operation of the website and app, including how the floating ribbon and countdown timer discouraged scrolling and how far below the fold the Online Booking Fee information appeared. Those findings were unchallenged factual determinations entitled to deference. The Court also concluded that the Tribunal had not used expert evidence to supplant its own assessment of general impression but had properly relied on it to understand the functioning of the digital environment and consumer interaction with it.

On the drip pricing provision, the Court agreed with the Tribunal’s contextual approach and its conclusions that the represented prices were not attainable online, that the Online Booking Fee was fixed and that it was obligatory for consumers purchasing tickets in the online channels. It found no extricable legal error in the Tribunal’s interpretation of section 74.01(1.1).

Remedies and the administrative monetary penalty

Having upheld the findings of reviewable conduct under both section 74.01(1)(a) and section 74.01(1.1), the Court of Appeal turned to the remedies the Tribunal had ordered. Cineplex did not challenge the 10-year order not to engage in the reviewable conduct. It did challenge the administrative monetary penalty of $38,978,000, arguing that the Tribunal erred in determining the permissible range of penalties and in applying the statutory aggravating and mitigating factors, and that the penalty was punitive, disproportionate and unprecedented.

Section 74.1(1)(c) authorizes an administrative monetary penalty up to the greater of $10,000,000 (or $15,000,000 for subsequent orders) and “three times the value of the benefit derived from the deceptive conduct” or, if that benefit cannot be reasonably determined, up to 3% of the corporation’s annual worldwide gross revenues. The Tribunal determined that the maximum penalty in Cineplex’s case was the greater of $10,000,000 and three times the value of the benefit derived from the conduct, and, using the $38.978 million in Online Booking Fee revenue over the review period as the benefit, calculated the upper limit as approximately $116.9 million. The Tribunal observed that Cineplex had not provided evidence to show that the benefit was lower than the gross Online Booking Fee revenue, and that the Commissioner’s expert evidence supported a finding that the design increased the prospect that consumers would purchase tickets online and pay the fee.

Cineplex argued that the Tribunal should have treated the benefit as not reasonably determinable and relied instead on the 3%-of-revenue cap, which, applied to Cineplex’s 2022 and 2023 worldwide gross revenues (approximately $1.269 billion and $1.389 billion), would have yielded caps of $38.07 million or $41.67 million. It submitted that the $38.978 million penalty either exceeded or sat at the top of the proper range. The Court of Appeal noted that this line of argument did not appear to have been fully advanced before the Tribunal and that Cineplex had not presented evidence quantifying how many customers would have purchased tickets even with full disclosure. The Court held that the Tribunal did not err in law by using the total Online Booking Fee revenue as the benefit measure on the evidentiary record before it.

Under subsection 74.1(5), the Tribunal was required to consider specified aggravating and mitigating factors when setting the penalty amount. It noted the wide reach of the conduct across Canada, its frequency and duration (daily from mid-June 2022 to at least the time of the hearing), the materiality of the representations, the number and proportion of consumers affected, the quantum of Online Booking Fee revenue, and Cineplex’s financial position. It also observed that Cineplex had no prior Competition Act non-compliance, that the conduct was not designed deliberately to deceive and was not directed at a particularly vulnerable class, that Cineplex sought a prompt hearing, and that this was the first fully contested application of section 74.01(1.1). The Tribunal considered that non-compliance should not be treated as a “licence fee” and that the purpose of an administrative monetary penalty is to promote conformity with the Act, not to punish.

Having considered all these factors, the Tribunal imposed an administrative monetary penalty equal to the total Online Booking Fees collected during the review period, $38,978,000. The Court of Appeal held that the imposition and quantum of the penalty were matters of discretion and that, on the Tribunal’s detailed reasons, there was no misdirection in law or palpable and overriding error in its weighing of the factors. It declined to reweigh the considerations or substitute a different penalty amount.

Final outcome

The Federal Court of Appeal concluded that the Competition Tribunal “did not err in law, as alleged by Cineplex” and dismissed Cineplex’s appeal with costs. The Tribunal’s findings that Cineplex had engaged in reviewable conduct contrary to sections 74.01(1)(a) and 74.01(1.1) of the Competition Act, and its remedial orders, including the 10-year prohibition and the $38,978,000 administrative monetary penalty, remain in force.