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Deceptive marketing in the spotlight: Ticketmaster to pay Competition Bureau penalty of $4.5 million

deceptive marketing

In our recent article on Trends and Developments to Watch for in 2019, we highlighted the Competition Bureau’s (the “Bureau”) focus on high-impact, consumer-focused digital economy investigations, including specifically investigations into drip pricing practices. On June 27, 2019, the Bureau announced that its investigation into such practices by Ticketmaster had concluded with a consent agreement. In a nutshell, the Bureau took issue with Ticketmaster’s allegedly misleading pricing claims in online ticket sales, alleging that mandatory fees would often inflate the advertised price by more than 20%, and in some cases by as much as 65%.

Ticketmaster’s practices, described in the Bureau’s application before the Competition Tribunal in 2018, included the addition of several non-optional fees, including a service fee, facility charge, order processing fee and resale service fee to advertised headline prices. The true cost of the tickets including these additional charges was only revealed to consumers after they had selected their tickets and navigated through to the end of the purchasing process. This conduct, the Bureau alleged, created the false or misleading general impression that consumers could buy tickets to sports and entertainment events for less than Ticketmaster was actually charging. The inclusion of disclaimers in fine print alerting consumers to the existence of additional fees but not their amount did not, in the Bureau’s view, alter the false and misleading impression created by the advertised headline prices.

Pursuant to the consent agreement, which has the force of a court order and will be binding for a period of ten years, Ticketmaster has agreed, among other things:

  • To pay an administrative monetary penalty of $4 million;
  • To contribute $500,000 towards the costs incurred by the Bureau during the course of its investigation;
  • To comply with the deceptive marketing provisions of the Competition Act within 30 days, including by not making, causing to be made, or permitting to be made any representation to the public that creates the “materially false or misleading general impression that consumers can buy tickets at prices that are not in fact attainable”; and
  • To establish and maintain a corporate compliance program designed to foster compliance with the Competition Act generally, and its deceptive marketing provisions specifically.

In its press release, the Bureau emphasized that it will “continue to examine similar issues in the event ticketing market and will take action as necessary”. To this end, Commissioner Boswell further stated in the release that:

Canadians should be able to trust that the prices advertised are the ones they will pay when purchasing tickets online. The Bureau will remain vigilant and will not tolerate misleading representations. The Bureau expects all ticket vendors to take note and review their marketing practices, knowing that the Bureau continues to examine similar issues in the marketplace and will take action as necessary.

Following in the footsteps of several Bureau investigations into drip pricing practices by home furnishing and car rental companies, the Ticketmaster investigation and settlement provides further evidence of the Bureau’s willingness to investigate and take action against marketing that it considers to be misleading to the public, in any medium, including through e-commerce sites such as the one operated by Ticketmaster.

By Michael Caldecott, Donald B. Houston and Ashley Taborda

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McCarthy Tétrault LLP

McCarthy Tétrault is a Canadian law firm that delivers integrated business law, litigation services, tax law, real property law, labour and employment law nationally and globally.McCarthy publishes a series of blogs to share information with companies to help them comply and manage their businesses. On the Inside Internal Controls blog we will share some of those blog posts sharing their expertise among others, in the areas of Competition/Anti-trust, Corporate and Commercial Law, Intellectual Property, Privacy, Environmental Law, Technology and Litigation. Read more here
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