On January 25, 2018, the Competition Bureau has brought an application before the Competition Tribunal alleging that Ticketmaster, and its parent company Live Nation, misled consumers on the advertised prices for sports and other entertainment tickets by advertising prices that ultimately do not take into account additional fees that are only disclosed to consumers later in the purchasing process, a practice known as "drip pricing".
History of "Drip Pricing" Enforcement
"Drip pricing" has been a priority on the Competition Bureau's radar for a number of years. "Drip pricing" is a marketing practice in which firms advertise only part of a product's price as the headline price and then reveal other charges or fees, usually mandatory or unavoidable fees, later as the customer goes through the buying process. This practice is particularly prevalent amongst online retailers that require consumers to click through multiple pages to make selections in the purchasing process.
To date, the Competition Bureau's enforcement actions against "drip pricing" have been primarily focused on the rental car industry. In 2015, the Competition Bureau brought a case against Avis/Budget, focusing primarily on its price advertisements and online booking process, which was settled in 2016 by way of a consent agreement; subsequently in 2017, the Bureau reached a consent agreement with Hertz/Dollar/Thrifty for similar conduct. Also in 2016, the Bureau reached a consent agreement with Comwave Networks, a provider of home phone and Internet services, for similar conduct in respect of its price advertisements and telephone sale intake process. Thus the application against Ticketmaster and Live Nation indicates that the Bureau is further expanding the scope of its enforcement actions to other industries.
In July 2017, the Bureau first signaled its interest in examining "drip pricing" practice in the ticketing industry by way of a press release "call[ing] on sporting and entertainment ticket vendors to review their marketing practices and display the real price of tickets upfront". On January 25, 2018, the Bureau formally filed an application to initiate a new "drip pricing" case against Ticketmaster and its parent company Live Nation.
Allegations against Ticketmaster
In its application against Ticketmaster, the Bureau alleges that, since at least 2010 when Live Nation acquired Ticketmaster, Ticketmaster has promoted the sale and resale of tickets to the public at headline prices that are not attainable, because a number of non-optional fees (including Service Fee, Facility Charge, Order Processing Fee, Resale Service Fee, and TM+ Resale Service Fee) are excluded from its advertised headline prices. These additional non-optional fees and the true cost of the tickets are only revealed after consumers have already selected their tickets and navigated through the various steps of the purchasing process. The Bureau alleges that these non-optional fees often increase the cost of tickets by over 20% and, in some cases, by over 65%. The Bureau further alleges that Ticketmaster's "drip pricing" conduct creates the false or misleading general impression that consumers can buy tickets to sports and entertainment events for less than what Ticketmaster actually charges.
It is the Bureau's position that, notwithstanding the non-optional fees are disclosed to consumers before they complete the purchase, disclosing the true cost of the tickets after consumers rely on the advertised headline prices to price out the tickets, select their seats and decide to buy their selected tickets is wholly inadequate to prevent the misleading impression created by the advertised headline prices. In addition, some of Ticketmaster's headline price advertisements are accompanied by fine print disclaimers that allude to the existence of additional fees but not the amount of those fees. The Bureau's position is that such disclaimers do nothing to alter the false and misleading impression created by the advertised headline prices. These are wholly consistent with the positions the Bureau has taken in the rental car industry.
Predictably, a Canada-wide class action has already been filed against Ticketmaster and Live Nation in respect of the same conduct. It can be expected that any further enforcement actions by the Bureau in respect of "drip pricing" will quickly be followed by class actions filed by plaintiff counsel.
Interestingly, it is acknowledged in the Bureau's application that Ticketmaster does not engage in "drip pricing" in Quebec. For events in Quebec, Ticketmaster already discloses the "true" prices of the tickets upfront, with the various non-optional fees included in the advertised prices. This is because, in 2009, the Quebec Consumer Protection Act was amended to specifically require that "the price advertised must include the total amount the consumer must pay for the goods or services" (s. 224). "Drip pricing" has also caught the attention of legislatures in other provinces. For example, a similar amendment to the Ontario Consumer Protection Act was introduced as private member's bill in December 2017.
With the Competition Bureau's expanded enforcement in "drip pricing" cases, plaintiff counsel' zeal to file follow-on class actions, and provincial legislatures' increasing interest in seeking legislative fixes for "drip pricing", retailers, particularly online retailers, should review their marketing practice and ensure that their price advertisements adequately disclose all non-optional fees and charges that consumers have to pay.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.