Hate when the final bill is higher than the original price due to surprise charges? Ottawa now plans to ban the practice

That vacation rental is almost yours. You clicked through multiple web pages on your phone, double-checked your dates, entered your email and address details, and even created a username and password.

But at the last step, there is an unwelcome surprise. Maybe a resort fee, or a cleaning or pet fee. It all adds up to much more than you expected to pay when you first looked at prices and decided on that booking.

That experience, when mandatory fees just keep coming on top of the advertised price, like drops of water from a tap, is called drop price.

As well as being annoying, drop prices also make it difficult to compare prices, and can lead to people spending more than planned due to the time and effort of getting to the checkout page – so why not just click ‘buy’ on that moment?

It’s also becoming more common in the digital economy, so much so that the federal government now plans to ban drip pricing entirely, amending the Competition Act to include new criminal and civil bans on ad pricing that aren’t feasible. due to additional mandatory fees. (It makes exceptions for government levies like taxes, which shouldn’t be included in the pre-fixed prices.)

The Canadian Competition Bureau has gone after companies in various sectors for drip prizes in recent years — including StubHub, Ticketmaster, furniture stores Leon’s and the Brick, and countless rental car companies — winning financial settlements in the millions of dollars.

But in doing so, it had to rely on more general rules against false and deceptive marketing, and earlier this year, in a submission to a consultation by Senator Howard Wetston, the agency said it would have to devote significant resources to proving at least that IV prices are in fact be deceitful.

Experts say the amendments, which are included in the budget implementation law introduced last week, would make it easier for the agency to bring and win IV drip award cases and also send a strong signal to advertisers.

While the Competition Bureau, an independent law enforcement agency, has been investigating IV-prize cases for years, Subrata Bhattacharjee, a partner at Borden Ladner Gervais LLP, said the acceleration of online commerce during the pandemic has likely drawn more political attention to the issue. †

“I think the presentation of price offers in e-commerce was really the reason why many consumers – and ultimately the government – ​​were interested in a clear determination about infusion prices,” he said.

“This is going to be a kind of practice that’s especially common in the digital space, where you’re stringing people through menus, and the digital interface lends itself to this,” said Jennifer Quaid, a civil law professor and vice dean of research at the University of Ottawa.

She said the changes “should make it easier for the agency to file cases where these practices are being used, if they have evidence that the practice is being used. So there’s no need to argue about whether this is a problematic practice. is.”

Asked about the example of food delivery apps, where extra costs often add up towards the end, Quaid said there will still be some “grayscale” around what’s acceptable. She said the agency will likely issue interpretation guidelines to help companies understand what could lead to enforcement actions.

Julie Soloway, co-chair of the competition law practice group at Blake, Cassels & Graydon LLP, said that by including specific provisions on IV pricing, the government is “making a stronger statement that this is a potential problem,” adding that it highlights the need for companies to “dust their compliance programs.”

In an article published Tuesday by the CD Howe Institute, Joshua Krane and James Musgrove, partners in the competition law group at McMillan LLP, criticized the changes, arguing that they introduce new uncertainty for companies around pricing practices.

Coupled with other changes in competition law, including tougher penalties that can cover a percentage of a company’s global revenue, Krane said international players can pass on doing business here.

“What I’ve heard is that companies are concerned about what this means and they may decide to (re)evaluate the level of their engagement with Canadians,” he said in an interview.

Krane said the changes to the competition law (the government also plans to make wage agreements between employers illegal among other things) are significant and should not have been buried in an omnibus budget bill.

Quaid also expressed those concerns, saying the government “undermines democratic legitimacy by operating in this way”.

Minister of Innovation, Science and Economic Development François-Philippe Champagne telegraphed the changes to the budget law in an interview with the Star in February.

Champagne also said a broader review of the Competition Act would follow, and its spokesman, Laurie Bouchard, said on Tuesday the government still plans to hold a public consultation.

Robin Shaban, co-founder of Vivic Research, a social justice-focused economic research firm, said groups and individuals who want to see progressive reform should start working on strong submissions now.

“For this, the community outside of Bay Street has to get its ducks in line.”


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