• Competition Bureau Seeks 30m$ Against Avis and Budget Over Non-Optional Fees
  • March 25, 2015 | Authors: Michele F. Siu; Dominic Thérien
  • Law Firms: McCarthy Tétrault LLP - Toronto Office ; McCarthy Tétrault LLP - Montreal Office
  • On March 10, 2015, the Competition Bureau brought a misleading advertising application before the Competition Tribunal against Aviscar Inc. and Budgetcar Inc. The Bureau alleges that Avis and Budget promote car rentals at prices and discounts that are not attainable because customers are required to pay additional fees over the initial advertised rental price. The Bureau further alleges that Avis and Budget mischaracterize such non-optional fees as taxes and surcharges that car rental companies are required to collect from costumers by governments or third parties, when Avis and Budget would choose to impose these fees to recoup part of their operating costs.

    The Bureau alleges that the various added fees increase the costs of a car rental by up to approximately 35%. It is further alleged that Avis and Budget have collected more than 35M$ in non-optional fees since March 2009 from customers who have rented cars online or through mobile apps.

    This application is an example of an action against “drip pricing”; an enforcement priority recently referred to by a senior Bureau representative as a practice “where consumers are presented with a price for a good or service, but not the full price until later”[1].

    For the first time since the introduction of new civil provisions into the Competition Act further to the adoption of Canada’s anti-spam legislation (CASL), the Bureau is seeking remedies for misleading discounts offered in the subject matter and main text of promotional emails. These new provisions allow the Bureau to bring an application for any false or misleading representations included in subject lines, without having to demonstrate materiality or the impact on consumers’ decision to buy the advertised product or service.

    In addition to promotional emails, the Bureau targets prices and discounts offered on websites and mobile apps, as well as in print advertisements, customer service scripts, and television commercials.

    The Bureau is seeking a 10M$ administrative monetary penalty, the maximum amount, against each of the two Canadian operating companies, and also the US public parent company, Avis Budget Group Inc., on the basis that it planned and was essential in the making of the challenged representations. In addition, the Bureau is seeking restitution to customers and the publication of corrective notices.

    [1] Remarks by Matthew Boswell, Senior Deputy Commissioner of Competition, PIAC Annual Dinner, November 28, 2014, available at http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03856.html.