Antitrust Law Daily Wrap Up, ADVERTISING NEWS: Canada Competition Bureau settles with Avis, Budget over misleading car rental prices, (Jun 3, 2016)

By Linda O’Brien, J.D., LL.M.

As part of a consent agreement reached with the Canada Competition Bureau, Aviscar Inc. and Budgetcar Inc. have agreed to pay a $3 million administrative monetary penalty for what the Bureau determined was false or misleading advertising for prices and discounts on car rentals and associated products, the Bureau announced yesterday. The companies also will pay $250,000 towards the Bureau’s investigative costs and will be required to implement a corporate compliance program.

In March 2015, the Bureau filed an application with the Competition Tribunal, seeking to halt what it alleged was false or misleading advertising by Avis and Budget. Certain mandatory fees charged by Avis and Budget to consumers were described as taxes and surcharges and were applied systematically when renting a car and other associated products, such as a GPS. Avis and Budget purportedly used the additional revenue to recover part of their own cost of doing business.

A Bureau investigation concluded that certain prices and discounts initially advertised by the two companies were not attainable because consumers were charged additional mandatory fees that were only disclosed later when making a reservation. The prices were advertised on Avis and Budget’s websites, mobile applications, and in emails, as well as in certain newspaper advertisements, television commercials, and flyers. The Bureau found that the representations were misleading even though an estimate of the fees was disclosed before consumers completed their reservation. The mandatory fees could increase the cost of a car rental by 5 to 20 percent above the original advertised price, depending on the rental location and vehicle type.

To address the Bureau’s concerns, Avis and Budget will not advertise car rentals and associated products at prices that are not attainable due to additional mandatory fees. Furthermore, the companies will revise the description of the additional fees to ensure they do not give the misleading impression that governments and agencies require them.

"Prices advertised to consumers, including on digital platforms, must be accurate," said John Pecman, Commissioner of Competition. "I am confident that the Bureau’s investigation and settlement of this case will serve as an important deterrent to false or misleading advertising in the Canadian marketplace."

Companies: Aviscar Inc.; Budgetcar Inc.

News: Advertising