Decision No. 119-A-2014

March 31, 2014

DETERMINATION on whether the air price advertisements found on the Web site priceline.com are subject to Part V.1 of the Air Transportation Regulations, SOR/88 58, as amended.

File No.: 
M4355/13-05983

INTRODUCTION

[1] In Decision No. LET-A-136-2013 dated December 19, 2013 (Show Cause Decision) the Canadian Transportation Agency (Agency) indicated that its Enforcement Division had conducted a compliance verification regarding one of priceline.com Incorporated’s (Priceline) advertisements, more specifically the priceline.com booking system. The Agency identified that it was of the preliminary opinion that priceline.com was non compliant with certain Air Services Price Advertising provisions set out in Part V.1 of the Air Transportation Regulations (ATR). Priceline.com is a Web site and a registered service mark of Priceline that operates as an online travel agency that sells travel services, including air services, through its online booking system.

[2] Priceline expressed the view that it is not advertising to the Canadian public and therefore does not need to comply with the requirements of Part V.1 of the ATR.

[3] The Agency provided Priceline with the opportunity to show cause by January 7, 2014 why the Agency should not conclude that Priceline’s advertisement of air prices within or originating in Canada, as found on the Web site priceline.com, is within the scope of the ATR provisions, in that it qualifies as “[...] advertising in all media of prices for air services within, or originating in, Canada.”

[4] On December 20, 2013, Priceline requested and was granted an extension to provide its submission. On January 10, 2014, Priceline provided its response to the Show Cause Decision.

PRELIMINARY MATTER

[5] In its January 10, 2014 submission, Priceline made a claim for confidentiality of its submission. The Agency requested Priceline to justify its claim and to provide a redacted version. The Agency has reviewed the reasons for the claim, including the nature and the extent of the harm that would likely result if the documents were disclosed, and agrees that the information contained in the documents should be treated as confidential. In its deliberations, the Agency has considered Priceline’s public and confidential submissions but, in this public decision, has not referenced any of the confidential information.

ISSUE

[6] Are the air price advertisements found on the Web site priceline.com subject to Part V.1 of the ATR?

POSITION OF PRICELINE

[7] In response to the Show Cause Decision, Priceline states that it is not advertising to the Canadian public or targeting the Canadian public. Priceline points out that while it does not block access to Canadians, its online booking system does not target Canadians. Unlike its major competitors, Priceline does not have a specific Web site for Canadians. Instead, it targets Americans, shows prices in U.S. dollars only and conforms to the U.S. Department of Transportation (U.S. DoT) regulations. Priceline argues that a Web site does not target a specific audience merely by virtue of being accessible on the Web by that audience.

[8] Priceline refers to the Federal Court decision in Desjean v. Intermix Media, Inc., 2006 FC 1395, [2006] FCJ No. 1754 (Desjean v. Intermix), in which the Federal Court refused to enforce the misleading advertising provisions of the Competition Act, R.S.C., 1985, c. C-34, as amended against Intermix Media on the basis that “there has been no targeting of Canada or of Canadian consumers in any specific way, there is no specific content for a Canadian audience, and Intermix has never purposely availed itself of Canada’s laws.”

[9] Priceline informs that it is a U.S. Web site located in the United States of America and terms and conditions state that the laws of Connecticut govern the relationship between it and its users. It also points to the fact that, similar to Intermix Media, it does not have offices in Canada. Priceline also does not advertise in Canada in any other media.

[10] Priceline argues that it would be unfair to require Priceline, which operates a Web site that is publicly available throughout the world, to comply with the advertising provisions of every country in the world simply by virtue of operating on the Web. This is especially true where it does not target Canadians.

[11] With respect to the factor, cited in the Show Cause Decision, that Priceline offers the ability to purchase flights originating in Canada, Priceline argues that it offers flights originating in numerous countries throughout the world, and gives no special attention to Canada.

[12] With respect to the fact that Priceline does not prevent booking of air transportation by Canadian consumers, Priceline argues that a mere ability to access and use a Web site cannot be equated with targeting.

[13] With respect to the reference in the Show Cause Decision that Priceline was “the number 5 most popular travel Web site in Canada for May 2013”, Priceline argues that this standing does not suggest that it is targeting Canadians. Priceline indicates that the very article from which this Agency’s evidence was based indicates that Priceline’s standing in the Canadian market has dropped since May and by September 2013 had fallen below the top ten. As such, Priceline concludes that it does not receive a significant number of Canadian travel Web site visits and its proportion of Canadian visitors is rapidly declining. Priceline also challenges these data in any case, as they may reflect Priceline’s other services, including booking services for hotel accommodation and car rentals, that account for the majority of Priceline’s business with Canadians.

[14] With respect to Priceline’s toll-free customer service number, which was referenced as a factor in the Show Cause Decision, Priceline argues that the availability of its toll-free number to Canadians is a consequence of having a toll-free number in the United States of America. Further, this is a customer service number for its travelling customers, and cannot be used to book flights, so it should not be considered as a factor by the Agency.

[15] Priceline states that it would like to advertise in the Canadian market in the future and when it does, it will ensure its compliance in good faith with all relevant provisions of Canadian law.

ANALYSIS AND FINDINGS

[16] The Agency’s Air Services Price Advertising Interpretation Note states:

The Agency considers that Part V.1 of the ATR does not need to apply to:

[...]

Advertising where the Canadian public has not been targeted.

  • For example, for carriers having multiple geographical specific versions of their Web sites, the Canadian version would need to comply.

[17] The Agency notes that this statement addresses those circumstances in which an advertiser hosts several Web sites each targeting customers of a specific country. The Agency would require that only the Canadian Web site comply with Part V.1 of the ATR and not those Web sites that target non-Canadians. It does not provide guidance where facts like those in the present case exist, that is, where a person maintains a single global Web site. In the present case, the Agency must consider, based on the relevant facts, whether a person who maintains a global Web site, but not a Canadian Web site, is subject to Part V.1 of the ATR.

[18] In Decision No. 8-A-2014, the Agency determined that where a person or carrier has no Canadian Web site or no Canadian page on its global Web site, “if advertising is done for air services within, or originating in, Canada, that global Web site must comply with Part V.1 of the ATR.” This was affirmed in Decision No. 71-A-2014. As in the current case, it is clear that the Priceline Web site offers flights within or originating in Canada, the question to be determined is whether the nature of the Web site in question should be subject to Part V.1 of the ATR.

[19] In addressing this question, the Agency is mindful of two competing considerations:

  1. Subsection 135.7(1) of the ATR explicitly provides that the regulations apply “to advertising in all media of prices for air services within, or originating in, Canada.” The offering of flights within and from Canada creates a presumption that such services are aimed at targeting Canadians.
  2. On the other hand, by their very nature, global Web sites are visible throughout the world, yet could be designed in such a way as to be only practically targeting certain markets. The Agency accepts that an advertisement on a global Web site owned by persons located outside Canada for the purposes of targeting persons located outside Canada may be beyond the scope of the regulations.

[20] In determining whether a global Web site is subject to Part V.1 of the ATR, the Agency must also be mindful of the objective of the regulations, which is to enable consumers to readily determine the total price of an advertised air service and to promote fair competition between all advertisers in the air travel industry.

[21] In its submissions, Priceline referenced the Federal Court decision in Desjean v. Intermix, which Priceline states evidences that Canadian courts have been reluctant to find that they have jurisdiction over advertising on Web sites that are hosted in foreign countries by foreign organizations. In Desjean v. Intermix, the Federal Court considered a motion to dismiss the plaintiff’s statement of claim which asserted that the defendant had violated the misleading representation provisions of the Competition Act by bundling “spyware” or “adware” with the free software that it offered on various Web sites without disclosing the bundling of such spyware or adware to consumers who downloaded the free software.

[22] The Federal Court granted the motion, and dismissed the statement of claim on the basis that it determined that it lacked jurisdiction over the defendant and the matter. The Court stated: “[j]urisdiction cannot be founded simply upon the fact that the plaintiff was in Canada when he downloaded the foreign content […]” In determining whether it was competent to hear the case, the Federal Court considered whether it had a “real and substantial” connection with the defendant, who resided outside Canada. The Court considered the following factors:

  • The defendant’s servers were located outside Canada;
  • The defendant had no employees or offices located in Canada;
  • There had been no targeting of Canada or of Canadian consumers in any specific way;
  • The defendant had not “availed itself” of Canadian laws as it does no business in Canada through the Web site;
  • The defendant had no bank accounts in Canada, nor did it pay taxes to either the federal government or any provincial government and it is not registered for GST or PST/HST purposes;
  • The defendant was not registered as doing business in any Canadian jurisdiction; and,
  • The defendant had no direct advertising, marketing or solicitation aimed at the Canadian market.

[23] The Court also referenced the British Columbia Court of Appeal (BCCA) decision in Braintech Inc. v. Kostiuk (1999), 171 D.L.R. (4th) 46. In that case, the BCCA determined that whether an Internet presence of a non‑resident can constitute a real and substantial connection with the forum will depend upon the character of the Web site. Considerations include whether the site is passive, is used to interact with residents of Canada, or is used to conduct business with Canadian residents.

[24] While the context of Desjean v. Intermix, which involved the question of proper forum for seeking a private remedy under the Canadian Competition Act, is different than the present circumstances, the Agency is of the opinion that some of the factors applied by the Court in that case are useful in its consideration of whether Priceline.com is subject to Part V.1 of the ATR.

[25] The Agency has considered these cases, as well as the representations made by Priceline, and is of the opinion that what matters for the purpose of establishing jurisdiction is whether the Web site is targeting Canadians. If the Agency determines that an advertiser is targeting Canadians, it will exercise its jurisdiction. If determined to be not targeting Canadians, the Agency will not assert jurisdiction.

[26] For the purpose of establishing whether Canadians are being targeted, the Agency is of the opinion that a factual assessment must be made, taking into account both positive and negative indicators that Canadians are being targeted or not.

[27] Stated in the positive, the Agency considers that the following factors indicate that a Web site is targeting the Canadian public:

  • The price is displayed in Canadian dollars;
  • An option is provided for the consumer to select Canada to differentiate sites or pages/content designed for Canada;
  • Banner advertisements or highlighted areas on the Web site promote special deals for flights from or within Canada or the Web site includes specialized content for a Canadian audience;
  • Advertisement in other media that target the Canadian public directs the consumer to the Web site;
  • The person has a place of business in Canada selling air services;
  • The Web site where the advertising is located has a Canadian domain name (e.g. “.ca”) ;
  • A toll-free number is available for use in Canada to make reservations; and,
  • Any other relevant factors established by the Agency providing an indication that the Canadian public is being targeted by the Web site.

[28] In addition, the Agency considers that an advertisement that is in a language other than English and/or French would create a strong (not an absolute) presumption that the Canadian public is not being targeted.

[29] Priceline argues that it is not subject to Part V.1 of the ATR, given that:

  • Priceline.com is a U.S. Web site and does not have offices in Canada. Priceline argues that the mere ability to access and use a Web site cannot be equated with targeting the Canadian public. While it does not block access to Canadians, it does not have a specific Web site for Canadians.
  • The terms and conditions of contract state that the laws of Connecticut govern the relationship with its customers.
  • Its toll-free customer service number is available in Canada as a consequence of having a toll-free number in the United States of America. That number is available for customers who are travelling. The toll-free number is intended for those having already booked a flight and is available in either Canada or the United States of America unless intentionally restricted.
  • The priceline.com Web site is targeted to Americans, shows prices in U.S. dollars only, and conforms to U.S. DoT regulations.
  • Priceline does not advertise in Canadian broadcast or print media for its airline reservation service.
  • It would be unfair to require Priceline to be subject to the ATR as it would mean that a U.S. based operator of a Web site available throughout the world would be required to comply with the advertising provisions of every country in the world.

[30] Further, in its Show Cause Decision, the Agency noted that a consumer with a Canadian mailing address and a Canadian credit card can purchase an air service on priceline.com. The Agency also referenced a publication that states that Priceline was the fifth most popular travel Web site in Canada in May 2013. In response, Priceline notes that the same publication indicates that its share of the travel booking visits has declined since May and in September 2013 it was no longer in the top ten. Priceline also argues that its non-air service bookings may have inflated visits to its Web site.

[31] In its Show Cause Decision, the Agency also noted that typing in the address bar of a web browser the domain name priceline.ca, owned by Priceline, automatically redirects to priceline.com. While Priceline did not specifically respond to the issue of redirection, the Agency is of the opinion that the mere redirection from the domain name priceline.ca to priceline.com is not, in itself, determinative of the question as to whether Priceline is targeting Canadians.

[32] In Decision No. 8-A-2014, the Agency held that “[t]he fact that the revenue received was de minimis is irrelevant; the obligation to comply with Part V.1 of the ATR is not dependent on the amount received by the person advertising the air services.” In fact, the absence of sales in the Canadian market by way of a global Web site is not conclusive evidence that the person is not targeting the Canadian public as the very purpose of advertising is to attract customers. The Agency accepts, however, that evidence of sales in Canada alone is not sufficient to require compliance with the ATR. Sales in the Canadian market may occur incidentally by Canadian consumers who diligently navigate global Web sites in search of inexpensive fares, notwithstanding the fact that the global Web site does not intend to target Canadians. The Agency is of the opinion that the application of Part V.1 of the ATR in such circumstances is not consistent with its objectives.

CONCLUSION

[33] Therefore, the Agency finds that the factors identified above, when considered in their totality, constitute evidence that the Web site priceline.com is not targeting Canadian public and is not subject to Part V.1 of the ATR.

[34] However, the Agency notes that Priceline indicates its interest in advertising in the Canadian market. Priceline will be required to comply with Part V.1 of the ATR when it does.

FACTORS IDENTIFIED IN THIS DECISION

[35] Every case is unique and accordingly the Agency will make its determinations based on the merits of each case. The criteria set out above will be considered when determining whether a Web site is targeting the Canadian public. If a person believes that the criteria set out in this Decision may impact a previous Agency decision, they may request the Agency to reconsider the matter.

Member(s)

Geoffrey C. Hare
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