Canada's Competition Watchdog Sues DoorDash Over Unfair Pricing, Discount Practices: Retail Mood Dips

The agency alleged that DoorDash has been engaging in this conduct for nearly a decade, acquiring nearly $1 billion in mandatory consumer fees.

Canada's Competition Bureau sued food delivery firm DoorDash (DASH) on Monday, alleging that it misled customers on some prices and offers, including discounts.

In a statement, the agency said its investigation found that consumers paid more than was advertised on the DoorDash website and app due to additional "mandatory fees at checkout."

The agency alleged that DoorDash has been engaging in this conduct for nearly a decade, acquiring nearly $1 billion in mandatory consumer fees.

"Parliament has made it clear that businesses must not engage in drip pricing by advertising unattainable prices and then adding mandatory fees," said Commissioner of Competition Matthew Boswell.

"The Competition Bureau has been fighting against this misleading practice for years."

The bureau has filed an application with the Competition Tribunal, seeking, among other things, that DoorDash stop deceptive price and discount advertising, pay a penalty, and compensate affected consumers.

DoorDash isn't the first company to face scrutiny from the Competition Bureau.

Last year, the Competition Tribunal found that furniture chains Leon's and The Brick engaged in what it described as misleading discount promotions, while Cineplex faced similar criticism over its online booking fees.

On Stocktwits, the retail sentiment for DoorDash dropped to 'bearish' from 'neutral' following the news. 

Shares of the company ended Monday down 0.4%, but were up in Tuesday’s early premarket hours.

The development follows DoorDash's $3.8-billion acquisition of the UK's Deliveroo.

DoorDash's shares are up 30% year-to-date.

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