Two of Canada's largest car rental companies have agreed to pay $1.25 million in penalties for falsely advertising discount prices that are essentially impossible to obtain.

Canada's Competition Bureau has reached what it calls a "consent agreement" with Hertz and Dollar Thrifty whereby both companies will pay penalties totalling $1.25 million and "ensure their advertising complies with the law and implement new procedures aimed at preventing advertising issues in the future."

The competition watchdog says the two companies advertised low prices for various car rental deals, with prices that consumers could not possibly obtain in reality due to various fees being tacked on — fees that added between 10 and 57 per cent to the final price, the bureau found.

"Some of these fees were described in a way that implied that they were mandatory taxes or surcharges imposed by various governments when, in fact, Hertz and Dollar Thrifty chose to impose the additional mandatory fees to recover part of their own cost of doing business," the bureau said in a statement.

In 2015, the bureau accused Avis and Budget of doing something similar, alleging the companies had overcharged customers by more than $35 million over the years with such misleading advertising. Those companies settled their dispute with the bureau for $3 million last year.

In addition to the penalty announced Monday, Hertz and Dollar Thrifty have agreed to provide the bureau with proof that they have implemented a corporate compliance program to ensure the practice is rooted out of their operations.

"Today's resolution will address any remaining issues in Hertz and Dollar Thrifty's advertising, including online," Canada's competition commissioner John Pecman said in a statement. "The two companies proactively and voluntarily took steps to address the conduct and will make further changes to ensure consumers are provided with accurate information."

While they operate independently, both companies are owned by the same parent, Hertz Global Holdings Inc., which did not immediately reply to a request for comment by CBC News for this story.