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UK competition regulator remains opposed to Viagogo/StubHub merger after phase two investigation

By | Published on Friday 23 October 2020


The UK competition regulator has concluded that a merged Viagogo and StubHub would likely result in a “substantial lessening of competition in the online secondary ticketing market” in the provisional findings of its phase two investigation. Of the two proposed remedies, one basically involves calling off the Viagogo and StubHub merger entirely.

Viagogo announced that it was buying rival StubHub from its previous owner eBay in a $4 billion deal last November. The transaction was then completed in February, but by that point the UK’s Competition & Markets Authority had already confirmed it was looking into the merger.

In June, the CMA announced that it was sufficiently concerned about the impact the deal could have on the secondary ticketing market in the UK that it was launching a more in-depth phase two investigation. It subsequently emerged that Viagogo had already offered to sell off StubHub’s European operations in a bid to allay the CMA’s concerns, but that hadn’t been sufficient to stop the phase two investigation getting underway.

In the provisional findings of that phase two inquiry, the CMA says that further investigation has confirmed that “Viagogo and StubHub are close competitors in an already very concentrated market with no significant additional competitors. They are the only two companies of material size in the UK’s secondary ticketing market with a combined market share of more than 90%”.

The merger of the two services, therefore, “is likely to result in a substantial lessening of competition in the online secondary ticketing market”. Therefore “the CMA is concerned that the merger could lead to increases in fees for customers, including fans, who resell or buy secondary tickets to live events. The CMA also found that the merger could result in a lower quality of service and reduced innovation in the sector”.

No one really denies that a combined Viagogo/StubHub will totally dominate the for-profit resale market in the UK. So the question throughout this investigation has been whether Viagogo/StubHub is also competing with and therefore constrained by other websites or ticket sellers, including face value resale sites, social media and classified websites where tickets might be resold, real world ticket touts, and the primary ticketing market.

For Viagogo/StubHub, trying to convince the CMA that it competes with the big primary ticket agents was always its best shot. Although that argument was pretty much rejected by the regulator at the end of phase one of its investigation, and no evidence presented in phase two has shifted its position on that point.

In a summary of its provisional phase two findings, the CMA writes: “The parties [ie Viagogo and StubHub] argue that primary ticketing platforms act as a significant competitive constraint on their business because ticket buyers do not always distinguish between primary and resale tickets, and primary ticketing platforms are increasingly engaging in dynamic pricing (where the price can vary with demand) and slow release of tickets (which might lessen of the flow of tickets into secondary channels)”.

However, it goes on, “our analysis shows that, on average, there is a very considerable difference in the prices at which tickets are sold between the primary and secondary channels. This suggests that for the majority of ticket sales on the parties’ sites, the price of primary tickets does not act as a competitive constraint on the price of secondary tickets, and hence on the parties’ fees and other terms to buyer and sellers”.

“With respect to dynamic pricing in the primary channel”, it then adds, “the evidence indicates that it represents a very small proportion of primary sales in the UK. Although dynamic pricing in the primary channel might reduce the attractiveness of the secondary market to resellers, and hence reduce market liquidity, it would not affect the degree of competition in the provision of uncapped secondary ticketing platforms services, which is the focus of our inquiry”.

And in conclusion, it says: “Our provisional view is that, while there are several important interactions between primary and secondary ticket sales which could have a significant impact on the parties’ business, they will not materially constrain the ability of the parties to increase fees or worsen non-price terms following the merger”.

Based on the provisional findings, the CMA sets out two possible remedies. The first would involve Viagogo selling off the global StubHub business entirely. That’s basically the regulator saying it will approve the merger if Viagogo calls off the merger.

The second would involve a partial sale. Although given that the CMA has already rejected a sale of StubHub Europe as a possible solution, that would need to be a significant partial sale, and would likely involve carving off operations from both the StubHub and Viagogo businesses, parcelling them together, and then seeking to sell that off. Which sounds like a messy solution.

This is, of course, a provisional ruling, and all parties now have another opportunity to respond.

The chair of the CMA’s inquiry group, Stuart McIntosh, said yesterday: “The evidence we’ve seen so far consistently points in the same direction – that Viagogo and StubHub have a market share of more than 90% combined and compete closely with each other. We are therefore concerned that their merger could lead to secondary ticketing customers facing higher fees and lower quality services. We’re now inviting comments on our provisional findings and possible remedies”.

Meanwhile, a spokesperson for Viagogo told reporters: “The CMA always considers a full range of remedy options for the UK market, and in the case of the Viagogo/StubHub merger, this is no different. Our intention remains to provide event-goers in the UK with the best possible service, and while we disagree with the provisional conclusion that the deal would reduce competition, we look forward to working with the CMA to deliver a comprehensive solution which addresses their concerns”.

Offering a view from the other side of the debate, Adam Webb from the anti-touting campaign group FanFair stated: “Though poorly-timed and focussed predominantly on the US market, Viagogo’s $4.05 billion acquisition of StubHub raises acute competition concerns in the UK. We are pleased the CMA has recognised this. Ultimately, the merger would bestow a hugely controversial business monopoly status in this country, and risk unpicking some significant progress made over recent years to clean up the secondary ticketing market. We now look forward to submitting further views to the CMA about both their findings and potential remedies”.

The often controversial Viagogo has continued to face regulatory hurdles in multiple countries in recent months, even while it battles with the major challenges caused by the COVID-19 pandemic and the resulting shutdown of live entertainment.

Earlier this month it was announced that a federal court in Australia had fined Viagogo AUS$7 million as part of the legal case pursued against it by the Australian Competition & Consumer Commission. The fine followed a court ruling last year that the secondary ticketing firm had made false or misleading representations and “engaged in conduct liable to mislead the public”.

Meanwhile, at the end of last month, the Irish government approved the wording of new laws that will pretty much ban the resale of tickets for profit in the country. Those new laws have been a long time in development, having begun as a private members bill in the Irish parliament. But the legislation is now seemingly a priority and could be passed into law this year.