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Computicket fined R20m for abuse of market power

South Africa's largest ticket seller has been ordered to pay nearly $1.5m for allegedly misusing its market power to shut out potential competitors

By Jon Chapple on 21 Jan 2019

Computicket sells tickets online and at physical outlets, like this one at the Cape Town Waterfront

Computicket sells tickets online and at physical outlets, like this one at the Cape Town Waterfront


image © V&A Waterfront

After a nearly decade-long investigation, South Africa’s leading ticket agency, Computicket, has been fined 20 million rand (US$1.5m), for allegedly abusing its dominant market position to keep competitors out of the market.

In a 61-page decision handed down by the South African Competition Tribunal this morning (21 January), Computicket – owned by local supermarket giant Shoprite – is found to have misused long-term (three-plus-year) exclusive contracts with promoters to “exclude new entrants from the outsourced ticket distribution market”, substantially lessening competition in the $83bn South African live music market.

The Competition Tribunal’s judgment brings to an end an investigation launched in 2010 by the Competition Commission of South Africa, which sought to uncover alleged abuses in the period following Computicket’s 2005 takeover by Shoprite. The origins of the case date to February 2008 when a rival company, Strictly Tickets, filed a complaint alleging anti-competitive behaviour.

“The company’s exclusivity contracts increased dramatically (in terms of quantity and duration) following its takeover by Shoprite in 2005,” according to the Competition Commission. “In addition, from at least December 2006 to September 2009, Computicket’s personnel aggressively enforced the exclusive agreements among its clients including theatres, music promoters and event organisers. This happened particularly when new entrants emerged in the market.”

In its judgment, the Competition Tribunal notes that Computicket “enjoyed a near monopoly position at the time it introduced the three-year version of the exclusive contracts in 2005″, after which “there was limited market entry during the period 2005 and 2010, a period which […] coincided with […] the introduction of the longer-term exclusivity contracts and Computicket’s aggressive enforcement of its rights under these contracts.”

“From at least December 2006 to September 2009, Computicket’s personnel aggressively enforced the exclusive agreements among its clients”

“No other theory for why entry [of new companies into the market] was so limited and ineffectual has been offered to rebut this conclusion,” it adds.

In December 2017, Germany’s largest ticket seller, CTS Eventim, was similarly found to be abusing its market dominance by requiring partner promoters to sell tickets only via its own eventim.net platform.

South Africa’s Competition Act 1998 prohibits dominant companies from engaging in “exclusionary acts” unless they can show “technological, efficiency or other pro-competitive gains which outweigh the anti-competitive effect of its act”, such as requiring their suppliers or customers not to deal with competitors.

In a statement, Shoprite says it plans to appeal the ruling. “Computicket (Pty) Ltd will appeal the Competition Tribunal’s finding that it utilised its dominance between 2005–2010 relating to exclusive agreements with inventory providers for live entertainment events,” it reads.

“The ticketing provider has studied the tribunal’s decision and, [under the] Competition Act, it has 15 business days to file its notice of appeal against the tribunal’s decision, which it intends to do.”

According to the International Ticketing Yearbook 2018, Computicket, “with a strong mass-market position and a powerful network of online and physical outlets”, “still holds pole position” in the South African market, having launched in 1971 as the world’s first computerised ticketing system.

 


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