The UK’s Competition & Markets Authority has formally supported the government’s proposal to introduce a price cap on tickets resold via the secondary market, concluding that that measure would protect consumers from “excessive resale pricing”, a key objective for ministers.
The competition regulator also provides some guidance on how any new price cap may be enforced. That’s important, it says, because any new law restricting how much ticket touts can mark up the price of tickets they sell will only benefit consumers if there is “a sufficient degree of compliance” secured “through a well-designed and adequately resourced enforcement framework”.
The CMA’s submission to the government’s ongoing consultation on the ticket resale market comes just days after secondary ticketing company StubHub US, which also operates Viagogo in the rest of the world, began the process of instigating an Initial Public Offering on the New York Stock Exchange.
The ramping up of regulation around ticket touting across the world was included in a lengthy ‘risks’ section in StubHub’s IPO paperwork.
The UK Labour Party committed to introduce a price cap on ticket resale ahead of last year’s General Election and launched a consultation on how that might be done in January.
The CMA’s input is important because it, alongside National Trading Standards, has been responsible for enforcing the existing regulation of ticket touting, with the CMA regulating the platforms and National Trading Standards the actual touts.
The CMA advised the previous government to introduce additional rules to regulate secondary ticketing, though it didn’t go as far as proposing a price cap, and its recommendations were rejected by ministers anyway.
In its new submission, the CMA says that its previous recommendations would address some of the remaining issues in the ticket resale market, but not excessive resale pricing. Which is why it supports the price cap proposal.
It then adds that “price caps in the context of secondary ticketing would not attract some of the concerns typically associated with such interventions in other markets”. That’s because the price cap would be a percentage of the face value ticket price set by the promoter of the show on the primary ticketing platforms, therefore the market is still ultimately dictating the price.
And while the price cap, depending on how it’s implemented, would likely result in a reduction in the number of professional resellers, and therefore a reduction in the number of tickets available on the resale platforms, that just means more tickets available for in-demand events on the primary sites.
“An effective ban on uncapped resale may increase the overall benefits to consumers”, the CMA writes, “with less consumer surplus being transferred to resellers”.
When it comes to enforcement, the CMA says that both touts and the resale platforms they use, like Viagogo, should be responsible for ensuring compliance with the price cap.
Given “the nature of the secondary ticketing market” and “the very large number of active resellers”, it says, “making platforms liable for ensuring tickets listed on their sites are compliant with any price cap would significantly simplify enforcement and improve overall compliance”.
It also proposes introducing a licensing scheme for the resale platforms. “For high demand events”, it says, “there will be strong incentives to circumvent the cap, and any enforcer will need to be able to respond swiftly”. If resale platforms have to be licensed, it would be easier for whatever entity is enforcing the law to promptly act.
Effective enforcement would also require clarity on what price a buyer had paid for a ticket, which isn’t always immediately obvious because fees are applied by the primary seller to the face value of the ticket.
Therefore, the CMA adds, ministers should consider a “proportionate requirement for primary sellers” to make available information on original ticket prices, which would “enable consumers, resellers, platforms, and enforcers to determine compliance with the price cap”.
US-based StubHub filed paperwork with the US Securities And Exchange Commission last week for an IPO that was originally planned for last year but delayed due to general market conditions. The company operates the StubHub resale platform in North America and Viagogo in the rest of the world.
Its SEC filing has 43 pages of risk factors, which includes an acknowledgement that secondary ticketing is regulated in an increasing number of countries, with some introducing price caps like that proposed in the UK, and others out-right banning the unofficial resale of tickets.
StubHub tells prospective investors, “we are subject to a wide variety of statutes, rules, regulations, policies and procedures in various jurisdictions in the US and abroad relating to the ticketing marketplace, which are subject to change at any time”.
It also notes that the ramping up of regulation around secondary ticketing is often the result, at least in part, of campaigning by artists and other players in the live music industry, as is the case in the UK. “Artists and promoters may attempt to disrupt the secondary ticketing market through lobbying for such restrictions regarding secondary ticketing policies”, the IPO filing states.
It then admits that ramped up regulation around secondary ticketing “would require us to change certain aspects of our business, operations, and buyer and seller relationships to ensure compliance”. This could, it adds, “decrease demand for services, reduce revenue, increase costs and/or subject us to additional liabilities or limit or inhibit our ability to operate”.