Ticketek fined $2.5 million for anti-competitive muscling of start-up rival
The Sydney court ruled that Ticketek took advantage of its strong market position on four occasions to prevent Lasttix from supplying its own services to event promoters.
The ruling is a major victory for Lasttix, which was launched in 2009 by Tony Faure, former CEO of NineMSN. Ironically, Ticketek is owned by Nine Entertainment, which has a joint venture with Microsoft to run NineMSN.
Lasttix’s board also includes Jack Singleton, founder of 1300 Flowers, and Nicholas Fairfax, a former board member at Fairfax Media. The business works by promoting last minute sales of tickets and providing users with a discount code which they use at existing market players, such as Ticketek.
It is estimated that Ticketek and Ticketmaster, the two dominant ticket selling outlets in Australia, account for more than 70% of all tickets sold for major domestic events."When a new start-up takes on an incumbent, it isn't easy. They don't take to it lightly. They tend to focus on anything other than consumers, while we are trying to cater for consumers."
The court action, brought by the Australian Competition and Consumer Commission, claims that event organisers requested Ticketek set up special discount ticket deals to be promoted by Lasttix, which specialises in selling ‘last minute’ discounted tickets.
The deal was meant to cover shows featuring celebrities including Liza Minnelli and TV talk show host Dr Phil.
However, Ticketek failed to carry out the agreement on four occasions. On one occasion last year, Ticketek create a special URL link for the ‘Warriors of Brazil’ production at Sydney’s Theatre Royal.
The company then shut down the link when it became aware that Lasttix was promoting it. The URL was only restored following requests from the show’s producers.
"Ticketek's market strength allowed it to do things it may not have done in a more competitive environment. Their behaviour towards Lasttix was opportunistic, anticompetitive and was found by the Court to be unacceptable," ACCC chairman Rod Sims said.
"With online technologies changing competitive dynamics, a business may attempt to capitalise on some of these uncertainties to damage their competition.”
“This decision of the court clearly states that they cannot. The ACCC's response to this conduct will ensure that event organisers have more choices in promoting their shows." Sims said.
"Consumers will also benefit from discount ticket deals becoming increasingly accessible in a variety of places, not just through ticketing agents."
"This action serves as a reminder to all businesses that illegal anti-competitive behaviour, of any type, will not be tolerated. The penalty imposed by the court indicates the seriousness with which this conduct is viewed."
Justice Bennett, who presided the case, said: "The four incidents comprising the conduct were not accidental. They each arose due to a deliberate decision and, apparently reflected a policy or practice not limited geographically within Australia.”
“The conduct was engaged in by both lower level employees and by more senior management."
Ticketek was fined $750,000 for each of the three 2009 instances when it refused event organisers’ requests to let Lasttix promote tickets. The 2010 incident attracted a penalty of $325,000.
Christopher Plowman, CEO of Lasttix, tells StartupSmart that he is pleased with the outcome of the case.
"We went to the ACCC about this a while ago as we thought some of the things Ticketek were doing wasn't right," he says. "I don't know what the implications will be, but we are pleased that the ACCC took the same view as us."
"When a new start-up takes on an incumbent, it isn't easy. They don't take to it lightly. They tend to focus on anything other than consumers, while we are trying to cater for consumers."
Neither Faure, who blogs for StartupSmart, nor Sims had returned calls on the judgement at the time of publication.