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Pascrell, Pallone Call on FTC to Crack Down on Abusive Ticket Sales

Letter to chairman highlights anti-competitive, anti-consumer practices that harm customers

Washington, DC, July 23, 2018

Today, Representatives Bill Pascrell, Jr. (D-NJ-09) and Frank Pallone, Jr. (D-NJ-06), the Ranking Member of the House Committee on Energy and Commerce, wrote to Joseph Simons, the chairman of the Federal Trade Commission (FTC), highlighting a recent report from the Government Accountability Office (GAO) which found a myriad of consumer protection and competition issues in the primary and secondary live event ticket markets. The members called on the FTC to use its authority to address these problems to protect consumers in the marketplace.

“[T]he FTC needs to act against deceptive and unfair practices in this industry relating to hidden fees, sale of speculative tickets, and misleading resale sites.  The FTC should also investigate reports of anticompetitive conduct in the highly-concentrated ticketing marketplace,” Reps. Pascrell and Pallone write.

The letter examines issues of unavailable tickets, high prices, exorbitant fees, market concentration, hidden add-ons, and rampant speculation, among other issues.

“The FTC should also act against anti-competitive conduct in the primary and secondary ticket sale markets.  When the Department of Justice cleared the Ticketmaster/Live Nation merger in 2010, it was sufficiently concerned about potential competitive abuses that it imposed a number of restrictions and barred the parties from retaliation against venues that used competing ticket services. Despite these restrictions, Ticketmaster and Live Nation may be wielding the power they enjoy from the vertical integration of venues, artists, promoters, and ticket services to cripple competitors,” the members write. “We encourage the FTC to protect consumers and competition in the event ticket sales market and we appreciate your attention to this matter.”

In 2009, the Obama administration approved a merger between Live Nation, the nation’s largest concert promoter, and Ticketmaster, the largest ticket provider. Rejecting protests that the joint company would ultimately harm competition and increase barriers for fans, Obama’s top antitrust regulator, Christine Varney, promised that the new company would create “enough air and sunlight…for strong competitors to take root, grow, and thrive.” The findings of the GAO and a plethora of reports and investigations since, including a recent explosive New York Times exposé, make clear that that has not happened and that the live events ticket market has been harmed by the Live Nation-Ticketmaster monopoly.

Some highlights of the GAO report include:

*The $9 billion-a-year event ticketing business is dominated by Ticketmaster, the largest ticketing company in the primary market and the second largest seller of tickets on the secondary market, and StubHub, the largest seller of tickets on the secondary market.

* By the time tickets go on sale to the public, only limited seats are available, with as many as 65 percent presold to fan clubs or other groups and another 16 percent on average held back by artists and promoters.  Brokers quickly snatch up any remaining seats, and consumers are forced to turn to the resale market with exorbitant markups that that may be double or more of face value.

* Primary and secondary ticketing companies also add fees that average 27 and 31 percent of ticket prices, respectively.  The massive add-on fees are frequently hidden until late in the purchase process, making it hard for customers to know the true cost of tickets and giving unscrupulous sellers the edge over companies that clearly disclose all fees upfront.

A copy of the full GAO report is available here.

Congressman Pascrell was an early critic of the Live Nation-Ticketmaster merger, and repeatedly urged the Obama administration to reject it, warning that the union would crush competition and harm consumers. After Ticketmaster infamously redirected Bruce Springsteen fans to its secondary site TicketsNow to buy marked up seats without notice, Pascrell introduced the BOSS Act in 2009 to create better transparency in the sale of live event tickets and provide overhaul reform of the unregulated secondary market. The legislation was offered in subsequent congresses and the subject of a House Energy and Commerce Committee hearing in 2016. Rep. Pascrell will be reintroducing a revamped version of his bill. Pascrell had a recent op-ed in the Los Angeles Times on his attempts to impose greater positive regulation on the fraught live events ticket market.

The full text of Reps. Pascrell and Pallone’s letter to FTC Chairman Simons is below.

July 20, 2018

Joseph J. Simons

Chairman

Federal Trade Commission

600 Pennsylvania Ave., N.W.

Washington, D.C. 20580

Dear Chairman Simons:

            We are writing to request the Federal Trade Commission (FTC) address the consumer protection and competition issues raised by the April 2018 GAO Report on Event Ticket Sales.[1]  Specifically, the FTC needs to act against deceptive and unfair practices in this industry relating to hidden fees, sale of speculative tickets, and misleading resale sites.  The FTC should also investigate reports of anticompetitive conduct in the highly-concentrated ticketing marketplace.

The GAO Report confirms what anyone who has ever tried to buy a ticket to a concert, show, or sporting event already knows—the deck is unfairly stacked against consumers.  By the time tickets go on sale to the public, limited seats are available.  As many as 65 percent of tickets are presold to fan clubs or other restricted groups, and another 16 percent on average are held back by artists and promoters.  Consumers must compete for the remaining tickets with professional brokers that have the resources and technology to buy many tickets quickly.  These brokers add substantial markups to the ticket price, more than doubling the cost of tickets for popular events.  Both primary ticket sellers and resale sites add exorbitant fees on top of the ticket price, and consumers must navigate other deceptive practices, including speculative tickets listings and “white-label” ticket sites.[2]

Market concentration in both the primary and secondary ticket market may explain why consumers have difficulty accessing tickets at a fair price.  The GAO Report notes that in 2008, Ticketmaster held a more than 80 percent share of the primary ticket market and continues to be the market leader today.  In the secondary ticket market, Ticketmaster is second only to StubHub, which holds a 50 percent share.[3]  Ticketmaster’s dominance was amplified in 2010 by its merger with Live Nation, a company that operates 200 event venues worldwide, promotes 30,000 shows a year, and manages 500 artists.[4]

Hidden Fees

GAO found that ticket sellers add service fees and other charges averaging 30 percent of ticket value.[5]  These fees are often hidden until late in the transaction, misleading consumers about the true cost and making it nearly impossible to comparison shop.  The ticket industry is already on notice that failing to disclose fees clearly and prominently constitutes a deceptive practice in violation of FTC law.  In 2013, the FTC issued revised guidance, “.com Disclosures,” clarifying that companies need to disclose any “significant additional fees the consumer would not expect to incur” prominently, on the same page, and immediately adjacent to any price claim.[6]  The FTC should bring enforcement actions against ticket sellers engaging in similar practices.  Further, the Commission should consider providing clear and specific guidance on hidden fees in the ticket sale industry to supplement its more general guidance on disclosures.

Speculative Tickets

Many ticket brokers are selling tickets they do not yet have, in some cases even before an event has gone on sale, and often without informing consumers of the speculative nature of the tickets.  As a result, consumers may not get the seat location they selected or may be left without a ticket at all.  Even if the broker refunds the ticket price, consumers may have already incurred non-reimbursable travel or hotel expenses to attend the event.

            The FTC settled charges against Ticketmaster and its affiliate TicketsNow in 2010 for a variety of deceptive tactics, including failing to tell buyers that many of the resale tickets it advertised were purely speculative.  In that case, the “phantom” tickets for a Bruce Springsteen concert never materialized.[7]  At the same time, the FTC warned other ticket sellers that the failure to adequately disclose the speculative nature of tickets could result in an FTC enforcement action.[8]  While we commend the FTC for these actions, we are not aware of any subsequent enforcement actions in the past several years despite GAO’s finding that the practice continues to be widespread.  The FTC should investigate whether any ticket sellers are engaging in the deceptive sale of speculative tickets.

White-Label Sites Masquerading as Event Venues

The GAO Report also exposed the use of white-label sites by third-party sellers.  Most white-label sites incorporate the event venue name into the site’s domain name, and many use images of the venue throughout the site’s webpages.[9]  Moreover, the markups and added fees on these sites are substantially higher than on other ticket resale sites.[10]  Deception by white-label sites continues despite past FTC enforcement efforts.[11]  The FTC should conduct a review of white-label sites and pursue enforcement actions to protect consumers.

Anticompetitive Behavior

The FTC should also act against anti-competitive conduct in the primary and secondary ticket sale markets.  When the Department of Justice cleared the Ticketmaster/Live Nation merger in 2010, it was sufficiently concerned about potential competitive abuses that it imposed a number of restrictions and barred the parties from retaliation against venues that used competing ticket services.[12]  Despite these restrictions, Ticketmaster and Live Nation may be wielding the power they enjoy from the vertical integration of venues, artists, promoters, and ticket services to cripple competitors.[13]  We urge the Commission investigate these allegations to ensure that they do not violate antitrust laws.

We encourage the FTC to protect consumers and competition in the event ticket sales market and we appreciate your attention to this matter. 

Sincerely,

_________________________                                              _________________________

Frank Pallone, Jr.                                                                    Bill Pascrell, Jr.

Ranking Member                                                                    Member of Congress

Committee on Energy and Commerce

 

[2] Id. 

[3] Id.

[4] Live Nation Rules Music Ticketing, Some Say with Threats, New York Times (Apr. 1, 2018).

[5] See Note 1.

[6] Federal Trade Commission, .com Disclosures: How to Make Effective Disclosures in Digital Advertising (Mar. 2013) (staff guidance).

[7] Federal Trade Commission, Ticketmaster and TicketsNow Settle FTC Charges of Deceptive Sales Tactics, Refunds for Springsteen Concertgoers Provided; FTC Warns Other Ticket Resellers (Feb. 18, 2010) (press release).

[8] Id.

[9] See Note 1.

[10] Id.

[11] Federal Trade Commission, TicketNetwork and Marketing Partners Ryadd and Secure Box Office Settle Charges of Deceptive Marketing Resale Tickets (Jul. 24, 2014) (press release).

[12] United States v. Ticketmaster Entertainment, Inc.¸ No. 1:10-cv-00139 (D.D.C. July 30, 2010).

[13] See Note 4.

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