Competition Tribunal slaps Computicket with R20m penalty

The Competition Tribunal has found that Computicket abused its dominance and has ordered the local ticketing giant to pay an administrative penalty of R20m.

The tribunal’s decision follows protracted litigation and an earlier investigation by the Competition Commission into the company’s use of long-term exclusive agreements to exclude new entrants from the outsourced ticket-distribution market.

The matter relates to the period between 2005 and 2010.

The commission led evidence that Computicket required or induced its customers not to deal with competitors.

In a statement, the competition authorities said the company’s exclusivity contracts increased dramatically in terms of quantity and duration following its takeover by Shoprite in 2005. 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.”

Computicket denied that its contracts had an exclusionary effect. Instead, it argued that customers preferred to use its services and that exclusive contracts were also a means to mitigate against reputational risk. Further, Computicket argued that there were a number of players which entered the market in the relevant period and competed with it for inventory.

In its judgment, the tribunal noted that Computicket “enjoyed a near monopoly position at the time it introduced the three-year version of the exclusive contracts in 2005”. The tribunal found that “there was limited market entry during the period 2005 and 2010, a period which, at the beginning and thereafter, coincided with the period of the introduction of the longer-term exclusivity contracts and Computicket’s aggressive enforcement of its rights under these contracts.

“No other theory for why entry was so limited and ineffectual has been offered to rebut this conclusion,” the tribunal said.

Furthermore, the tribunal noted a trend that Computicket’s pricing and profits increased steadily during this period.

The origins of the case date back to February 2008, when a rival of Computicket, known as Strictly Tickets CC, laid a complaint with the commission. This was followed by further complaints by other competitors: Soundalite CC, KZN Entertainment New and Reviews CC, L Square Technologies and Ezimidlalo Technologies CC. The commission consolidated the complaints and referred the matter to the tribunal.

The tribunal said the delay in finalising the matter “is attributed to a lengthy and litigious history between the parties over discovery of documents, followed by an unsuccessful administrative law challenge to the commissioner’s decision to refer the complaint”.