CAB Upholds CCS' Decision Against SISTIC for Abusing its Dominance in the Open Ticketing Services Market

In a landmark decision, the Competition Appeal Board (“CAB”) has, on 28 May 2012, issued its decision in the appeal (Appeal No 1 of 2010) brought by SISTIC.com Pte Ltd (“SISTIC”) against the Competition Commission of Singapore’s (“CCS”) decision that SISTIC contravened section 47 of the Competition Act (“the Act”) for abusing its dominant position via a series of exclusive agreements. This is the first decision by the CAB in Singapore on abuse of dominance under the Act.

The CAB has upheld CCS’ finding that SISTIC had abused its dominant position in the market for open ticketing services in Singapore to both event promoters and ticket buyers. The CAB further agreed with CCS’ decision to impose a financial penalty on SISTIC but varied the quantum of the said financial penalty.

The CAB decision can be found here.

Background to CCS’ Decision

Ticketing service providers such as SISTIC act as middlemen between two groups of customers – the event promoters and the ticket buyers – by providing them a platform to buy and sell tickets. SISTIC had entered into the following exclusive agreements:

           i. The Application Service and Ticketing Agreement between SISTIC and The Esplanade Co. Ltd. (“TECL”) which contains explicit restrictions requiring that all events held at the Esplanade venues use SISTIC as the sole ticketing provider;

           ii. The Agreement for Ticketing Services between SISTIC and Singapore Sports Council (“SSC”) which contains explicit restrictions requiring that all events held at the Singapore Indoor Stadium (“SIS”) use SISTIC as the sole ticketing service provider; and

           iii. 17 other agreements that contain explicit restrictions requiring the event promoters concerned to use SISTIC as the sole ticketing service provider for all their events.

As a consequence of the above exclusive agreements, event promoters who wish to hold their events at key venues such as the Esplanade and SIS have no choice but to sell tickets through SISTIC.

CCS found that SISTIC is dominant in the market for open ticketing services in Singapore with a persistently high market share of [85-95]%, and that the restrictions under the various exclusive agreements were harmful to competition by restricting the choices of venue operators, event promoters and ticket buyers. Symptoms of such harmful effects were observed in the market, such as the increase in SISTIC’s booking fee for ticket buyers in 2008.

CCS directed SISTIC to modify the exclusive agreements by removing clauses that require SISTIC’s contractual partners to use SISTIC exclusively. In addition, a financial penalty of $989,000 was imposed on SISTIC for infringing section 47 of the Act.

Decision of the Competition Appeals Board

SISTIC appealed against the finding of liability and on the level of financial penalties. SISTIC argued that it did not hold a dominant position in the market for open ticketing services and that its exclusive contracts were not abusive as they did not give rise to an anticompetitive effect.

The CAB agreed with CCS’ finding that SISTIC’s persistently high market share over time is indicative of its dominant position and that there are no exceptional circumstances shown by SISTIC to rebut the said indication. Also, the CAB found that CCS was justified in relying on the evidence of SISTIC’s increase in booking fee from $2 to $3 in 2008 (for tickets with a face value of above $20) to conclude that SISTIC has the ability to profitably sustain prices above competitive levels.

The CAB held that the credible threat from SSC and TECL to constrain SISTIC was unrealistic as TECL’s and SIS’ commercial interest in SISTIC was likely to affect their decision to switch to other ticketing services providers. In respect of SSC’s and TECL’s incentive to exercise countervailing power against SISTIC, the CAB found that even though TECL and SIS did have strong bargaining power, they have weak incentives to exercise that power with respect to price. The CAB also found that the exclusive agreements constituted a barrier to entry into the market for open ticketing services in Singapore.

The CAB affirmed CCS’ finding that SISTIC holds a dominant position in the market for open ticketing services in Singapore. The CAB found that with the exclusive agreements “SISTIC achieved virtually complete monopoly of providing ticketing service for all the events held in the Esplanade venues and at the SIS. By these agreements, SISTIC effectively foreclosed any competition whether for or in the Relevant Market as the Esplanade venues and the SIS are concerned during the contractual duration of these agreements. There is no way any competitor can compete for any share of the market with respect to these venues.”

The CAB found that CCS has established that the exclusive agreements are explicitly exclusionary in nature and have led to substantial foreclosure effects on competition in the market for open ticketing services, as market entry, market access and growth opportunities for existing or potential competition are stifled.

The CAB found that these exclusive agreements have an appreciable adverse effect on competition in Singapore and do not have any net economic benefit, other than, from SISTIC’s point of view, foreclosing competition and that that SISTIC’s strategy and conduct by way of the exclusive agreements were intended to effectively restrict or foreclose competition in the Relevant Market or were capable of so doing, and amounted to an abuse of dominance.

The CAB varied SISTIC’s financial penalty from $989,000 to S$769,000 after considering the aggravating and mitigating factors of the case. The CAB also ordered that SISTIC pay 70% of CCS’ costs of the appeal.

For media clarifications, please contact:

Michael Low
Senior Assistant Director
Strategic Planning
Competition Commission of Singapore
Email: michael_low@ccs.gov.sg
DID: 6325 8304