Ticketmaster near-monopoly in Canada entrenched by planned merger

Canadians hoping for a strong competitor against Ticketmaster Entertainment Inc. in the event-ticket business now face what one critic calls the "disturbing" likelihood that the U.S. company's dominance will be reinforced.

Ticketmaster and event promoter Live Nation inc. confirmed Tuesday that they plan to combine their acts in a so-called "merger of equals."
The combination of North America's biggest ticket distributor and biggest venue operator would operate under the name Live Nation Entertainment.

The arrangement between the two Los Angeles-based companies is likely to face intense scrutiny from U.S. antitrust authorities - especially because Live Nation recently developed its own ticketing service working in competition against Ticketmaster.

That service is just gaining momentum in the United States and Live Nation was planning to extend it early next year to Canada, where Ticketmaster has overwhelming dominance of outside ticket sales for major entertainment and sports venues.

A combined company would have enhanced power over both performers and audiences.

The proposed merger "sounds like it's a disturbing development," said Mel Fruitman, vice-president of the Consumers' Association of Canada.

"The original word was that Live Nation said they were going to go out there and compete with Ticketmaster for the sale of tickets. Now they've gone in the opposite direction."

Ticketmaster is estimated to sell tickets on behalf of more than 80 per cent of the major arenas and stadiums in the United States, and it has a similar market share in Canada, said Fruitman.

"They control at the moment most of the major venues, and it's my understanding that many of those contracts were due to expire within the next year or so, and we were looking forward to seeing some competition," Fruitman added.

"This combination with Live Nation, who controls the venues, with the ticket sellers is certainly something that the Competition Bureau needs to look at, because that really is locking up the industry."

However, he could not say what leverage the Canadian government could place on a merger between two big American companies.

Fruitman said Ticketmaster generates a significant volume of complaints to the Consumers' Association, particularly over the array of extra charges it places on tickets.

"The one that annoys most, certainly annoys me the most, is when I say I will print out my own tickets, and they say, 'Oh, we're going to charge you for that.' So they charge you for saving them the cost of printing the tickets - how perverse is that?"

There also are concerns a lack of choice for online purchases, and about Ticketmaster's dual sales arrangement: it sells tickets at its Ticketmaster phone and online operation, and also provides a reselling service for already purchased tickets through TicketsNow.com.

"Tickets seem to sell out almost immediately," Fruitman said. "There's suspicion that they are flipping tickets over to TicketsNow.com."

This has provoked attempted class-action litigation in Ontario, where lawyers say Ontario's anti-scalping law has been violated and people have been overcharged at Ticketmaster and TicketsNow.com since February 2007.

Two law firms claim Ticketmaster and other defendants owe $500 million in damages to victimized event-goers.

Ticketmaster has insisted its system is fair and doesn't violate the law.

There also have been privacy worries, with the federal privacy commissioner saying last April that Ticketmaster Canada Ltd. was violating federal legislation but had since brought its practices up to standard.

"It's not very user-friendly, and has never been user-friendly," the Consumers' Association's Fruitman said.

Suit alleges Ticketmaster broke anti-scalping law

A $500-million class action lawsuit has been launched against Ticketmaster and related groups, claiming the ticket seller conspired to "scalp" its own tickets.

The suit alleges that Ticketmaster has diverted tickets to concerts and other popular events away from its own regular website, Ticketmaster.ca, over to its ticket-brokering website TicketsNow.com. TicketsNow allows people who have tickets to exchange, trade or sell tickets at marked-up prices.

Lawyers from Sutts, Strosberg in Windsor, Ont., and Branch McMaster in Vancouver say they're representing a client who allegedly paid more than $530 for two concert tickets purchased from TicketsNow that would have cost about $130 if they had been available from Ticketmaster.

The client had attempted to buy the tickets through Ticketmaster's regular website and was directed him to the higher-priced tickets on the TicketsNow website.

The firms say other event-goers have been overcharged in the same way when they bought tickets from Ticketmaster.ca or TicketsNow.com since February 2007.

They allege the defendants violated Ontario's "anti-scalping" laws, contending that the practice of selling tickets in the secondary market for amounts that exceed their face price violates the legislation.

The law firms claim Ticketmaster Entertainment, Inc., Ticketmaster Canada Ltd., TNOW Entertainment Group, Inc., and Premium Inventory, INC. owe $500 million in damages to those who were overcharged.

The firms allege that Ticketmaster deliberately limits the number of tickets that are sold at face price and then diverts tickets to TicketsNow, where they can be sold for amounts that exceed their face value.

"Customers have voiced concerns over the fact that tickets for the most popular events can ostensibly sell out in minutes, only to become immediately available in the secondary market at much higher prices," said Luciana Brasil of Branch McMaster, one of the lawyers representing the plaintiff.

"The mere fact that Ticketmaster has a financial interest in both retail and premium ticket sales leads to an obvious question about the process by which those tickets are sold to members of the public and how it works," said Jay Strosberg of Sutts Strosberg LLP, another of the lawyers representing the plaintiff.

Ticketmaster has said in response to prior complaints that the company's ticket-selling system is fair and doesn't violate the law.

The class action aims to represent all persons who bought tickets for an event in Ontario from Ticketmaster or through TicketsNow.com from and after February 9, 2007. More information on the suit can be found at www.ticketmasterclassaction.com.

Earlier this month, Bruce Springsteen expressed anger with Ticketmaster's selling practices.

He said he has heard from fans who wanted to see him play at New Jersey's Meadowlands that they received an error message on their computer screen that shut them out of the main Ticketmaster website.

The potential ticket-buyers then saw an ad for Ticketmaster subsidiary TicketsNow offering tickets for hundreds of dollars more than face value.

Springsteen said on his website that he and the E Street Band are "furious."

"We perceive this as a pure conflict of interest," the band said.

The band said it had received assurances from Ticketmaster that it will stop redirecting Springsteen fans to TicketsNow.

In other related TicketMaster news...

Ticketmaster is seeking to overturn current anti-scalping legislation, lobbying the Ontario and Manitoba governments to review rules banning the resale of tickets.

"There's a real need to update these laws," Ticketmaster vice-president Joe Freeman says.

He said Ticketmaster's resale site, TicketsNow, is just giving the public what it wants: secure access to tickets they don't mind paying more money for.

"You can't regulate away the laws of supply and demand and, unfortunately for a lot of shows, particularly now in the internet era, demand just far, far exceeds supply."

But consumers such as Steve Oetting of Winnipeg, Manitoba said reselling sites such as TicketsNow are illegal and a conflict of interest.

Oetting said he logged on to Ticketmaster's website to look for tickets for an upcoming Elton John concert and found a link to TicketsNow. While tickets weren't yet released on Ticketmaster, TicketsNow was offering 53 tickets at higher prices.

"Reselling tickets above face value, I think, is scalping," he said. "They're promoting it, they are providing the vehicle by which it can transact. I think that's an illegal act according to the government of Manitoba."

Kevin Donnelly, senior vice-president and manager of Winnipeg's MTS Centre, said he asked Ticketmaster to remove the TicketsNow link from the Manitoba site.

"The history is, you hate scalpers, they've been the bane of your existence, and now, there is an industry that is [facilitating it]," he said.

"It sends the wrong message at the very least, that people should be encouraged to go to these secondary sites."

A spokesperson with the Alberta government said a review of the province's anti-scalping legislation, which is rarely enforced, is currently underway.