The Competition Commission claims ticketing firm Computicket and its parent, retail group Shoprite Checkers, are guilty of anticompetitive behaviour and has referred the two companies to the Competition Tribunal for prosecution.
The companies have been charged with signing and enforcing exclusive agreements in contravention of the Competition Act, the commission said in a statement on Thursday.
“These agreements, with anticompetitive features, were concluded by Computicket with inventory providers in the entertainment industry from 2013 to date,” it said. In terms of the agreements, Computicket is appointed as the sole provider of ticketing services to the inventory provider or customer in question.
In 2005, after the acquisition of Computicket by Shoprite Checkers, the ticketing firm changed the duration of its exclusive contracts to a standard period of three years. The exclusive agreements are staggered in respect of when they were signed and in respect of when they expire.
“In these agreements, Computicket has the ability to price-discriminate between its large and small inventory provider customers,” the commission said “The contractual terms of the agreements extend the foreclosure in that third parties, who are not necessarily contracted with Computicket, are required to deal with it, to the exclusion of its competitors, in the event that such third parties contract with Computicket’s customer.”
According to the commission, Computicket’s larger customers are able to negotiate better rates than smaller customers, based on their size. “This allows Computicket to isolate the competitive pressure arising from those inventory providers who may find the option of self-supply more attractive.”
The commission has asked the tribunal to impose an administrative penalty of 10% of Computicket’s and Shoprite Checkers’ annual turnover.
Between 2008 and 2009, the commission received five complaints from Strictly Tickets, Artslink, Going Places, TicketSpace and Ezimidlalo Technologies against Computicket. They alleged that Computicket engaged in anticompetitive practices by concluding exclusive agreements with inventory providers for the provision of outsourced ticket distribution services for the entertainment industry. The Commission consolidated the complaints into a single case as all the complaints raised similar allegations.
In April 2010, the commission referred the case to the tribunal on the basis that the exclusive agreements between Computicket and inventory providers contravened various sections of the Competition Act.
The case before the tribunal covered the period from 1999 to December 2012. “The matter was subject to lengthy litigation around certain legal technicalities about whether Computicket was entitled to certain documents in the commission’s possession.”
This issue was settled in 2016 in favour of Computicket, paving the way for the merits of the matter to be heard in October 2017, the commission said. The tribunal’s decision on the matter is still pending, the commission said.
While the initial matter was going through the litigation processes, the commission received a complaint from Twangoo (trading as Groupon South Africa) in June 2013, which alleged that Computicket concluded exclusive agreements with inventory providers in the entertainment industry in contravention of Competition Act.
In September 2014, Groupon withdrew its complaint. However, the commission initiated a complaint against Computicket in November 2014 for alleged contravention of the act.
In October 2018, the commissioner amended the complaint to include Shoprite Checkers, Computicket’s holding company, as the second respondent.
The new case is similar to the case against Computicket heard in October 2017, where a decision is still pending. While the allegations are the same, Shoprite Checkers has been added as a second respondent.
In an e-mail to TechCentral, Computicket and Shoprite Checkers said they have studied the referral by the commission and “disagree with the basis” for it. “In terms of the Competition Act, the respondent companies may answer the referral within 20 business days after being served with the referral. Opposing affidavits will be filed by the respondent companies within the required time frames.” — © 2018 NewsCentral Media