American Antitrust Institute Calls on Federal Trade Commission and State Officials To Investigate the Growing Threat of Restrictive Ticketing Practices

The American Antitrust Institute (AAI) today called on the Federal Trade Commission (FTC), state attorneys general and consumer protection agencies, and legislators to investigate restrictive paperless ticketing practices for live events that deny consumer choice and stifle competition

A white paper by AAI Research Fellow James Hurwitz, formerly a policy analyst with the Federal Trade Commission, details the call to action. The 71-page paper concludes that restraints on the ability to transfer paperless tickets “unjustifiably limit consumer choice and depart from bedrock competitive market principles,” and may violate federal and state antitrust and consumer protection laws. The paper also states that these practices may warrant legislation to protect the market and consumers.

Restrictive paperless ticketing practices prevent ticketholders from easily sharing, giving away, and reselling their tickets. Unlike traditional event tickets, paperless tickets are tied to a purchaser’s credit card and personal identification, allowing companies to restrict the use and transfer of tickets. Ticketmaster, the dominant primary seller of live event tickets, imposes the most stringent limitations on the transfer of its paperless tickets. A paperless ticket bought through Ticketmaster, for example, may be resold only through TicketsNow, the company’s resale website. Such restrictions can decrease competition in the secondary ticketing market, causing increased prices and reduced incentives for quality customer service.

“We see restrictive paperless ticketing as a threat to the open market and consumer fairness, and call on the FTC and other government officials to investigate this emerging practice,” said Albert Foer, president of AAI. “An FTC investigation and economic analysis will inform the industry and consumers about problems worthy of correction, as well as assist legislative efforts and, hopefully, private initiatives to address problems resulting from these practices.”

The white paper and broad call to action seeks to elevate the issue of restrictive paperless ticketing among the nation’s legislators and public officials. In 2010, New York became the first state to pass legislation protecting consumer rights to transfer their tickets, requiring ticket sellers to provide an alternative to restrictive paperless tickets; that law was renewed in 2011. Looking ahead at 2012, a number of states are poised to consider similar action on this issue including Florida, Minnesota, New Jersey, and North Carolina. The AAI has provided witnesses to testify in favor of various state bills.

 The paper concludes: “With the loss of secondary market competition, prices can increase, output decrease, and incentives for innovation diminish. Legislative remedies may offer quicker and more focused benefits (than litigation), and, based on the available evidence, appear to be warranted.”

The full paper can be read here.

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