Select Committee on Culture, Media and Sport Second Report

Conclusions and recommendations

1.  It is important to bear in mind that the term "touting" has very different meanings to different people, when considering claims that "touting" causes problems and that there is a need for intervention to control it. (Paragraph 13)

2.  It is clear, however, that the rise of the internet has increased the opportunity for secondary sales of tickets—by individuals, organised rings and IT experts—beyond the sometimes offensive antics of "touts" immediately outside stadiums. The question for legislators and policymakers, however, is to define the extent to which this has become a "problem", why it is so—generally or on a case by case basis—and whether legislation is a proportionate response. They must bear in mind, too, the extent to which legislation will be enforceable, and at what cost, and whether it may have unintended consequences. (Paragraph 13)

3.  The surveys of consumer opinion which have so far been carried out do little more than confirm that consumer attitudes are mixed. One element which is missing is whether consumers would give the same answers if they had been informed of the concerns expressed by organisers about the possible long term effects of touting on the industry. Further research would be helpful. (Paragraph 30)

4.  We accept that the organisers' desire for the secondary market to be curbed is largely motivated by concern for the long term well-being of the industries in which they operate, and that this is something beyond merely protecting their own commercial interests which, in the short term, they could do simply by raising their prices, so that there was no profit to be made by touting. (Paragraph 31)

5.  As mentioned, there has been particular public criticism of the selling of tickets which were issued free, for charitable events; and we have no hesitation in condemning this practice. However, in principle, we see no difference between the selling on of tickets which have been provided free (whether to a wholly free event or as a complimentary ticket) and the selling on for profit of tickets which have been priced low to enable particular groups to attend, or which have been allocated to particular groups such as wheelchair users. In both cases the resale undermines the objectives of the organisers who, in both cases, have intentionally supplied the consumer with something worth more than any money which has been paid. However, the onus is on promoters to ensure that such tickets can be distinguished so that sellers, buyers and exchanges are aware of the basis on which they were originally available. (Paragraph 35)

6.  More work needs to be done on quantifying the core problem. In particular more reliable estimates are needed of the proportion of tickets passing through the secondary market: overall; for different kinds of events; at, above or below face value; via organised operations or incidental sales; through auction sites, trading platforms, secondary agents or other routes. We would encourage secondary ticket sellers and marketplaces to co-operate fully in making this data available. (Paragraph 39)

7.  While we consider that it would be unwise to assume that problems caused by ticket touting are necessarily the same worldwide, or that measures used to ameliorate the problems in one country would necessarily be effective in another, there may be lessons to be learned. The different trends now observed in different parts of the United States and Australia strongly suggest that legislatures there are seeking to contend with problems whose nature depends on how touting and national attitudes to it have developed over the years in those countries. We recommend that DCMS, with the assistance of the industry, should undertake a comparative analysis of what problems have arisen in other countries, including other European countries, what measures (if any) have been introduced to deal with them, and whether such measures have been regarded as successful in tackling the problems they were intended to address. (Paragraph 46)

8.  We accept that a blanket refund policy may not be a realistic option for organisers. Apart from the likelihood that it would encourage touts to buy up swathes of tickets safe in the knowledge that they could get their money back on any not sold for profit, it would carry an unacceptable commercial risk: in this context, tickets are not like durable goods which can be returned unused to a shop for resale, not least because they become valueless once the event has taken place. (Paragraph 58)

9.  Quite apart from any question of whether promoters' returns mechanisms are adequate to balance and make conditions restricting resale fair and enforceable, it seems to us highly improbable that consumers who are simply seeking to avoid making a loss on tickets which they are unable to use would find the returns services on offer from the primary market to be a satisfactory alternative to what the secondary market offers. Services offering less than full reimbursement and then, only for sold out events—so that the primary market can only profit and never lose by providing the service—would be less attractive, and of little real benefit to those consumers. The primary market must do more to help the "genuine" supporters who cannot attend for "genuine reasons" to mitigate their losses. As well as providing more authorised resale mechanisms, refunds should be more openly available to those supporters, who should not be penalised by a blanket refusal to give refunds put in place to protect the market for touting. More widespread use of schemes offering vouchers could offer a constructive way forward, with the potential to give full satisfaction to the consumer with less encouragement for tout abuse than cash refunds. (Paragraph 59)

10.  We look forward to learning the outcome of the negotiations between the Office of Fair Trading and the Society of Ticket Agents and Retailers (STAR) on model terms and conditions for use by STAR members. We are disappointed that they have still not been announced and we urge the OFT to explain the reasons for the delay. However, it seems to us wholly unsatisfactory that there should continue to be uncertainty as to whether standard terms and conditions restricting resale, which underpin organisers' strategies against touting, would be enforceable against consumers who sell in breach of them. We observe that eBay, which says that it should not be asked to take sides in contractual disputes about terms and conditions between organisers and consumers, nevertheless saw fit to launch a test case to "stand up for the consumer" in Australia. We find it surprising that none of the stakeholders has apparently been motivated to test standard terms and conditions in this country and we recommend that they should consider the option of litigating so that the uncertainty may be resolved. We note in this respect that, shortly after giving evidence to the Committee, the Office of Fair Trading launched a court case to test the legality of bank overdraft charges. We would encourage it to make it clear that, failing voluntary agreement within the industry, it is prepared to do so over terms and conditions of secondary ticket sales and to set a clear deadline in public by which it is prepared to do so. (Paragraph 60)

11.  As long as secondary sellers continue to indulge in dubious or suspect practices, there will inevitably be calls for legislation and we would encourage them to clean up their act by, at the very least, not advertising tickets which cannot possibly be in their or their customers' possession at the time. (Paragraph 67)

12.  We would also welcome an across the board commitment not to list tickets distributed free of charge, for example for charity events, to particular attendees, such as children or the disabled. In the interests of consumer confidence and safety, too, we would like to see secondary marketplaces require sellers to provide more information about ticket details including, ideally, face value, block, row and seat numbers. However, we recognise that this is only practical if the event organisers do not simply cancel all tickets advertised for sale in the secondary market. (Paragraph 68)

13.  We do not underestimate the difficulty of eradicating abuses of the market without imposing unnecessary fetters on areas of the market which cause no problems. As we have observed, there is no consensus as to what proportion of the market is problematic: the case for intervention would be strengthened if it were demonstrated that there were real problems affecting more than a small minority of events. (Paragraph 76)

14.  We also believe that more can be, and should be done, to seek a voluntary solution. Since it is the secondary market which gives rise to the industries' concerns, and regulation of that market (voluntary or otherwise) which is sought, it is not realistic to expect to find solutions in a forum where that market is virtually unrepresented. So long as one contingent seeks the effective abolition of the other, which is therefore fighting for its very survival, hopes of agreement must be forlorn. (Paragraph 77)

15.  We agree with DCMS that regulatory intervention should be considered only as a very last resort. While intervention was justified on grounds of public order and safety at and around football matches, and may be an international requirement for hosting some major sporting events, we have reservations about the criminal law being used as a way of supporting organisers' efforts to select the audiences for their events, essentially as an aid to their self-policing of touting. We are also concerned by the real risk that a convenient market, which some consumers have grown accustomed to use and trust, would be driven underground, to the detriment of consumers and stakeholders. We appreciate, however, that international pressures may make it necessary for existing legislation to be extended as a condition of the UK being eligible to host major international sporting events, but we are not persuaded that it would be right to legislate more widely at this stage. (Paragraph 78)

16.  While we appreciate that the concept of "Crown Jewel" events is viewed as a possible interim measure, rather than as a long term solution, we are not optimistic that this approach would do more than exacerbate the confusion inherent in the existing two-tier system. In the absence of a voluntary code, it is understandable that pressure will continue to extend special protection to the 'Crown Jewel' sporting events and many popular music events. We urge eBay and other operators in the secondary market to follow the lead of those marketplaces which already refuse to list tickets for free events or tickets which have been allocated for specific groups, such as children, the disabled or amateur sports clubs. There is no arguable justification for profiteering from these. (Paragraph 79)

17.  It is encouraging to see a move towards constructive dialogue between creators and secondary marketeers and we urge all the interested parties to join in this debate. It could provide the seed for the co-operation which has so far been lacking between the stakeholders. As presented, the proposal may be no more than a different machinery whereby those responsible for providing events would be able to share in profits which can now be made in the secondary market. But it does introduce new potential for a recognition of the legitimacy of the secondary market by the entertainment and sports industries, alongside an acknowledgment of their moral right to share in profits made by others out of the events for which they are responsible and in which they have invested talent, funding and organisation. At the same time it provides scope for the acknowledged benefits of the secondary market to the consumer to be preserved and developed, with added protection for consumers and a real incentive for effective self-regulation throughout the ticketing industry. For example, tickets could be sold subject to terms and conditions which provided that resale through an approved secondary marketplace was permitted (with an agreed levy passing back to the industry through a collecting agency), so that consumers could be given more information about the tickets being offered for sale, without any risk of finding that tickets have been cancelled because they have been sold on. Approval would be dependent on an agreed code of practice covering consumer protection measures as well as arrangements for collecting levies. A great deal of work needs to be done on the detail of how such a scheme might operate but, at the least, this initiative could lead to joint engagement towards a solution in which the convenience of the secondary market could continue while at the same time supporting the industries on which it relies. We commend it and strongly encourage all those involved to consider it seriously. (Paragraph 81)

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