Memorandum submitted by the Office of
Fair Trading (OFT)
INTRODUCTION
1. This memorandum is submitted in advance
of OFT's appearance in June 2007 before the Culture, Media and
Sport Select Committee's inquiry into the touting of tickets for
cultural and sporting events.
2. The memorandum describes the role of
the OFT, and in brief, the outcome of its market study into ticket
agents in the UK and the OFT's responses to the specific questions
raised by the Committee.
THE OFFICE
OF FAIR
TRADING (OFT)
3. The OFT is an independent competition
and consumer protection authority. The Enterprise Act established
the OFT as a statutory corporation on 1 April 2003. It is led
by a Board consisting of a chairman, an executive director and
five non-executive members.
4. The OFT's mission is to make markets
work well for consumers by:
— encouraging businesses to comply
with competition and consumer law and to improve their trading
practices through self-regulation;
— acting decisively to stop hardcore
or flagrant offenders;
— studying markets and recommending
action where required; and
— empowering consumers with the knowledge
and skills to make informed choices and get the best value from
markets, and helping them resolve problems with suppliers through
Consumer Direct.
THE OFT'S
MARKET STUDY
5. In 2005 the OFT published the results
of its study into ticket agents in the UK Ticket Agents in
the UK (OFT 762)—January 2005. In part, this examined
the role of secondary ticket agents. A secondary ticket agent
is a person or company who re-sells tickets usually at a premium,
for a concert, theatrical or other event. The term "touts"
is sometimes applied to those secondary agents that sell outside
venues rather than through the Internet or booths.
6. The study found three main types of sellers
in the secondary market: professional, (those that re sell tickets
as a business); corporate, (who offer hospitality packages and
include tickets); and non professional, (normally individual consumers
who have bought tickets for events but find they are no longer
required).
RESPONSES TO
ISSUES RAISED
BY THE
COMMITTEE
7. Our responses refer generally to secondary
agents.
Underlying causes of ticket touting, its impact
on performers, promoters and the public
Causes
8. The demand for many events outstrips
supply. The OFT study found that consumers who cannot get tickets
are often willing to pay premium prices (para 7.21 of OFT study).
[43]
9. The promoter may set the face value of
the ticket at a lower level than the market will bear to ensure
good attendance or retain fan loyalty (para 7.21 of OFT study).
[44]
10. Limited price range for seats in most
venues. The OFT study also found that some consumers may place
a higher value on tickets for certain seats than is reflected
in their face value (7.22 of OFT study). [45]
Impact
11. Some secondary agents provide a useful
function where consumers do not wish to make an immediate decision
to purchase the ticket but prefer to wait until a later date.
At this point, although the primary agent has ceased selling tickets,
the consumer still has the option to buy the ticket (albeit usually
at a higher price).
12. Where the consumer cannot go in person
to the box office or phone the box office during opening hours,
and this is the only means to buy from a primary agent, many secondary
agents perform a useful function by enabling consumers to purchase
tickets on the Internet 24 hours a day, seven days a week. [46]
13. The OFT's study found that consumers
do not shop around. Competition in the ticket market primarily
takes place with respect to competition between primary agents
for preferential allocation contracts with promoters and venues.
Consumers may suffer detriment from secondary agents if secondary
agents are not complying with competition legislation, for example,
if the price of resold tickets was fixed between different ticket
agents. Outside of that, resellers are free to set the price they
believe the market will bear for the tickets and consumers must
decide what they are willing to pay for the ticket in question.
The OFT has not seen evidence of any infringement of competition
law.
14. However, consumers may also suffer detriment
as a result of buying from a secondary agent who does not comply
with consumer protection legislation. This can result in a consumer
not being aware of, or being deliberately misled, about the face
value of ticket until after they have bought it, and thereby the
size of the premium they are paying, and finding out only after
they have made the purchase; being misled about seat location;
and not receiving tickets for which they have paid.
15. A promoter/event organiser who has prohibited
a ticket from re-sale for commercial gain (ie it cannot be resold
in the course of a business) could seek to void the ticket if
it has found it has been sold in this way. This may result in
a third party who was not the original contracting party holding
a worthless ticket without knowing this until they come to use
the ticket.
16. It is thought complaints may be under
reported since it is tourists who are most frequently targeted
by disreputable secondary agents.
17. The OFT believes that existing competition
and consumer legislation protects consumers from potential detriment
caused by secondary agents.
Should resale of a ticket, at face value or higher,
be permitted? Does the acceptability depend on the circumstances
in which the ticket is offered for resale?
18. The OFT study found that secondary agents
can provide a useful function and benefit to consumers. See paragraph
11 and 12 of this response. [47]Although
it was found that the activities of secondary agents generate
three times more complaints to the OFT than those of primary agents,
complaints regarding ticket agents overall are relatively low
compared to complaints about other sectors received by the OFT
and Trading Standards Services. Many of the issues consumers complain
about such as pricing information and non delivery of pre paid
tickets are common to both the primary and secondary agents. The
study also found that the legislation currently in place is sufficient
to address the problems we identified in the secondary market.
The OFT does not consider that an outright ban on the re selling
of tickets would be beneficial to consumers. To justify an intervention
in the market that removed secondary agents would require evidence
of substantial detriment to outweigh the potential cost to those
business involved.
19. See also paragraphs 22 and 23 below.
Impact of Internet on trade in tickets
20. Where the consumer cannot go in person
to the box office or phone the box office during opening hours,
and this is the only means to buy from a primary agent, many secondary
agents perform a useful function by enabling consumers to purchase
tickets on the Internet 24 hours a day, seven days a week.
21. The Internet has provided the means
for many secondary agents to operate on a national and international
scale, hugely opening up their potential customer base and increasing
the scope for competition between agents.
Are tickets' terms and conditions banning transfer
and onward sale, fair or enforceable?
22. Particular sport and entertainment sectors
have statutory restrictions on the resale of tickets (eg football
tickets). In the OFT's view a contractual term seeking to exclude
a consumer's right to assign a ticket that they have purchased
in all cases, for example where this is not for profit and is
between family members, could be considered unfair under the Unfair
Terms in Consumer Contracts Regulations 1999 (UTCCRs). However,
contract terms need to be viewed in context and it therefore may
be acceptable, in certain circumstances, to restrict reassignment
(eg where tickets are provided to a particular group such as schoolchildren).
In these circumstances we would expect any potential unfairness
arising from this restriction to be mitigated by a refund provision
that allows the original purchaser to get their money back if
they can no longer attend. The UTCCRs would also require any restriction
to be made very clear and prominent, including on the ticket itself.
23. The OFT believes that there is scope
under the UTCCRs for a term prohibiting consumers from reselling
tickets for profit as being considered unfair. However, only a
court can decide if a term is unfair. It may be sufficient for
the consumer to be returned to their original position.
The merits of new approaches by ticket agents
attempting to prevent transfer of tickets, including wider use
of personal ID
24. As noted above the OFT does not see
that banning the re sale of tickets would be beneficial for consumers.
Where it is thought appropriate in specific circumstances to ban
re sale then a consumer who cannot use the ticket should be entitled
to a refund. The element of the contract that precluded that could
be unfair under the UTCCRs, see paragraphs 22 and 23.
Should the existing offences of sale by an unauthorised
person in a public place of a ticket for designated football matches
or London 2012 Games, be extended to cover other sporting or cultural
events?
25. Event holders and promoters may seek
to incorporate terms that prohibit the sale of tickets by businesses
for commercial gain in their terms and conditions and to seek
enforcement through the courts. If collective consumer detriment
arises as a result of the re-sale by an unauthorised person, and
depending on the circumstances, it is likely that those designated
as enforcers under the Enterprise Act 02 (local authority Trading
Standards Services and OFT amongst others) would be able to take
action against the business re selling the tickets under consumer
protection legislation (listed below).
26. As stated at paragraph 22 and 23 the
OFT takes the view that to prohibit consumers from re selling
a ticket could be an unfair term under the UTCCRs. The introduction
of legislation that would ultimately make it an offence for a
consumer to re sell a ticket is unlikely to provide the consumer
with additional protection but in some cases will leave the consumer
worse off as they may be left with a ticket they cannot use and
cannot return.
June 2007
43 Not printed. Back
44
Not printed. Back
45
Not printed. Back
46
In OFT market study (Jan 2005) 44% of respondents in consumer
survey listed "convenience" as the reason for choosing
a ticket agent (both primary and secondary) to buy their ticket
over a box office. Back
47
Not printed. Back
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