Examination of Witnesses (Questions 140-159)
MR SHAUN
WOODWARD MP, MARGARET
HODGE MBE MP AND
MR JOHN
FINGLETON
26 JUNE 2007
Q140 Paul Farrelly: You will be giving
comfort in August on that point?
Mr Fingleton: Yes, I think we
will be setting out very clearly in August what has been agreed.
Q141 Paul Farrelly: So I will find
out in August?
Mr Fingleton: Yes.
Margaret Hodge: Chairman, can
I just come in because as the sponsor department for the OFT I
would say two things to Paul. One is that the Consumer Protection
from Unfair Trading Regulations, when they come in, will ensure
that there is appropriate information. They are pretty wide-ranging
both in their scope and their definition and they will ensure
that the information that the consumer requires in the secondary
ticketing market is available. That is the first thing to say.
The second thing to say to him is that we as the sponsor department
will be vigilant in this area, so we will see what evidence emerges
and whether consumer concerns grow and whether the Internet actually
really genuinely has become more of a problem in the market rather
than facilitating consumers in having greater choice, and we will
accordingly seek advice from OFT so there is a double lock on
trying to protect the consumer. The OFT do it directly and we
as their sponsor department will also keep an eye on it.
Q142 Paul Farrelly: And music fans
can expect the same protection as sports fans?
Margaret Hodge: They will both
be protected by the consumer protection legislation, yes. The
Crown Jewels approach might lead to a difference in approach to
those two events you mention.
Mr Woodward: All of this being
said, my view after 14 months in this job is that what we need
slightly more of is goodwill. It is no secret that I was exasperated
by the conduct of eBay over BBC Radio 1's Big Weekend recently.
That was an opportunity for the industry, notwithstanding the
caveats that they may well have shared with you, to have responded
in a slightly better way to what actually took place on the Internet.
Again let us bear in mind that it was only a small number of tickets
we are talking about, but there is no question that when that
weekend was organised it was principally meant to be for people
who lived locally to Preston. When the tickets had been paid for
by licence fee payers, in other words they were free but the BBC's
costs in relation to this were coming out of the licence fee,
when it was made absolutely clear that they were meant to be for
people locally, when the artists had given their time for free,
when those tickets found their way via consumers onto eBay, I
think it would have been better if eBay had shown an act of faith
and actually said, "We will suspend the listings to these
events". That would have shown a willingness for self-regulation
to be able to work. And I do think that there is an issue that
those involved in the secondary market have to wrestle with here,
because it is important they understand that the Government does
not want to step into this with regulation, because it may not
work; it is easy to announce but to actually enforce it and make
it work is very hard. The model terms and conditions undoubtedly
will help but for this really to work well, whether it is with
regulation or without regulation, we need the industry to understand
that fairness and fair access really matters and when the BBC
puts on an event paid for by licence fee payers that is free and
those tickets end up going on the Internet and eBay is making
money out of the listings for that, there is a problem, and I
think it is very important that industry recognises that some
of the solution to this problem rests in the hands of the secondary
ticket market, and it would be a real shame if the Government
finds itself pushed into a position where it might be forced ultimately
to consider regulation when the industry has it in its own hands
to resolve this.
Q143 Paul Farrelly: I share your
exasperation with that example and I am sure, Shaun, you can understand
the exasperation here where the Ministries and the Office of Fair
Trading cannot come to this Committee and tell us the main terms
of the agreement because it is going to be announced in August
in all its fine detail.
Mr Woodward: To be fair on that,
that is a point of process and to be really honest that would
be a bit like saying you have got a select committee report coming
out next Tuesday and we want you to tell us what is in it today.
To be fair to the OFT here, if they have a reason to withhold
confidences until August I think we had better respect that. What
I think is quite legitimate though to ask about is whether or
not there is a desire by the OFT to want to address that. Again,
one of the things I think concerns me, and I think it an issue
we would all share around this table, is that it is interesting
that newspapers like the Sun or Mail or Telegraph
or Times, or whatever, are picking up large volumes of
complaints but at the same time they are not coming to the OFT.
I think again it is perfectly legitimate for the OFT to say that
of its mailbag of two million complaints a year it hardly gets
any in relation to the specific area of exploitation of unauthorised
sales but it may be of course that the consumer does not think
of going to the OFT to register their concerns, and so it may
be helpful if your Committee is able to direct the public a bit
their way because I think it is in good faith by John that he
is saying what he is saying but, equally, if the volume of complaints
coming to the OFT were like complaints about banks and bank charges
then I think it might find itself in a different position.
Q144 Adam Price: I was wondering
if you think it is permissible or acceptable for promoters to
insist on no resale and then introduce measures, like Glastonbury
for example, with personal identification? You would not have
been very happy for instance if Paul Farrelly had paid his £25
for a special conference at the weekend and then I had turned
up instead because I had bought it off him. I have got better
things to do at the weekend, but is it permissible for promoters
to insist on no resale and then introduce measures like that and
also to insist on traceability then if tickets are put up on the
Internet?
Mr Woodward: Adam, I think again
we have to be careful before we give a knee-jerk response to that.
By instinct I cannot see any sensible reason for there not being
a legitimate market for resale and it is interesting again to
note in the legislation that is taking place in New York at the
moment by Governor Spitzer (and that comes out of the New York
Yankees case) they are repealing the legislation which outlawed
the secondary market but that was because the New York Yankees
wanted to be able to take more control over their own tickets.
However, it is an important feature of the New York legislation
that there is a market for reselling.
Margaret Hodge: I think I would
put it in a slightly different way. There may well be a public
interest in ensuring that there is not a transfer or resale of
tickets vis-a"-vis football games and there is a public order
purpose in that. If there is a public order purpose you would
take a different view and use that legislation. The real question
for this Committee and the question that we are trying to address
is should we use regulation around primary and secondary ticket
agents to control or free up a secondary market. There may be
occasions when you want to prevent the resale but you should use
appropriate legislation and be clear about your purpose in so
doing otherwise you want consumer choice.
Q145 Adam Price: Okay, I can understand
the specific public order issue in relation to football which
is about physical sale outside a ground but have you not extended
that to on-line as well? Is it illegal now to sell ---?
Margaret Hodge: Consumer protection
is as much on-line as elsewhere.
Q146 Adam Price: Yes, but it is illegal
to resell football tickets for a profit on-line?
Margaret Hodge: Yes.
Q147 Adam Price: But there is not
the same public order issue in that case so you are saying there
is a legitimate case for banning the resale of tickets?
Margaret Hodge: Where it is a
situation where you want to control who goes to your football
game because you are concerned about a public order implication
however you sell that ticket, whether it is a primary agent, a
secondary agent, on-line, customer face-to-face, it would be illegal.
The consumer protection legislation does not alter because the
transaction takes place on-line.
Q148 Philip Davies: Rosemary, who
is not here now, made a very good point earlier which is that
people go and buy exclusive fancy handbags in shops and then within
ten minutes flat have them up on eBay selling them at a profit.
Presumably the Government and OFT do not intend to get stuck into
that kind of situation so it is difficult for me to understand
why tickets should be any different in terms of if somebody has
bought something and they feel they can sell it on at a profit,
even though they are making a fast buck, it would be any different.
Would you think that by getting involved in regulating tickets
you are opening up a can of worms for all kinds of other things
that may legitimately follow on or would that be a deterrent for
you to get involved?
Margaret Hodge: We have slightly
different purposes as Departments and our approach to it is we
are coming at it in a slightly different way, but I have got a
lot of sympathy with that view, and again I think one would have
to justify the intervention either because there is a consumer
detriment, which is why I have always looked to see what we can
do around transparency and openness so the consumer knows what
they are getting and can make that informed judgment, or I would
look at things like is there a public order or international obligation,
which takes you to the Olympics issue or is it a unique event,
which was the view taken about the Princess Diana concert for
example, and whether or not resale was legitimate. So it is those
sorts of issues, but I share a lot of your concern that if we
start intervening we would be distorting the market and actually
then impeding consumer freedoms and it is information that matters,
it is informed choice, it is getting that transparency that is
vital.
Mr Woodward: Again, Philip, there
is an important distinction to be made, is there not, between
you, say, buying a ticket for £100 and selling it for £125
and you organising 20 people to buy tickets at various addresses
for events and then effectively making a business out of it. When
the demand and supply part of the equation here is for a sporting
event or a music event where there simply are nowhere enough tickets
going to be available then there is a sense of unfairness that
grows amongst consumers about not being able to get access to
it. What the Internet undoubtedly has allowed to happen—which
is both good and bad—is very fast access and if you are
organised about this you could develop a revenue stream with 100
people applying for these tickets, and that is where we are picking
up in our focus group work at the DCMS the distinction that the
public are making here in the secondary market. They are making
a very clear one, they are saying "Me as the consumer, me
that can't go, me that has a ticket that just wants to sell it
on for a bit more," that should be fine, but where it is
clearly an organised, unauthorised secondary market, they think
that is unfair. Interestingly where again opinion divides is not
actually saying the Government should act. A recent BBC poll,
a big poll of 3,000 people, actually put forward the idea in relation
to a music event that they want the music industry to take a bigger
role in this. The thing about technology now and you saw it with
Glastonbury and you saw recently with an Arctic Monkeys concert,
is those putting on these events, the promoters, do have an opportunity
now to check these things out. They can make sure that the person
who applies for the ticket is the person who comes but here again
we come back to the whole problem with eBay and that BBC Weekend
recently because again the BBC were insisting there should be
ID checks at the event so that if you apply for the ticket you
were the person that came. The consequence of eBay persisting
after we asked them voluntarily to no longer carry the listing
was that, I am told, that the BBC then had to abandon their security
checks because some people were even offering on the listing on
eBay alternative IDs, let us put it that way, as a way of getting
into the event. I do think again it comes back to a moment whereby
even if it is a tiny minority of tickets we are talking about
there is an onus on the responsible part of the secondary market
here, regardless of whether there is legislation, to say "This
is not right we should not be doing it."
Q149 Chairman: Surely the OFT are
suggesting that the attempts by promoters to prevent tickets being
sold to other people may be in breach of the current regulations?
Mr Fingleton: Our view is that
a pure restriction on the consumer's right to resell would contravene
existing consumer protection law. However, that needs to be looked
at in the context of a) how it is communicated to consumers so
is it spelt out very clearly that there is no reselling and b)
is there a right of refund, so if the consumer can get a refund.
That makes a big difference because it is about where the risk
is borne. Risk cannot be a one-way street for the consumer, so
if you are going to say you cannot resell in the event that you
cannot go to the event and you cannot get a refund either, that
is putting too much risk on the consumer and therefore is incorrect,
and we also look at the actual scope of the prohibition and how
wide it was.
Q150 Chairman: So was Glastonbury
in breach of regulations?
Mr Fingleton: I am not going to
pronounce on the specific legality but I think Glastonbury did
have a refund up until a period before and I think the court will
take account of those factors and might very well find that Glastonbury
was not in breach but if it had not had a refund might find that
it would have been in breach. I think the refund is a critical
part of that. What has never been tested is whether—and
other places like the Barbican do this as well that if you hand
your tickets in up to three days beforehand you get a voucher—courts
have never pronounced on whether that is an equivalent treatment
of the customers to allowing them to resell. Of course the problem
then becomes at what stage the final consumer becomes a business,
because if you as a final consumer purchase the ticket with the
genuine intention of going to the event and then find out that
you cannot, of course you should either have a refund or be able
to resell. If, on the other hand, you purchase with the full intention
of saying, "I am going to get in there fast and make a profit,"
you look a little bit more like a business, and if you do that
for quite a lot of tickets and you are making quite a lot of money
out of it you look much more like a business. How you draw the
fine line between consumers acting as consumers and consumers
becoming secondary agents will be a challenge if these cases ever
get to court.
Q151 Philip Davies: I know Shaun
does not always appreciate me giving my experience from Asda,
but when I worked for Asda we challenged something called the
Net Book Agreement where publishers insisted that books could
only be resold on at a particular price, and we challenged that
in the courts and won, and the Net Book Agreement collapsed, and
now people can sell books at any price they want to sell them,
and that seems to have given a whole lot of benefit to customers
and more access to more people as far as I can see. Would it not
be quite extraordinary if following many years on from the Net
Book Agreement decision which prevented conditions like that being
imposed that we actually went back to a system where we were allowing
ticket sellers to make such restrictions on what price they could
be sold on in future or anything like that, would that not be
seen as a retrograde step?
Mr Fingleton: On the Net Book
Agreement the evidence is that the number of titles went up and
prices went down when that particular regulation was ruled against
so it was a regulation that was stifling the market. I think banning
secondary sales in the market generally would harm the market
because it would mean that demand and supply did not match as
well as they might. It would mean I think that consumers would
be less willing to pay upfront for events in uncertain circumstances
and consequently it might dampen demand for the industry, and
so it is our very clear view that this type of regulation, and
I think it has been put very nicely that 90% of the market works
very well and trying to regulate any for the other 10% would be
extremely difficult. There are a lot of practical difficulties
with enforcement, with compliance, with European competition law,
because there is a question mark over whether that would be the
case, and I think also with the evidence we get from consumers
that the primary issue they are interested in is enforcement of
existing law vis-a"-vis secondary agents who are misleading
consumers when they sell tickets on. That would be our primary
focus going forward. One other point I should have mentioned earlier,
anticipating the Unfair Commercial Practices Directive which comes
into force next April, anticipating that and the work that we
are doing with the industry and making sure that the industry
will be future-compliant as well as past-compliant.
Q152 Mr Sanders: Why is an Olympics
athletics fan deserving of more protection than a Charlton Athletic
fan?
Margaret Hodge: It is an international
obligation.
Q153 Mr Sanders: Why?
Mr Woodward: If we want to hold
the Olympics we actually have to agree to do it, so maybe we do
not want to hold the Olympics but I think it is a good idea to
hold them. The other thing you have got to bear in mind, Adrian,
here is putting on these events costs quite a lot of money and
again—
Q154 Mr Sanders: But surely that
is true for everybody?
Mr Woodward: Forgive me, I am
trying to answer your question. Let me answer the first question.
We are looking at the Crown Jewels events and what we are looking
at is a recognition that we do not think the Government should
be trying to control these events. What we are trying to prevent
are incidents taking place which abuse the market. It is terribly
important to be proportionate about this. 90% of it works well.
There is no huge consumer demand for outlawing a secondary market;
in fact quite the contrary. What there is is very strong consumer
demand to stop those who are making excessive amounts of money
out of unauthorised sales in the secondary market, and I think
to start regulating every single sporting event that took place
along these lines would be an example, I am afraid, of over-regulation.
Certainly this Labour Government, and I think the Conservative
Party too, share this view; we want less bureaucracy and less
regulation not more. I do not believe that stepping in and over-regulating
and producing a whole bureaucracy which would have to be administered
is the way forward. Maybe you have in mind, Adrian, a programme
for how you would administer this without effectively passing
on huge extra costs to the clubs which, after all, are not always
finding it particularly easy. It may be that you can tell me that
the two clubs that you have just cited are demanding that we do
this but we are not picking up a demand that we do it. There are
certain Crown Jewels events of national significance where access
is a key issue where there undoubtedly is concern by the consumer
that we should move on this front, so keeping it proportionate,
trying to get self-regulation to work where we can has to remain,
I think, the sensible way forward. Further bureaucracy and regulation
is not desirable. However, in extremis if these excesses
continue of course ultimately it will have to be one way that
we consider moving forward.
Q155 Mr Sanders: So what are the
fears about the Olympics Games that it requires this added protection?
Margaret Hodge: I am a little
bit puzzled by where you are coming from. Are you suggesting that
the state should regulate the sale of tickets?
Q156 Mr Sanders: I am suggesting
why is it that there is this extra protection for the sale of
tickets for people to go to the Olympic Games that does not exist
for a consumer of another type of ticket to a concert or another
sporting event?
Margaret Hodge: Let me ask you
the question—
Q157 Mr Sanders: You are here to
answer the questions, not me.
Margaret Hodge: The question,
with the greatest respect to you, is a bit of an odd question.
I do not know whether you are suggesting one of two things, either
Lib Dem big state—
Q158 Mr Sanders: Do not make it party
political, we are here talking about consumers.
Margaret Hodge: I am wondering
whether the Liberal Democratic Party is now promoting the idea
of big state intervention to protect the individual. The second
thing I was going to ask you was whether you were suggesting that
on the grounds of this specific condition that was laid down by
the Olympic authorities that we should have said no to hosting
the Olympic Games here in Great Britain?
Q159 Mr Sanders: There must have
been a good reason for that specific condition; it was to protect
consumers, so why do you not extend that protection to consumers
for other events?
Margaret Hodge: Because we think
it is much better for consumers to have choice in the market and
that is why I am somewhat astounded by the direction of your questioning.
And what we need to do is ensure that they get the appropriate
and full information and transparency so that they can make an
informed choice and that there should not be a mechanism imposed
by the state which would restrict their choice on the basis of
a false definition of consumer protection.
Chairman: A final question from Paul
Farrelly.
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