The federal Competition Bureau is expanding its investigation into Ticketmaster to include the company’s secret scalping program revealed last week in a Toronto Star/CBC undercover investigation — amid new calls for accountability from politicians, music and sports fans across the continent.
Meanwhile, a Toronto law firm has launched a $250-million class action suit against Ticketmaster Canada, alleging the company’s practices engaged in “false or misleading misrepresentations” that violate the Competition Act.
A spokesperson for Navdeep Bains, minister of innovation, science and economic development, confirmed the investigation Wednesday after the minister called the bureau with concerns about the Star/CBC revelations.
“I did reach out to the Competition Bureau to really express my concerns I’ve heard from Canadians,” said Bains in an interview. “We want to see that consumers are treated with respect and with transparency.”
In a statement Wednesday, Competition Bureau spokesperson Marie-France Faucher said, “We are looking into the matter, and examining whether this type of conduct could fall within the Competition Act.”
The company has invested millions of dollars creating an online software tool called TradeDesk, designed to allow industrial-scale scalpers to manage their vast inventories of tickets for resale. While scalpers profit from markups, Ticketmaster also stands to gain additional commission fees for those resold seats.
“I have a gentleman who’s got over 200 Ticketmaster.com accounts,” a Ticketmaster sales executive told undercover reporters from the Star and CBC posing as scalpers at a recent convention in Las Vegas. “We don’t spend any time looking at your Ticketmaster.com account. I don’t care what you buy. It doesn’t matter to me.”
That mutually beneficial economic relationship appears to undermine a company policy limiting ticket purchases for each customer in the interests of giving fans a fair shot at seats for sporting events and concerts, and discouraging “unfair ticket buying practices.”
That limit, posted when tickets go on sale, is typically six or eight seats per buyer.
The Star/CBC investigation triggered the class action suit from Toronto-based Sotos Class Actions — the second class action firm in the country to pursue damages on behalf of Ticketmaster customers. On Sunday, the Star reported Regina-based Merchant Law Group LLP, which already has a class action filed against Ticketmaster alleging inflated ticket prices, plans to expand that claim to include revelations contained in the Star/CBC investigation.
“Ticketmaster effectively operates as an oligopoly over the live entertainment industry,” said Sotos lead counsel Louis Sokolov in an interview Wednesday. “These practices, if they’re true, cause great harm to consumers and many millions of dollars in damages.”
Richard Powers, associate professor at the University of Toronto’s Rotman School of Management, said Ticketmaster is now exposed to a potentially significant regulatory response from governments.
“The Competition Bureau or the government is likely to sanction and/or create more laws around the issues. And that has the potential of ending their monopolistic position in event ticketing. Something is going to happen,” Powers said.
The Star/CBC revelations sparked outraged responses across Canada before spreading into the U.S. media. On Friday, two senior U.S. senators — Jerry Moran and Richard Blumenthal — wrote a public letter to Ticketmaster’s parent company, Live Nation, including a list of questions for which they want answers by 5 p.m. on Oct. 5.
“Given our ongoing interest in protecting consumers from unfair and deceptive practices, we seek clarification on the use of (the TradeDesk) program,” the letter reads.
While Ticketmaster officials have repeatedly declined interviews with the Star and CBC over the past six months, the company’s president broke his silence this week in an interview with Billboard magazine in which he acknowledged shortcomings in the company’s oversight of its TradeDesk clients.
“There’s clearly some things that we’re not doing well enough,” said Jared Smith. “We’ll learn from it and we’ll make some changes.”
Bains said the new revelations aimed at Ticketmaster require close scrutiny.
“From a consumer point of view, you want to make sure there’s a level playing field,” he said. “From a consumer perspective, that there is transparency and fairness, that consumers understand the arrangements that they’re getting into and that they’re getting the best possible outcome in a very fair system. That’s what we want to see. We want fair competition and transparency.”
He stopped short of promising any legislative response to the concerns, saying the government will await the Competition Bureau’s findings.
“We want to see how this unfolds in the coming weeks and months …We will make our determination accordingly.”
With files from Alex Boutilier
Robert Cribb is a Toronto-based investigative reporter. Follow him on Twitter: @thecribby
Marco Chown Oved is a Toronto-based investigative reporter. Follow him on Twitter: @marcooved