Ticketing service provider SISTIC has lost its appeal against the decision by the Competition Commission of Singapore (“CCS”) as the Competition Appeal Board (“CAB”) has upheld the decision that found SISTIC to have abused its dominant position through a series of exclusive arrangements made with event promoters and operators. This is a landmark case as it is the first decision by the CAB in Singapore on abuse of dominance.
Singapore based SISTIC.com Pte Ltd (“SISTIC”) a ticketing service provider, acts as middlemen between event promoters and the ticket buyers by providing a platform to buy and sell tickets for events. SISTIC entered into exclusive agreements with event promoters to sell tickets through SISTIC, as a result event promoters who wished to hold their events at key venues such as the Esplanade and Singapore Indoor Stadium had no choice but to sell their tickets through SISTIC. In particular SISTIC entered into the following exclusive agreements:
- The Application Service and Ticketing Agreement between SISTIC and The Esplanade Co. Ltd. ("TECL") which contains explicit restrictions requiring that all events held at the Esplanade venues use SISTIC as the sole ticketing provider;
- The Agreement for Ticketing Services between SISTIC and Singapore Sports Council (“SSC”) which contains explicit restrictions requiring that all events held at the Singapore Indoor Stadium (“SIS”) use SISTIC as the sole ticketing service provider; and
- 17 other agreements that contain explicit restrictions requiring the event promoters concerned to use SISTIC as the sole ticketing service provider for all their events.
- CCS on 15th December 2009 issued a Proposed Infringement Decision (“PID”) against SISTIC for abuse of its dominant position in the ticketing service market in Singapore. CCS found that SISTIC is dominant in the market for open ticketing services in Singapore with a persistently high market share of 85% - 95%, and that the restrictions under the various exclusive agreements were harmful to competition by restricting the choices of venue operators, event promoters and ticket buyers. Symptoms of such harmful effects were observed in the market, such as the increase in SISTIC’s booking fee for ticket buyers in 2008.
- CCS issued an Infringement Decision (“Decision”) on 4th June 2010 for abusing its dominant position in the ticketing service market through various exclusive agreements. The Decision was the first abuse of dominance infringement decision for a breach of section 47 of the Competition Act (“Act”). CCS directed SISTIC to modify the exclusive agreements by removing clauses that require SISTIC’s contractual partners to use SISTIC exclusively. Additionally, a financial penalty of S$989,000 was imposed on SISTIC for infringing section 47 of the Act.
- SISTIC appealed to the CAB against CCS’ finding of liability and on the level of financial penalties imposed on it. SISTIC argued that it did not hold a dominant position in the market for open ticketing services and that its exclusive contracts were not abusive as they did not give rise to an anti-competitive effect.
- The CAB agreed with CCS’ finding that SISTIC’s persistently high market share over time is indicative of its dominant position and that there are no exceptional circumstances shown by SISTIC to rebut the said indication. The CAB affirmed CCS’ finding that SISTIC holds a dominant position in the market for open ticketing services in Singapore. The CAB found that CCS has established that the exclusive agreements are explicitly exclusionary in nature and have led to substantial foreclosure effects on competition in the market for open ticketing services, as market entry, market access and growth opportunities for existing or potential competition are stifled.
- The CAB held that the credible threat from SSC and TECL to constrain SISTIC was unrealistic as TECL’s and SIS’ commercial interest in SISTIC was likely to affect their decision to switch to other ticketing services providers. In respect of SSC’s and TECL’s incentive to exercise countervailing power against SISTIC, the CAB found that even though TECL and SIS did have strong bargaining power, they have weak incentives to exercise that power with respect to price. The CAB also found that the exclusive agreements constituted a barrier to entry into the market for open ticketing services in Singapore.
- The CAB found that these exclusive agreements have an appreciable adverse effect on competition in Singapore and do not have any net economic benefit, other than, from SISTIC’s point of view, foreclosing competition and that that SISTIC’s strategy and conduct by way of the exclusive agreements were intended to effectively restrict or foreclose competition in the Relevant Market or were capable of so doing, and amounted to an abuse of dominance.
The CAB decision is indeed a landmark decision that would serve as a useful precedent in abuse of dominance cases in Singapore. The decision would also assist in creating a level-playing field for the smaller ticketing service providers.