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StubHub to Ticketmaster: Don’t Block Our Sales

On March 29, 2015, StubHub, Inc. brought an antitrust action against the Golden State Warriors LLC (the “Warriors”) and Ticketmaster, L.L.C. (“Ticketmaster”), alleging that they monopolized the ticket resale market by forcing Warriors fans to use only secondary ticket exchange services provided by the Warriors, and excluding competing secondary ticket exchange services.  The action is pending before the Honorable Vince Chhabria in the Northern District of California.  You can read the complaint here.

The Action

The action alleges that the Warriors possess a monopoly over the sale of “primary” or “first sale” Warriors tickets, all of which are sold through Ticketmaster.  Warriors fans can only purchase season passes through Ticketmaster.  In addition, StubHub contends that the Warriors have cancelled or threatened to cancel ticket subscriptions to Warriors season and post-season tickets if fans resell their Warriors tickets over a secondary ticketing exchange that competes with Ticketmaster, such as StubHub.  Approximately 75% of Warriors tickets are sold as season ticket packages.

StubHub alleges that, as a result of these practices, its sales of Warriors tickets decreased by approximately 80% in the past year:

See Complaint, StubHub, Inc. v. Golden State Warriors, LLC and Ticketmaster L.L.C., 15-cv-1436 (N.D. Cal), available here.

StubHub further alleges that the Warriors and Ticketmaster have engaged in a false and misleading advertising campaign to cast doubt on the reliability and authenticity of tickets purchased on StubHub, and denied StubHub the ability to technologically integrate with Ticketmaster’s primary sales platform.

StubHub alleges that the Warriors and Ticketmaster have engaged in: unlawful tying and a restraint of trade in violation of Section 1 of the Sherman Act; a conspiracy to monopolize in violation of Section 2 of the Sherman Act; anticompetitive conduct and conspiracy to monopolize in violation of California’s Cartwright Act; unlawful and/or unfair business acts or practices under California Business and Professions Code Section 17200; tortious interference with StubHub’s prospective economic advantage.

Is There More to Come?

This particular action only challenges Ticketmaster’s sales practices with respect to the Warriors.  However, StubHub also alleges that Ticketmaster is the only primary ticket platform for 25 NBA teams, 32 NFL teams, 25 NHL teams, and the majority of major concert venues.  The complaint contends that excluding secondary ticket exchange services is “a looming threat for all sports fans.”

This litigation may be the opening salvo for a protracted legal dispute between StubHub and Ticketmaster concerning nationwide tickets sales for a variety of events.  As StubHub acknowledges, secondary ticket sales have increased in popularity in recent years, largely because secondary ticket exchanges have grown in popularity and most states have rescinded anti-scalping laws.  Indeed, StubHub contends that it was “in the forefront of establishing” the secondary ticket exchange market, and that Ticketmaster “is now a substantial and growing provider” of secondary ticket services.  In other words, Ticketmaster has begun competing in the secondary exchange market—a market where StubHub used to be the primary seller.

The results of this litigation will likely have an impact on future interactions between Ticketmaster, StubHub, and secondary ticket exchange markets more generally.  It will be notable to observe how the litigation unfolds, and whether StubHub brings any similar cases in other jurisdictions.