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Jun 5, 2010

Competition body hands Sistic big fine$989,000 penalty for blocking competitors by forcing exclusive deals

By Lim Wei Chean & Jessica Lim

TICKETING giant Sistic was fined $989,000 yesterday, the heaviest sanction handed down by the

Competition Commission of Singapore (CCS) since it began policing the Republic's entrepreneuriallandscape in 2006 to ensure a level playing field.

The CCS ruled that Sistic had abused its dominant position in the ticketing industry to block other firms

from competing, and harmed consumer interests in the process.

It did this by forcing 17 event promoters and two of the biggest venues in Singapore - the Esplanade and

Indoor Stadium - into signing exclusive contracts with it.

This meant that anyone here who wanted to watch a concert or play at either venue would have had no

choice but to buy a ticket from Sistic.

This effectively locked up 60 to 70 per cent of all ticket deals in Singapore.

Customers were deprived of choice, and were forced to swallow higher ticket prices as a result, the CCS

said.

For example, in 2008, Sistic raised its handling charges by $1, and consumers were powerless to switch.

Event promoters also say Sistic typically takes a 5 to 10 per cent cut of ticketing revenue as part of its

fee; its competitors charge 5 to 8 per cent.

Sistic does not have an active hand in setting ticket charges, organisers said, but they admitted that their

higher levies could lead to more expensive tickets.

Though the fine dished out yesterday was large - CCS' previous record punishment for a single company

was $518,167, levied against coach operator Transtar Travel last year for price-fixing - it represents a

fraction of what Sistic, which conducts between 85 and 95 per cent of all ticket sales here, earns in a year.

CCS declined to disclose Sistic's annual turnover, but said the fine works out to a maximum of 5 per cent

of its earnings.

Under the law, CCS can fine a company a maximum of 10 per cent of its annual turnover for a maximum

of three years. Sistic was given the maximum fine.

In a press briefing to announce its ruling yesterday, a CCS spokesman explained that the Competition Act

does not forbid dominant companies from making exclusive deals on merit - an offer of guaranteed lowest

prices, for instance.

However, such contracts must not muzzle competition or leave customers without a choice.

The CCS also said Sistic's behaviour had the effect of stifling innovation in a 'small but significant' industry

which supports the Government's efforts to develop Singapore as a leading cultural capital and location for

international events.

Sistic was ordered to remove immediately all clauses in existing contracts which require venue operators

or event promoters to use it exclusively and must stop making such agreements in future.

Sistic plans to appeal. Its chief executive officer, Mr Kenneth Tan, said yesterday that the company 'has

always competed through superior innovation and technology'.

Rival ticketing agents and concert promoters disagreed, however. They said the ruling is likely to lead to

cheaper tickets.

Mr Ong Min Ji, chief executive officer of Exceptional, which runs ticketing services Gatecrash and

OneTicketHub, said the exclusive agreements have been the biggest obstacle to fair competition.

He said his company has tried practically every tactic in the book to win over customers - best price

guarantees, no booking fees campaigns, a seat selection system, and better customer support, for

instance - but has run into a brick wall every time as organisers are contractually bound to use Sistic.

He added: 'Even our loyal customers who had been with us for years have no choice, when they want to

do a bigger show at the Esplanade or other venues.'