Essay on Case Study Ticketmaster Exclusive Dealing

1488 WordsJun 29, 20156 Pages
Ticketmaster v. (2003 U.S. Dist. LEXIS 6484) Background Ticketmaster (“TM”) and (“TC”) were full-service ticketing companies serving local markets across the United States. In the late 1990s, TM sued TC for “deep linking,” whereby TC allegedly listed TM events on its website and linked visitors to TM’s website just before the point of purchase. TC countersued under Sections 1 and 2 of the Sherman Act claiming TM’s exclusive contracts unreasonably restrained trade and maintained their monopoly in the ticketing industry. TC’s fundamental claim was that TM’s long-term exclusive contracts with venues foreclosed TC from competition, resulting in harm to TC and consumers. TC wanted to be a venue’s Internet…show more content…
Typically, all companies proposed long-term exclusive contracts across all four distribution methods. The length was generally 3-10 years with the average being 5-6 years. Thus, on average around 20% of venue contracts came up for bid each year3. According to TC, it competed with TM for every large-venue contract that came up for bid since 19984. The relevant “price” a venue pays a ticketing company is the split of the C&H fees. For example, suppose the average per-ticket C&H fee for Staples Center is $15. During the RFP process, Staples Center negotiates with each ticket company over the share of the C&H fee Staples would keep and the share that would go to the ticket company. The amount of C&H fees that goes to the ticket company is the relevant price paid by Staples Center for ticketing services. Thus, of a $15 C&H fee, if Staples Center gets $7 and Ticketmaster gets $8, the relevant price paid by Staples for ticketing services is $8. If Staples chooses the Paciolan self-supply option, it pays a licensing fee and then keeps the entire $15 C&H fee for itself. Sometimes up-front payments are made to a venue such as lump-sum payments (e.g., $1 million upon contract signing), cash advances, or low interest loans that are paid back to the ticket company by future C&H fees. In addition to contracts with individual venues, both TM and TC competed for long-term exclusive contracts with

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