Computicket hauled over the coals
A seven-year legal battle between Computicket and the Competition Commission is coming to a head at the Competition Tribunal in Pretoria.
For the past two weeks, the tribunal has been hearing evidence about the alleged anticompetitive nature of Computicket’s exclusive contracts used to sign up vendors selling tickets to events.
In 2010, the commission referred the case to the Competition Tribunal for prosecution, following complaints from rival ticketing companies between February 2008 and September 2009 that Computicket was bullying vendors into signing exclusive long-term contracts (which bars vendors from selling tickets through any other ticketing service).
Computicket’s response was to launch a number of legal challenges that have delayed the case until now.
The tribunal has now heard evidence that Computicket had rejected requests for nonexclusive contracts and had used threats if vendors did not sign the exclusivity clauses.
“There was no war; we just got walked over by Computicket and we got stomped,” said Gary Charne of Strictly Tickets, a now-defunct rival ticketing company.
Charne and ex-Joburg Theatre chief executive Bernard Jay claimed that Computicket had used exclusive contracts, normally three years in duration, to sew up the market.
Jay testified that rival TicketWeb used a lower fee structure to lure vendors away from Computicket. He said Computicket offered to undercut TicketWeb’s fees if vendors signed an exclusive contract.
“The first I knew of exclusive agreements with Computicket was shortly after the time that TicketWeb came into the business in South Africa,” said Jay.
The commission’s chief economist, Liberty Ncube, testified that Computicket’s exclusive long-term contracts were likely to have “significant anticompetitive effects” on the market.
Ncube said Computicket had pursued an “all-or-nothing” policy and had rejected requests for nonexclusive contracts. Computicket had signed 1 800 contracts between 1999 and 2010 and 99% of these were exclusive contracts, he said.
He added that the company would threaten a legal challenge, the removal of its ticketing equipment or the halting of its ticketing services to secure an exclusive contract or prevent vendors from working with rival ticketing companies. There was no evidence of efficiency being the reason for introducing the three-year exclusivity contracts.
The commission said that, until mid-2005, Computicket contracts lasted four months or less. After that, contract lengths were extended to three-year terms, coinciding with the acquisition of Computicket by Shoprite in 2005. Jay said his relationship with Computicket had been good until this point.
But Computicket general manager Kurt Drennan said the instruction to extend the contract lengths had come from Naspers, Computicket’s previous owner. He argued that the long-term contracts were not anticompetitive and were merely a response to rival TicketWeb’s use of exclusive contracts. TicketWeb and Computicket merged in 2001. Drennan said that eliminating TicketWeb as a competitor wasn’t the primary objective: “It was really just trying to save a business that was losing money.”
Both ticketing services were operating at a loss and the idea was to create one sustainable business, he said.
An example of the animosity between vendors and Computicket was evident in an email quoted by the commission’s advocate, Jerome Wilson. In it, Computicket managing director Fanie Schoeman responds to news from sales manager Alfie Reid that the Oude Libertas theatre would probably self-supply its own tickets in the future.
“Treat your dog for what it is, a dog,” wrote Schoeman. “Allow it to sleep on your bed and it may maul you whilst asleep.”
Charne testified that, in 2006, Strictly Tickets was selling tickets for six theatres across the country. “We started becoming very successful,” said Charne. “I recall one month at the Victory Theatre when we sold over R120 000’s worth of tickets.
“One morning, we woke up and we were sent an email by one of the theatres, saying: ‘Listen, we’ve got a letter from Computicket but more importantly from Shoprite, a big, powerful, respected company, and they’re warning us that we have an exclusive agreement and that we need to remove all of our tickets off Strictly Tickets with immediate effect’, or there would be some sort of an action that would be accountable by the theatres,” recalled Charne.
Within a week, he said, the same thing happened with the Catalina Theatre, the Heritage Theatre, the Dockyard Theatre, the Wits Theatre, the Victory Theatre and the Liberty (now Auto and General) Theatre on the Square. “We went from R400 000 in ticket sales one month to R30 000 the next month, all the way backwards,” he said.
Charne testified that he decided to wind down Strictly Tickets in 2011.
“I was very upset that this case had taken so long,” he said. “This case has gone on for almost a decade.”