Answer the following question:
Question 1
FunEvent Ltd is established in Fantasia, a (fictive) Member State of the European Union. FunEvent Ltd is active in the areas of ticketing services, advance bookings, and the organisation of live entertainment events. With its (fictive) platform FunEvent.com, the company offers ticketing system services to organisers of live entertainment events and advance booking offices. The main purpose of ticketing systems is to give event organisers access to a sales network of advance booking offices. For this purpose, ticketing systems offer event organisers and advance booking offices the technical connection to a database which contains, administers and coordinates data about various events.
Ticketing systems thereby enable, on the one side, event organisers to sell tickets via a platform to different advance booking offices which, in turn, distribute the tickets to final consumers. On the other side, ticketing systems allow advance booking offices to book tickets for different events on behalf of end consumers. In addition to a fixed system connection fee, event organisers pay FunEvent.com a small commission of 1 EUR per transaction made via its ticketing services platform. Advance booking offices can use the system free of charge. FunEvent Ltd also operates its own (fictive) online shop FunEvent.fan which offers advance booking services to end-consumers. FunEvent Ltd also organises live entertainment events itself, especially pop and electro tours, concerts, and festivals.
The value-based transaction volume of tickets sold via FunEvent.com amounts to about 70% of all tickets sold via ticketing systems in Fantasia. By comparison, FunEvent’s closest rival, RockIt has a market share of 10% in the ticketing systems market in Fantasia. The remaining competitors hold a market share of less than 5%, respectively. Setting up a ticketing system platform requires investment in the development of complex IT systems, software and datasets. While the creation of a new ticketing systems is very costly, the costs of an individual transaction via the platform tend to be low. Ticketing systems become more attractive for event organisers, the higher the number of advance booking offices connected to the platform.
This is because the probability of selling sufficient tickets to end customers increases with the number of connected advance booking offices. Simultaneously, the attractiveness of ticketing systems for advance booking offices also increases with the number of event organisers present on the platform. A high number of connected event organisers enables advance booking offices to offer a wider selection of events to end customers, which enhances the probability of bookings.
Event organisers and advance booking offices consider the connection to FunEvent.com indispensable. Large event organisers sell about 60% of their total annual volume of tickets distributed through ticketing systems through FunEvent.com. Smaller event organisers and advance booking offices use only one ticketing system rather than multiple ticket systems in parallel. FunEvent Ltd also offers advance booking services to end-consumers through its own online shop FunEvent.fan. End-consumers make about 40% of all online advance
bookings in Fantasia through FunEvent.fan. FunEvent also collects important data on end customers via its FunEvent.fan online shop. The data can be used to improve the marketing of its online shop and ticketing system.
In January 2021, FunEvent introduces a new incentive scheme targeted at large event organisers. Under this scheme, FunEvent offers event organisers a 20% reduction on the 1 EUR commission fee charged for each transaction via its ticketing system FunEvent.com.
This fee reduction is available to event organisers who commit to selling all or almost all of their tickets distributed through ticketing systems exclusively through FunEvent.com. The duration of the scheme is one year. The scheme does not contain any mechanism for prior termination. In December 2021, RockIt is on the verge of bankruptcy, and if the trend of losing customers cannot be reversed by January 2022, it will inevitably exit the ticketing systems market. RockIt’s last hope is a complaint to the European Commission. Before filing the complaint, RockIt seeks advice from you as a competition law expert.
A few days later, you are also approached by Fantasia Event Association (FEA), an interest group representing smaller event organisers in Fantasia. FEA complains that the online shop FunEvent.fan gives consistently greater visibility to ‘in-house’ live events, i.e., events organised by FunEvent, compared to events organised by competing independent event organisers. While FunEvent’s ‘in-house’ events appear near or at the top of the FunEvent.fan website, the events of competing organisers are consistently ranked much lower in the list of events offered via the website.
Advise RockIt and FEA on whether they can rely on EU competition rules to take action against FunEvent’s practices.
Your advice should include answers to the following questions:
(a) Do FunEvent’s discounts and ranking of events breach competition law?
(b) What types of defences, if any, is FunEvent likely to put forward?
(c) What are the potential remedies that the competition authority can impose? What are the most appropriate and therefore most likely to be imposed?
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