European ticketing outlet Viagogo could be forced to sell all or some of American ticket resale marketplace StubHub after regulators in the United Kingdom said their merger would lead to reduced competition, higher fees, and other detrimental impacts to consumers.
Viagogo first announced plans to acquire StubHub from ecommerce giant eBay nearly a year ago in a $4.05bn all-cash deal. But since then, Viagogo and StubHub have been forced to remain separate operations while UK regulators continue to examine the combination, a time period that also has seen the entire global live events industry heavily battered amid the ongoing Covid-19 pandemic.
Newly issued provisional findings from the UK’s Competition and Markets Authority (CMA) have concluded that the full combination of Viagogo and StubHub would create an overly dominant entity in ticket resale.
“The evidence we’ve seen so far consistently points in the same direction – that Viagogo and StubHub have a market share of more than 90 per cent combined and compete closely with each other,” said Stuart McIntosh, CMA inquiry group chair. “We are therefore concerned that their merger could lead to secondary ticketing customers facing higher fees and lower quality services.”
The CMA has identified a partial or full divestiture of either StubHub or Viagogo as potential structural remedies to its concerns. It is now inviting public comment on its preliminary findings, with a final ruling expected in December.
“The CMA is mindful of the significant impact that the coronavirus is currently having on the live events industry. However, the evidence is that Viagogo and StubHub would remain important competitors for the foreseeable future without the merger,” the regulators said.
The Swiss-based Viagogo said in its own statement that it, not surprisingly, objects to the CMA’s findings.
“Whilst we disagree with the provisional conclusion that the deal would reduce competition, we look forward to working with the CMA to deliver a comprehensive solution which addresses their concerns,” the company said.
If a sale of some or all StubHub is forced to occur, regulators could appoint a trustee to oversee that sale. That trustee, in turn, would not have any obligation to hit a certain valuation for the assets, setting up the potential of sizable financial losses for Viagogo chief executive Eric Baker, who previously was a co-founder of StubHub, and his investors.
StubHub, meanwhile, has additional consumer scrutiny this year as it shifted its refund policy for events canceled due to the pandemic to an unpopular store credit model.