Viagogo’s $4bn takeover of StubHub partially blocked
Ticket resale website Viagogo has months to sell StubHub’s operations outside North America, after the UK competition watchdog ordered it to unravel large swathes of a $4bn (£2.9bn) takeover that shook the world of live events.
The Competition and Markets Authority said combining two businesses with 90% of the UK’s market for concert, theatre and sports ticket resale would have reduced competition, potentially leading to higher fees and worse service for consumers.
It said Viagogo could keep StubHub’s US and Canadian operations but must sell its UK and international arms.
The CMA has typically given the selling company several months to find a buyer in similar cases.
The regulator can take over the process if a sale does not happen fast enough and has no obligation to achieve a high price to recoup any of Viagogo’s $4bn spend on the deal.
The CMA’s order is a tougher version of a proposal made last year by Viagogo, which has faced controversy in the UK for flouting consumer law, working with powerful ticket touts and launching a legal battle against Ed Sheeran.
Viagogo offered to sell StubHub’s UK and international businesses, but said any buyer would only be licensed to use the brand for three years and would have to share tech platforms with StubHub’s North American operation.
But the CMA said buyers should get the brand for 10 years and take full control of the platform.
There are thought to be several buyers potentially interested in taking on StubHub’s UK ticket resale operation, the second largest in the country after Viagogo.
But the CMA’s decision creates a logistical and financial headache for the Viagogo boss, Eric Baker, who pressed ahead with the $4bn takeover in February 2020, despite the risks posed by coronavirus and the regulator’s concerns.
Between them, Viagogo and StubHub control more than 90% of the UK’s market for ticket resale.
The potential dominance of a combined business drew scrutiny from the regulator, which had already taken action against both companies for breaches of consumer law, securing a court order against Viagogo to force its compliance.
As well as going ahead despite the regulator’s misgivings, Baker also appeared to dismiss the risk posed by the spread of coronavirus, which went on to shut down events around the world.
The takeover has since been dubbed the “worst deal in history”, as a result of its apparently poor timing. The $4bn price tag could be deemed overvalued, depending on how much Viagogo can get for StubHub’s non-North America business, as a forced seller.
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Baker founded both companies, setting up StubHub with university friend Jeff Fluhr before the two fell out and Baker was sacked.
He moved to Europe and soon came to dominate the market for resold tickets, partly by forging alliances with powerful touts able to hoover up tickets and sell them at inflated prices to eager fans.
The CMA’s inquiry group chair, Stuart McIntosh, said: “After examining all the options, including unwinding the merger in full, the evidence shows that Viagogo selling StubHub’s international business will resolve our competition concerns, effectively and proportionately.”
Viagogo said: “We are pleased to have found a remedy that is acceptable to the CMA that will allow everyone involved to move forward with clarity and certainty.”
Music industry group FanFair Alliance called on the CMA to turn its attention to Viagogo’s relationship with ticket touts.
“Aside from the acquisition costs, anyone wishing to operate a successful uncapped ticket resale business in the UK would require two things: significant relationships with large-scale ticket touts to supply inventory, and deep enough pockets to outspend Viagogo on Google search advertising,” said spokesman Adam Webb.
“That might be good for Google, and it might be good for ticket touts. But we need a conclusion that’s good for UK consumers, and stops them being ripped off.”
