The Competition and Markets Authority (CMA) has launched an investigation into Viagogo’s $4bn (£3.2bn) purchase of ticket resale website StubHub, heaping fresh misery on a deal already thrown into turmoil by the Covid-19 crisis.
Viagogo unveiled its plan to buy StubHub from online auction website eBay in November, bringing together two businesses that have faced criticism for practices such as helping touts charge huge mark-ups from consumers seeking to attend Ed Sheeran gigs, watch Premier League matches or see Michelle Obama at the O2 in London.
Despite the CMA warning it was considering a probe, Viagogo went ahead with the $4bn payment, partially funded by loans from the Walton dynasty, the world’s richest family, who owns US retail titan Walmart.
The competition regulator has now launched a full investigation which will last until 11 June. At that point, it could ask the companies to allay competition concerns, potentially by selling parts of their UK operation.
It could also launch a second inquiry that could ultimately result in the UK element of the deal being blocked altogether.
The logic of the deal and the $4bn price tag have also been brought into question by the coronavirus pandemic, which has resulted in a mass cancellation of concerts around the world that has effectively brought revenues grinding to a halt.
Web traffic to both websites has tumbled since the pandemic hit in all of their major markets, particularly the US and UK. Secondary ticketing firms including StubHub have pushed for a bailout from the US government to see them through the crisis but the plea has so far not been granted.
StubHub has also been hit with a $5m class action lawsuit demanding that it offers ticket buyers full refunds for cancelled events, after it asked them to accept credit worth 120% of the price of tickets.
Meanwhile, Viagogo is optimistically advertising tickets for Lady Gaga’s show at the Tottenham Hotspur Stadium in July, in the hope that lockdown restrictions will have ended by then.
Fans’ groups have campaigned against the $4bn takeover, including FanFair Alliance, backed by managers of artistes including One Direction and Arctic Monkeys.
The group’s spokesman Adam Webb said the CMA should block the deal because “two negatives don’t make a positive”.
“Both Viagogo and StubHub have been mired in controversies, breaches of UK law and anti-consumer practices,” he said.
“This […] merger would consolidate their market power and, in the UK at least, create a single monopoly platform for the commercial resale of tickets. That scenario should set alarms ringing. It would also risk undoing much of the progress we’ve seen to reform this sector.”