Ticket Scalping: Impact on Consumer and Competition Law Challenges in India

-by Vasu Taneja, 4th year student at Rajiv Gandhi National University of Law, Punjab.

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Introduction

In the past few months, India witnessed a surge in concert events across the nation. These concerts drew massive crowds, eager to witness their favorite artists perform live. However, despite the enormous turnout, only a handful of individuals managed to secure tickets through the platforms for these concerts. The intense demand for tickets led to a phenomenon known as ticket scalping, where platforms purchased tickets in bulk and resold them at significantly higher prices than their original value. Fans had to wait online in a long queue on BookMyShow (“BMS”) website to book their tickets. Third-party platforms, meanwhile, deployed automated bots to block queues for individual fans and bought tickets in bulk. This ended in BMS facing a lawsuit, plus the platform was accused of black marketing, by logging out users who were keen on getting into the queue. The platform’s reported intention was to allow scalpers ample time to organize fake queues and buy tens of thousands of tickets. While the court has not yet considered the events, the public outcry has sparked conversations regarding the necessity for stricter regulations of the ticketing industry, with an emphasis on fair ticket distribution practices.

Currently, there’s no specific law governing ticket scalping in India. However, alternative avenues could be explored, such as the Competition Act to address anti-competitive agreements and Consumer Protection Act (“COPA”) to deal with unfair trade practices. The remedy in COPA is straightforward and does not require much attention unlike its counterpart competition law. Nevertheless, the author argues that India’s competition regime is inadequate to handle the current situation. Stricter regulation in the ticketing industry can only be achieved through reforms in regulating secondary markets and advocating for a more substantial role for the Competition Commission of India (“CCI”). Additionally, aligning Indian laws with the international approach is crucial unless a specific legislation is introduced.

Impact on Consumer and Market Dynamics

The use of artificial bots to buy up tickets to resell them later creates an artificial scarcity. By cornering a large portion of tickets and then reselling them at higher prices, scalpers prevent consumers from accessing tickets at competitive rates. The artificial inflation of ticket prices harms consumers and prevents natural forces of supply and demand from operating efficiently. The use of bots also creates a barrier to entry for ordinary buyers to have a chance at buying tickets. This undermines competition and results in uncompetitive marketplace where only those who can afford the inflated resale prices gain access. The multifold impact of ticket scalping is furthered by lack of sufficient means to counter it. The Competition Law is insufficient to address the problems posed by ticket scalping, which will be discussed in the next section.

Applicability of Consumer Law and Challenges

As mentioned above, no legislation exists to address the concerns raised by ticket scalping in India. Nevertheless, its implications for consumers and market dynamics warrant the application of competition law, although its applicability in this case is limited. Resailing tickets at a significantly higher price is anti-competitive as it harms the consumer’s choice by limiting their ability to purchase the tickets at a competitive rate. The consumers have to pay significantly disproportionate amounts to secure the tickets. Competition Act, 2002 deals with issues relating to anti-competitive behavior or behavior which may harm the competition or consumers’ interests. It doesn’t have a dedicated section specifically addressing hoarding or resale in the black market. However, it does prohibit such acts through Section 3, which deals with anti-competitive agreements. This section prohibits any agreement entered by individuals or enterprises that cause appreciable adverse effects on competition.  

The applicability of the Competition Act is problematic because it excludes individuals acting in their personal capacity, such as dealers and traders, from its scope. While Section 48 holds the company’s management liable for anti-competitive agreements, no section specifically addresses the liability of individuals acting in their personal capacity for activities under Section 3. This issue is compounded by the absence of provisions to address hoarding and black marketing of goods. Despite the preamble of the Act outlining its objectives, which include preventing anti-competitive practices and mitigating harm to the market and consumers, the current framework fails to adequately address these issues. The legal framework in India addressing the issue of ticket scalping has lagged behind the rise of black marketing and has not adequately addressed this pressing concern. The scalpers have often enjoyed success at the cost of consumers due to the loopholes present in the Indian law.

Possible Reforms in India

India, not alone, has uncovered the dark truths of scalping, a global phenomenon that has prompted several countries to address these concerns. While their efforts have not been entirely successful, they have implemented various laws to combat this issue. In the U.S., Better Online Ticket Sales Act (“BOTS”) was introduced in 2016; the act prohibits automated systems/bots from purchasing tickets. The European Union in 2019, under intense pressure from artists and organizers, banned the use of bots to purchase tickets. In Australia, New South Wales, tickets cannot be sold for more than ten percent above their value. India may want to look at similar reforms to bring the adverse effects of ticket scalping in check as well. The best way to go about it is to get a law targeting ticket scalping. But if a new legislation that specifically addresses ticket scalping cannot be put in place, the current one can be amended to suit the needs of the problem. India can regulate secondary market by placing caps on the resale price of tickets which would prevent exorbitant price gouging by scalpers to ensure that tickets remain affordable for general public. Outlawing the use of automated bots to purchase tickets would give genuine customers a fair chance to buy tickets.

Further, amendment to the Competition Act to include person acting in individual capacity in its scope could reap the same benefits. Moreover, CCI would be able to take a proactive approach to investigate anti-competitive behavior in the ticketing market especially in cases where market manipulation is evident. The goods prone to resale can be marked to include tickets which generally have a very high resale price. The immediate step that can be taken to mitigate the problem of scalping is by urging platforms like BMS to expressly bar resale of tickets in their terms and conditions applicable to sale and purchase of tickets.

Conclusion

The increasing popularity of concerts in India has led to the emergence of discussions surrounding ticket scalping. While this is a practice that is common worldwide and became famous after the Olympics in Beijing, the recent occurrences of it have been shocking for even the Indian ticketing industry. Its abuse may result in shifting of consumers’ and competitive harm requiring an active governmental response to avoid the recurrence of such incidents. It is clear that the rise in the number of concerts in the country will be unceasing, so there is an urgent need of reforms in the ticketing sector to target the scourge of scalping. The author’s recommendations are one of the ways in which reforms can be instituted. For the time being, however, it is advisable for platforms like BMS adapt to these changes and modify their terms and conditions, prioritizing the interests of consumers.