The Golden State Warriors, the NBA’s reigning champions, won another victory last week, this time in the courtroom. On Thursday, November 5, 2015, a federal judge dismissed StubHub’s antitrust action against the Warriors and Ticketmaster.
StubHub filed suit in April, alleging that the Warriors violated the Sherman Antitrust Act by restricting the resale of season tickets to Ticketmaster’s platform. The complaint alleged that the Warriors threatened to revoke ticket privileges, deny first bid at playoff tickets, and refusal to invite ticket holders back next year if they are found to resell tickets with any other ticket vendor. This, StubHub argued, creates a monopoly over the “secondary market” for tickets.
The Warriors and Ticketmaster countered with a motion to dismiss, arguing that StubHub failed to allege a “cognizable relevant product market,” and the court agreed. According to the court’s November 5th Order, a plaintiff must allege that a defendant has “market power” over “both a product market and a geographic market” in order to state a valid claim under the Sherman Antitrust Act. A “product market” must “encompass the product at issue as well as all economic substitutes for the product.”
StubHub’s claims were based on the theory that there existed two separate product markets: (1) a “primary market” for the season tickets; and (2) a “secondary market,” being the resale of the tickets. The court held that although the price of the primary ticket is its “face value” and the price of the secondary ticket varies, “any such differential does not suffice to support the existence of two separate markets.” There is only one market—Warriors tickets sold directly by the team itself—and the “natural monopoly of every manufacturer has in the production and sale of its own product cannot be the basis for antitrust liability.”
Thus, the court dismissed StubHub’s complaint in its entirety for a failure to state a claim.