On 5 February 2019, the High Court heard an application by the Commerce Commission for an interlocutory injunction to prevent Swiss-based Viagogo from making further representations alleged to be in breach of the Fair Trading Act.
The online ticket reseller has been the subject of controversy due to its advertising and marketing practices and perceived failure to deliver what it promised to consumers.
Between January 2017 and August 2018, Viagogo was the most complained about trader to the Commerce Commission with more than 400 complaints received during this period.
This application by the Commerce Commission is of particular interest because:
(a) The Commerce Commission applied to the Court for orders without formally serving Viagogo; and
(b) Viagogo is based out of New Zealand.
The Commission's application was heard by Justice Patricia Courtney, who has reserved her decision. We will provide a further update once that decision is released.
Viagogo's alleged conduct
The Commission alleges that Viagogo made false or misleading representations about event tickets sold on its website, including that:
Tickets for sporting, music and entertainment events were in short supply or about to sell out, when they were not.
Tickets could be purchased at prices which did not include Viagogo's significant fees.
Ticket validity could be guaranteed by Viagogo, when this was not the case.
The Commission sought an interlocutory injunction banning Viagogo from making these and other misleading and deceptive representations.
If granted, the injunction would require Viagogo to significantly restructure the claims and offer structure on its website. For example, it may need to make its terms and conditions more visible, ensure references to ticket scarcity accurately reflect the true situation, and make pricing structures and fees more transparent.
The Commission did not serve its application Viagogo
Viagogo is based in Switzerland. The Commission had asked Viagogo to accept service of its application, but Viagogo refused.
Instead of taking steps to formally serve Viagogo in Switzerland, the Commission applied for an interim injunction on a without notice basis. It told the Court that it would take 6 months to serve Viagogo formally, and that Viagogo's conduct should not be allowed to continue while service was being undertaken.
Although Viagogo ultimately instructed lawyers to act on its behalf in relation to the application, it did so subject to a protest to jurisdiction of the Court (otherwise known as a Pickwick basis). The combination of a very high number of complaints, the nature of the alleged breaches, and the long delay that would otherwise occur meant that the Commerce Commission chose to seek an injunction without formal service being effected.
Jurisdiction over overseas entities
Given the increasingly global nature of buying and selling products and services online, these proceedings may be a sign of things to come as the Commerce Commission works to ensure that the interests of New Zealanders are properly protected.
The question as to whether the New Zealand Courts have jurisdiction to hear the Commerce Commission's application is particularly important for New Zealand consumers. The High Court has previously concluded that "if a material part of misleading or deceptive conduct occurred within New Zealand, the Fair Trading Act applies".
But does an overseas website directed at New Zealand consumers constitute "conduct within New Zealand"? That issue has not been conclusively determined before the New Zealand courts before, and we await the Court's decision with interest.
In our view, if the Court considers that it does have jurisdiction that may help level the playing field for New Zealand-based websites which may otherwise be subject to stricter controls and oversight than their overseas competitors. It is a positive step for New Zealand businesses, and the public in general, that the Commerce Commission is taking a strong stand against apparent breaches of the Fair Trading Act by entities based outside of New Zealand.
If you would like to discuss any of the matters raised in this article, please contact the authors or your usual Bell Gully advisor.
This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.