Ticketmaster agrees to pay $10 million fine for breaching competitor’s system to ‘choke off’ competition

Thomas Catenacci, DCNF

Ticket sales and distribution company Ticketmaster agreed to pay a $10 million criminal fine over its alleged breach of a rival company’s computer system to “choke off” competition.

Stephen Mead, a former executive at startup ticketing sales company CrowdSurge, allegedly breached CrowdSurge’s computer system after he left the company in 2012 and was hired by Ticketmaster in 2013, Variety reported.

Mead and other Ticketmaster executives used the information they observed from CrowdSurge’s internal databases to “choke off” the startup company’s business and “steal back” its top musical artist clients, according to a Department of Justice (DOJ) press release.

“Ticketmaster employees repeatedly – and illegally – accessed a competitor’s computers without authorization using stolen passwords to unlawfully collect business intelligence,” Acting U.S. Attorney DuCharme said in a statement.

“Ticketmaster’s employees brazenly held a division-wide ‘summit’ at which the stolen passwords were used to access the victim company’s computers, as if that were an appropriate business tactic,” he continued.

Following the DOJ’s announcement, Democratic New Jersey Rep. Bill Pascrell Jr. tweeted criticism of Ticketmaster and parent company Live Nation on Thursday saying that the companies hold too much power.

In 2014, Mead emailed Zeeshan Zaidi, the former head of Ticketmaster’s Artist Services division who pled guilty to charges related to the case, and another executive with multiple login credentials for CrowdSurge’s computer system, according to the DOJ. Mead instructed the others to “screen-grab the hell out of the system.”

Then, using the CrowdSurge information they collected, the executives created a business presentation that outlined how Ticketmaster could “benchmark” their offerings against CrowdSurge’s, the DOJ said.

Mead eventually received a promotion and was given a raise, according to the DOJ. The scheme ended in December 2015, when Songkick, a separate ticketing company that merged with CrowdSurge earlier in 2015, sued Ticketmaster, Variety reported.

After he left CrowdSurge, Mead kept about 85,000 work-related documents on his personal computer, the lawsuit alleged, according to Variety. He had also signed a separation agreement with his former employer in which he agreed not to disclose proprietary information.

“Ticketmaster used stolen information to gain an advantage over its competition, and then promoted the employees who broke the law,” FBI Assistant Director-in-Charge Sweeney said in a statement. “This investigation is a perfect example of why these laws exist – to protect consumers from being cheated in what should be a fair market place.”

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