Sarah Gilbert — MEI Fellow
After much anticipation and a 18-month long investigation, on May 23, The Department of Justice, 30 states, and the district attorney general filed a civil antitrust lawsuit against Live Nation Entertainments and its subsidiary Ticketmaster. The Complaint alleges Live Nation and Ticketmaster have “engaged in numerous forms of anticompetitive conduct” and have “unlawfully maintained its monopoly in each market” violating Section 2 of the Sherman Act, 15 U.S.C § 2 and Section 1 of the Sherman Act, 15 U.S.C. § 1.
Summary of Complaint filed against Live Nation and Ticketmaster
The complaint filed in US District Court for the Southern District of New York details the “anticompetitive conduct” and alleges five violations of the Sherman Act and twenty-two violations of state law.
The complaint highlights anticompetitive conduct by Live Nation and Ticketmaster including the following: a forced partnership with Oak View Group; pressuring of venues, artists, and competitors to enter exclusionary and unreasonable contracts; and retaliation against potential entrants and acquiring competitors.
Forced Partnership with Oak View Group
The Oak View Group is a commercial real estate and investment company for sports and live Entertainment that manages a number of venues throughout North America. Although Oak View Group started off as a competitor to Live Nation-Ticketmaster, the DOJ alleges Live Nation-Ticketmaster has pressured Oak View Group to act as a protector on their behalf through acts of “scolding.” One of Oak View Group’s co-founders, Irving Azoff, was the previous CEO of Ticketmaster and executive chairman of Live Nation. The complaint notes Oak View Group has avoided bidding against Live Nation for talent and colluded with Live Nation to pressure venues to sign exclusive agreements with Live Nation.
Azoff had been accused of setting up a music licensing monopoly through his preforming rights organization Global Music Rights (GMR), and the Radio Music Licensing Committee (RMLC) filed a lawsuit in the Eastern District Court of Pennsylvania in November 2016 against Azoff and GMR. However, the case settled and the DOJ backed GMR acknowledging the latter’s argument that RMLC’s authority to negotiate commercial radio station royalty rates was essentially an “illegal buyer’s cartel” and that RMLC’s “naked agreements to fix prices are one of the most pernicious forms of anticompetitive restraint” that violate antitrust laws.”
Pressuring Venues, Artists, and Competitors to Enter Exclusionary and Unreasonable Contracts.
The two ticketing markets within the live entertainment industry are the primary and secondary ticketing markets. Like their names suggest, the primary ticketing market involves the initial sale of tickets from artists/promoter/venue to fans, and the secondary market consists of re-selling of those tickets.
The DOJ claims Ticketmaster accounted for 70% of the primary ticketing market and the only notable competitors like AXS ticketed no more than 14%. The lawsuit states that Live Nation directly manages over 400 musical artists and, in total, controls around 60% of concert promotions at major concert venues. In addition, Live Nation also “owns or controls more than 265 concert venues in North America, including more than 60 of the top 100 amphitheaters in the United States.” This means that Live Nation has control over not only the artists, but also the promoters as well as the venues.
In order to retain control of the venues, the DOJ alleges that Live Nation would enter in exclusive contracts with the venues preventing them from using different promoters or engaging with any other primary ticketing company like AXS. The DOJ also notes that Live Nation would prevent the over 400 musical artists they manage from performing in any venues that did not agree to also use Live Nation’s promotion services.
The complaint alleges that Live Nation has a reputation and history of retaliation in the industry. In particular, Live Nation threatened venues that if they engaged with Live Nation’s competitors in the promotion of ticketing space, then they would lose access to Live Nation’s concerts altogether. Due to the significant control that Live Nation holds over artists and venues, competitors have acquiesced to it’s control over the live performance industry by entering into unfair contracts with the company.
Retaliation Against Potential Entrants and Acquiring Competitors
The DOJ alleges that Live Nation had successfully threatened financial retaliation against the private equity firm Silver Lake unless its portfolio company TEG stopped attempting to work in the U.S. concert promotion market. They also note that Live Nation has strategically acquired several smaller and regional promoters which the company had previously identified as a threat. The complaint includes allegations that the CEO of Live Nation sent threatening messages to venues who attempted to use competitors in both the primary and secondary markets such as SeatGeek or AXS.
The major competitors in the secondary ticketing market are StubHub and SeatGeek. The complaint alleges that Ticketmaster holds an unreasonable amount of control in the secondary ticketing space through their use of their SafeTix technology. The SafeTix technology is marketed to reduce the risk of ticket fraud by encrypting the barcode on electronic tickets. However, this ensures that any resellers and customers who attempt a resale transaction through StubHub or Seat Geek (which would most likely be the primary ticket held by Ticketmaster) must create Ticketmaster accounts and consent to the terms and conditions of any ticket transfer through Ticketmaster’s platform. At the same time, there are claims that hackers have been able to hack the SafeTix technology.
The complaint concludes that all “these acts have a synergistic anticompetitive effect that have harmed competitions and the competitive process.”
Live Nation-Ticketmaster Defenses
Natural Monopoly
One of main defenses possible for Live Nation-Ticketmaster’s current control of 70% of the market for ticketing and live events would be that it has a natural monopoly. Ticketmaster has held more than an 80% share of major concert primary ticketing since 1995 and in 1994 Pearl Jam filed a complaint against Ticketmaster with the DOJ alleging violations of antitrust laws. However, Ticketmaster argued that its “market dominance was a result of its efficiency.” With regard to the current 2024 case against Live Nation-Ticketmaster, the company released a public statement vehemently denying the DOJ’s allegations. The company argues that the DOJ ignores the current market conditions, and that Live Nation-Ticketmaster is not responsible for the higher prices for tickets. Instead, the company blames rising production costs, artist popularity, and ticket scalpers.
These statements do not address the “dynamic” ticket pricing methods that Ticketmaster employs. Although the company could argue that the increase in price and ticketing methods are to ensure better services, many consumers do not seem to be experiencing more efficient services as seen through recent ticketing stories.
No Monopoly Benefits
In 2010, the DOJ approved the merger of Live Nation and Ticketmaster despite concerns of a possible monopolistic outcome. The merger was contingent on an agreement that Ticketmaster would license its primary ticketing software to a competitor, sell off one ticketing unit, and not retaliate against venue owners who use a competing ticket service. In a statement made by the DOJ in 2010, “the merger, as originally proposed, would have substantially lessened competition for primary ticketing in the United States, resulting in higher prices and less innovation for consumers.”
Despite this agreement, in 2019 the DOJ found that “Live Nation repeatedly and over the course of several years engaged in conduct that, in the Department’s view, violated [the agreement].” The agreement was then modified to address allegations similar to the ones brought in the current DOJ suit. An argument can be made that the DOJ in 2019 did not peruse the dissolution of Live Nation-Ticketmaster because it was not a necessary remedy for the allegations and thus is not a proper remedy for similar allegations today. Thus, in Live Nation’s recent public statement, the company asserts:
The Obama Administration saw things differently. It allowed Live Nation and Ticketmaster to merge, and in defending that position acknowledged that there was no legal basis for challenging the vertical aspects of the merger—specifically, allowing a large concert promoter to combine with a large ticketing company. In one filing, it said that it had ‘determined that it could not prove that the vertical integration resulting from the merger would significantly harm competition in the concert promotion market.’ There is no factual basis for concluding otherwise today.
The current DOJ will have to demonstrate that the extensive modifications to the agreement made in 2019 were not a suitable enough remedy and that an unwinding of the merger is the only possible option to prevent antitrust violations by Live Nation-Ticketmaster. However, with the shift of the political climate and theories involving consumer protection under the current White House administration, the 2019 agreement may prove to not be a critical issue.
In a joint letter to Judge Arun Subramanian, who is overseeing the case, Live Nation-Ticketmaster echoes their public statement by denying that they enjoy the benefits of a monopoly. Their principal defenses include that DOJ market definitions are improper because their business practices are procompetitive, and that the DOJ failed to show plausible harm to competition.
According to the scheduling order on June 27, 2024, the DOJ has until August 12, 2024 to file an amended pleading and Live Nation-Ticket master has until August 16, 2024 to file a reply. As the case continues to unfold under public scrutiny and changes in presidential administrations it will be interesting to see how Live Nation-TicketMaster’s defenses evolve.