Doj And States Sue Live Nation, Could Seek Breakup Of Company
The Justice Department and dozens of states sued Ticketmaster and its parent company Live Nation Thursday alleging that they have illegally monopolized the live music industry through a mix of exclusive contracts, self-preferencing and acquisitions.
Attorneys general from states including California, Colorado, Texas and Florida signed onto the antitrust case filed in New York federal court. It adds to the embattled company’s myriad policy and legal battles, and if successful, could potentially lead to a breakup of Live Nation. In an unusual move, the DOJ and states are seeking a jury trial, based on claims from the states.
A behemoth in the live music industry, playing a leading role in all facets of the business, Live Nation is a perennial target for lawmakers, regulators and music fans. The latest wave of criticism kicked off in earnest following the botched sale of concert tickets for Taylor Swift in November 2022.
The company’s conduct is pernicious and widespread, according to the lawsuit, not only squeezing out rivals but harming the entire industry and ultimately hitting artists, venues and fans in the wallet.
“The live music industry in America is broken because Live Nation-Ticketmaster has an illegal monopoly,” Jonathan Kanter, who heads the DOJ’s antitrust division, said in a statement. “Our antitrust lawsuit seeks to break up the Live-Nation-Ticketmaster monopoly, which will restore competition to the benefit of fans and artists alike.”
Live Nation blasted the case as part of an aggressive antitrust movement led by the Biden Administration.
“This follows intense political pressure on DOJ to file a lawsuit, and a long-term lobbying campaign from rivals and ticket brokers seeking government protection for themselves,” said Dan Wall who heads up the company’s corporate and regulatory affairs. The case “ignores everything that is actually responsible for higher ticket prices, from increasing production costs to artist popularity to 24/7 online ticket scalping that reveals the public’s willingness to pay far more than primary tickets cost,” Wall said.
“It is also clear that we are another casualty of this Administration’s decision to turn over antitrust enforcement to a populist urge that simply rejects how antitrust law works,” Wall added.
POLITICO first reported last year that the DOJ was planning to sue Live Nation.
At the heart of the case is the company’s so-called “flywheel”, with allegations it uses its market power in each of its various business lines — including concert promotion, artist management, venue ownership and management and ticketing — to reinforce its dominant position in the others.
“The flywheel is Live Nation-Ticketmaster’s self-reinforcing business model that captures fees and revenue from concert fans and sponsorship, uses that revenue to lock up artists to exclusive promotion deals and then uses its powerful cache of live content to sign venues into long-term exclusive ticketing deals, thereby starting the cycle all over again,” the DOJ said in a statement. The DOJ says the “anti-competitive conduct creates even more barriers for rivals to compete on the merits.”
Live Nation has touted just such an effect in recent earnings releases, saying last year “As we then look to 2024 and beyond, we have all the necessary levers to build our flywheel globally."
Live Nation maintains that the venues prefer exclusivity and are their main beneficiary, while the DOJ says Ticketmaster steers concerts it promotes to venues with exclusive Ticketmaster contracts.
The contracts, which cover about 70 percent of ticket sales at major venues, according to the lawsuit, allow Live Nation to “reduce competitive pressure to improve its own ticketing technology and customer service,” the DOJ said.
According to the complaint, which referenced internal Live Nation documents, “Ticketmaster is quite clear about why it focuses on these deals: they are, in Ticketmaster’s own words, a ‘[h]edge against significant improvements by the competition or even a new competitor’ because the ‘client is under contract for longer and not able to leave [Ticketmaster] or price the competition’s offer into our new deal for an extended time.’”
Live Nation controls more than 250 concert venues in North America, including a majority of the largest 100 amphitheaters in the U.S. According to the lawsuit, the company restricts access to those venues unless artists use its promotion services.
While antitrust lawsuits typically first focus on whether a company violated the law before a judge decides how to remedy any problems, the DOJ and states are seeking structural relief including a break up of Live Nation and Ticketmaster. The two merged in 2010 after a settlement with the Obama Administration DOJ, in which the company sold some ticketing assets and promised not to force venues to use Ticketmaster.
The DOJ and states have been investigating the company since 2022, but it has been under federal oversight since 2010 after the merger. Thursday’s lawsuit goes far beyond problems arising from the merger, with the DOJ and states alleging more recent and expansive anticompetitive conduct.
At its most recent earnings call, Live Nation’s finance chief cast doubt on the legality of a breakup. “Very little of the conduct that DOJ has raised with us relates to the combination of ticketing and promotion resulting from the merger. And most of what does was anticipated and addressed by the consent decree allowing the merger to go forward. Based on the issues we know about, we don’t believe a breakup of Live Nation and Ticketmaster would be a legally permissible remedy.”
Live Nation has drawn the ire of Congress. Sen. Amy Klobuchar (D-Minn.), who leads the Senate Judiciary antitrust subcommittee, along with other Senate Democrats, urged the DOJ to seek a breakup if its probe finds anticompetitive conduct. At a Senate hearing in January 2023, Sen. Mike Lee (R-Utah) questioned the wisdom of allowing the Live Nation-Ticketmaster merger to happen.
Ticketmaster says that its market share has fallen in recent years and is now significantly less than the 80 percent alleged by the DOJ in its 2010 case against the Live Nation deal. It says companies including SeatGeek, AEG and Paciolan are chipping away at its dominance, and the company estimates it controls just half of the market if sporting events are factored in.
Before the 2020 expiration of the initial DOJ settlement, the company settled with the DOJ again in late 2019 over violations of the earlier agreement, including allegations of forcing venues to use Ticketmaster and retaliating when they didn’t. As part of the new agreement, the company agreed to extend court oversight via an independent compliance monitor through 2025, and agree to not retaliate, a bargain it has not lived up to according to the current case.
The lawsuit is the latest in a series of major antitrust cases brought by Biden Administration enforcers keen to see through the President’s aggressive economic competition agenda. The Justice Department sued Apple in March, and the FTC sued Amazon last fall. There are also a pair of pending cases against Google, and the FTC is challenging a major grocery deal and a merger in the fashion industry.
