The US Department of Justice (DOJ) has launched a lawsuit which could seek to break up Live Nation-Ticketmaster after
alleging the company has violated antitrust laws.
The 128-page filing accuses LN and Ticketmaster, who merged in 2010, of using their “power and influence” to “insert themselves at the centre and the edges of virtually every aspect of the live music ecosystem”. Live Nation’s EVP, regulatory affairs, Dan Wall has issued a response, contesting the claims.
The suit, which had been expected for several weeks, was filed today (23 May) in the United States District Court Southern District of New York. It states that Live Nation directly manages more than 400 musical artists and controls
around 60% of concert promotions at major venues across the country, as well as owning or controlling more than 265 concert venues in North America.
“This has given Live Nation and Ticketmaster the opportunity to freeze innovation and bend the industry to their own benefit,” it claims. “While this may be a boon to Live Nation’s bottom line, there is a real cost to Americans.
“Through a self-reinforcing ‘flywheel’ that Live Nation-Ticketmaster created to connect their multiple interconnected businesses and interests, Live Nation and Ticketmaster have engaged in numerous forms of anticompetitive conduct.”
In adds that LN controls “roughly 80% or more” of primary ticketing for major concert venues via Ticketmaster, plus a “growing share” of the resale market.
“Live Nation’s monopoly, and the anticompetitive conduct that protects and maintains its monopoly, strikes a chord precisely because the industry at stake is one that has for generations inspired, entertained, and challenged Americans,” it continues. “Conduct that subverts competition here not only harms the structure of the live music industry and the countless people that work in that industry, but also damages the foundation of creative expression and art that lies at the heart of our personal, social, and political lives.”
“We allege that Live Nation relies on unlawful, anticompetitive conduct to exercise its monopolistic control over the live events industry in the US”
Allegations include acquiring competitors and competitive threats, restricting artists’ access to venues, locking out competition with exclusive contracts and blocking venues from using multiple ticketing firms.
“We allege that Live Nation relies on unlawful, anticompetitive conduct to exercise its monopolistic control over the live events industry in the United States at the cost of fans, artists, smaller promoters, and venue operators,” says a statement from US attorney general Merrick Garland. “The result is that fans pay more in fees, artists have fewer opportunities to play concerts, smaller promoters get squeezed out, and venues have fewer real choices for ticketing services. It is time to break up Live Nation-Ticketmaster.”
Dan Wall, LN’s EVP, corporate and regulatory affairs, has penned a lengthy response to the lawsuit, which he says comes in the wake of “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”.
Furthermore, Wall describes the claim that Live Nation and Ticketmaster are wielding monopoly power as “absurd”.
“The defining feature of a monopolist is monopoly profits derived from monopoly pricing,” he says. “Live Nation in no way fits the profile. Service charges on Ticketmaster are no higher than elsewhere, and frequently lower. And even accounting for sponsorship, an advertising business that helps keep ticket prices down, the company’s overall net profit margin is at the low end of profitable S&P 500 companies.
“Every year, competition in the industry drives Live Nation to earn lower take rates from both concert promotion and ticketing. The company is profitable and growing because it helps grow the industry, not because it has market power.”
“The world is a better place because of that merger, not a worse one”
In closing, Wall insists that Ticketmaster is “a far better, more artist and fan-focused business under Live Nation’s ownership than it ever was as a standalone company”.
“But that’s not how this DOJ sees it. They are reflexively antagonistic to vertical integration,” he says. “The Obama Administration saw it 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 world is a better place because of that merger, not a worse one.”
Live Nation president/CFO Joe Berchtold also discussed the then pending lawsuit during the company’s Q1 earnings call earlier this month.
“Based on the issues we know about, we don’t believe a breakup of Live Nation and Ticketmaster would be a legally permissible remedy,” he said. “Live Nation and Ticketmaster came together lawfully through a merger that the DOJ reviewed and approved subject to divestitures and other remedies. The DOJ has repeatedly stated in court filings that the merger and settlement were in the public interest.”
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