What was promised in 2010 to deliver a robust pro-consumer ticketing and live events industry has created exactly the opposite 12 years later. That is the message from a collection of pro-competition advocacy groups that are encouraging consumers to pressure the Department of Justice to investigate and break up Live Nation Entertainment, Inc. – the company formed by the merger of Live Nation and Ticketmaster.
“Live Nation-Ticketmaster owns more than 70 percent of the primary ticketing and live event venues market. They’ve routinely abused this market power to screw over concertgoers, sports fans, artists, venues, and other ticket companies,” reads the invitation to consumers posted on ActionNetwork.org. “Without competition in the industry, music lovers, sports fans, and event goers are completely at the mercy of this mega-corporation.”
The groups say the merger has resulted in increased ticket prices – prices that can increase once added to a customer’s shopping cart. Additional fees that can equal 75% of a ticket’s value and single-ticket limits have also resulted. The events colossus “bullies” independent venues and artists, the groups say, asking concerned consumers to complete a form and send an email to the DOJ detailing their frustrations dealing with the company. The letter-writing campaign is supported by More Perfect Union, Fight Corporate Monopolies, Sports Fans Coalition, American Economic Liberties Project, TakeItBack.Org, and Demand Progress. The Action Network is a website that enables groups to rally support for various causes.
When it approved the merger in 2010, the DOJ required the companies to comply with a 10-year consent decree prohibiting them from retaliating against concert venues for using competing ticketing services or otherwise threatening those venues. Saying the companies repeatedly violated the consent decree, the DOJ extended and strengthened its demands in early 2020, calling the move “the most significant enforcement action” of an existing judgment in DOJ history. The modified judgment stated that, should a venue select a ticketing service other than Ticketmaster, Live Nation will not threaten to withhold concerts from that venue. The company was required to appoint an internal antitrust compliance officer, conduct regular internal training to ensure its employees fully comply with the judgment, notify customers of the judgment, and pay costs and fees associated with the enforcement action. The DOJ said it would assign an independent monitor to Live Nation to detect violations more effectively, each of which would earn Live Nation a $1 million penalty. The terms of the judgment were set to expire in 2020 but were extended for another 5-1/2 years.
The groups will likely find willing participants among the plaintiffs in a since-dismissed proposed class action brought against the companies in federal court for the Central District of California in April 2021. Tired of paying “supracompetitive fees” on ticket purchases, concertgoers sought relief under Sections 1 and 2 of the Sherman Act. The plaintiffs claimed Live Nation engages in anticompetitive exclusive dealing with concert venues; forces ticket brokers into exclusivity arrangements; bars customers from transferring tickets unless they use Ticketmaster; forces lower-cost secondary ticket services trying to do business with venues to use both Live Nation’s concert promotion and concert ticketing services (aka illegal tying); and executes vertically arranged boycotts.
Ticketmaster achieved its dominant position through a “web of long-term exclusive dealing agreements” and other anticompetitive activity, the plaintiffs maintained.
That case was dismissed in September 2021 by U.S. Judge George H. Wu who found the contract between the companies and consumers required disputes to be arbitrated. The ticket-purchasers appealed to the Ninth Circuit which held oral arguments on Sept. 19. There, attorneys for the ticket buyers argued that Ticketmaster failed to make clear to consumers that by using the service they were entering into a contract that forced them to resolve disputes via arbitration. Much of the oral argument literally centered on the size and color of the font used in the online purchasing process and whether the company clearly identified itself as the contracting entity. Attorneys for Live Nation and Ticketmaster argued that they did then and continue now to provide consumers with constructive notice. They also noted that consumers check a box indicating their affirmative agreement with the terms of purchase. The arbitration clause has been upheld as valid by several federal judges in California, attorneys for Live Nation and Ticketmaster argued.
Given the Biden administration’s commitment to block anticompetitive mergers, it’s likely that – if proposed today – the Live Nation / Ticketmaster merger would have been turned away at the door. It’s the administration’s policy that inspired a March 21 letter from Rep. Bill Pascrell, Jr. (D-NJ) to Federal Trade Commission Chairwoman Lina Khan and Assistant Attorney General Jonathan Kanter. Couched in terms of the agencies’ efforts to modernize merger guidelines to protect against anticompetitive deals, Rep. Pascrell urged Khan and Kanter to “closely assess” this “disastrous merger.” Mergers are “not written in stone,” the congressman wrote, calling the merger a “posterchild of consolidation gone bad” and one that should be investigated.
The Ticketmaster / Live Nation merger presents an interesting issue for the DOJ: how to respond to a merger (i) it would not approve if proposed today, (ii) that has produced anticompetitive effects in multiple markets, and (iii) whose parties have flouted behavioral remedies designed to protect competition. Complicating matters, private enforcement is unlikely given Ticketmaster / Live Nation’s success in forcing these actions into arbitration. To date, the DOJ’s response has been underwhelming, as it has simply extended the behavioral remedies imposed when approving the merger through 2025. But these remedies have not protected competition or consumers in the 12 years since the merger and there is little reason to believe they will do so moving forward. The DOJ should, therefore, reexamine its approach and adopt methods that will more effectively protect competition in the vital primary ticketing and live event venues markets.
Read our prior posts:
DOJ Event Powerhouse Live Nation Punishes Concert Venues for Using Competing Ticketers Despite Bar
Edited by Tom Hagy for MoginRubin LLP.