Merger & Acquisitions, Antitrust Litigation & Investigations

DOJ Antitrust Division May Sue to Split Live Nation/Ticketmaster

Movement to unwind anticompetitive merger not fading away. Politico reports DOJ suit is coming.

image of large crowd at concert

Following its ten-month investigation, the United States Department of Justice appears on the verge of filing an antitrust suit against Live Nation, parent of Ticketmaster, for abusing its power in the ticketing and live music markets. According to Politico, which cites three sources familiar with the matter, the DOJ could file suit as soon as this fall and, as part of its relief, will ask the court to unwind the 2010 merger of Live Nation (the event promoter) and Ticketmaster (the ticket seller).  

If brought, the DOJ’s suit would be met with praise from a broad spectrum of groups. Competitors, legislators, consumer advocates, artists, and concertgoers have consistently and categorically criticized the entertainment behemoth since the merger. And the “boos” only got louder after Ticketmaster notoriously botched the presale for Taylor Swift’s tour this past November.

But the case also faces major obstacles. Not only will the DOJ have to convince a judge to undo a 13-year-old merger involving multi-billion dollar companies, but it will also have to explain why Obama’s DOJ and Trump’s DOJ were wrong when permitting the merger with conditions rather than challenging it altogether.

Initial Approval of the Merger and Subsequent Actions

The Ticketmaster/Live Nation merger was announced in 2009 and immediately faced significant opposition from lawmakers, people in the music industry, and consumer groups. Opponents cited horizontal concerns in the ticket sale market. Ticketmaster was the long-dominant ticket seller and Live Nation was just entering the ticket sale market when the transaction was announced. The merger, therefore, eliminated a nascent, well-funded rival in the ticket sale market.

Opponents also identified several vertical concerns with the merger. For example, because Live Nation controls most large concerts, it can foreclose a large portion of the ticket sale market from Ticketmaster’s rivals by using Ticketmaster for its events. This would reinforce Ticketmaster’s market power by preventing its rivals from entering or expanding.

Despite these issues, the DOJ allowed the merger to proceed.

DOJ Appears Ready to Act

Nearly a year since its investigation was made public, the DOJ appears poised to file a complaint against Live Nation in the coming months. And, assuming the anonymous sources cited by Politico are correct, the principal relief sought by the DOJ will be to break up Live Nation and Ticketmaster.

But challenging a merger of this size at this stage presents several complicated issues. For one, given the importance of Ticketmaster and Live Nation to their respective markets and the fact that these companies have operated as one entity for more than a decade, undoing the merger would create severe near term disruptions in the ticket sale and live event markets. Not only would the companies have to expend significant resources deciding how to divide assets and employees, but they would have to rework the countless agreements with venues, artists, and others that involve products or services provided by Ticketmaster and Live Nation.

The DOJ also has the unenviable task of convincing the presiding judge that the previous iterations of the DOJ were wrong when permitting the merger in 2010 and when approving the reworked behavioral remedies in 2020. This task would be easier if there were a significant event since 2020 that the agency could point to as the reason for the challenge. But this does not appear to be the case. Rather, the change in approach is principally due to a change in philosophy.

While these factors make the case more difficult, they should not prevent the DOJ from challenging the merger assuming the facts warrant action. Decades of limited merger challenges by federal agencies coupled with Borkian principles seeping into merger case law enabled problematic concentration and/or a reduction in competition in roughly 75% of US industries. According to a 2020 report by the American Economic Liberties Project, this economy-wide loss of competition costs the average family $5,000 annually. The most effective tool federal agencies have for restoring industry-level competition is undoing anticompetitive mergers. The Ticketmaster/Live Nation merger appears to fit this bill, meaning the DOJ can help restore competition in the ticket sale and live event markets by undoing this transaction.

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Edited by Tom Hagy for MoginRubin LLP.  Photo by Chaz McGregor on Unsplash.


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