Company served with a new lawsuit amid fresh calls to unwind.
When concert promoting giant Live Nation Entertainment, Inc., and ticketing giant Ticketmaster Entertainment, Inc., merged in 2010, antitrust regulators said the deal would not harm competition, but they put some compliance measures in place just in case. Apparently, regulators were right to be wary. The list of detractors has grown more vocal during the last 12 years, with shouts that Live Nation’s alleged anticompetitive conduct has and continues to harm consumers and competitors.
In 2020, the company drew the attention of the Department of Justice Antitrust Division and a proposed class of concertgoers in California, as well as from plaintiffs in several suits in Canada. This year at least one member of Congress has called for the deal to be unwound. Rep. Bill Pascrell, Jr. (D-NJ) said in a March statement that the entertainment conglomerate is “squeezing consumers like an octopus.” Pascrell, a Democrat, was critical of the Obama administration for allowing the deal to go through.
While the merger was permitted, a 2010 final judgment with the DOJ strictly prohibited the company from retaliating against concert venues for using competing ticket companies, threatening concert venues, or taking other actions against concert venues for 10 years (United States v. Ticketmaster Entertainment, Inc., et al., Case No. 1:10-cv-00139-RMC [July 30, 2010]).
Despite the judgment, the DOJ announced in 2020 that Live Nation had been repeatedly violating it for years.
The government had hoped that a modified and extended judgment clarified for Live Nation the types of conduct regulators consider out of bounds, saying the order was intended to give consumers and venues the relief the DOJ wanted in the first place. The modified judgment stated that, should a venue select a ticketing service other than Ticketmaster, Live Nation would not threaten to withhold concerts from that venue. The company was also required to appoint an internal antitrust compliance officer, conduct regular internal training to ensure its employees fully complied with the judgment, notify customers of the judgment, and pay costs and fees associated with the enforcement action. DOJ said it would assign an independent monitor to Live Nation to spot violations more effectively. Each violation would earn Live Nation a $1 million penalty. The terms of the judgment were set to expire in 2020 but the DOJ extended it through 2025.
At the end of 2021, the company reported to the Securities and Exchange Commission that an independent monitor had been appointed to watch and report to the DOJ on its compliance with the judgment and investigate any violations. The company has appointed an internal antitrust compliance officer, too, and conducts internal compliance trainings for employees. The company told the SEC that it is restricted from engaging in certain business activities that, without the judgment, would be lawful. “Our inability to undertake these business strategies could disadvantage us when we compete against firms that are not restricted by any such order,” the company said. Live Nation is also operating subject to agreements with the States of New Jersey, Maryland and Illinois and the FTC which limit its ticketing resale practices.
As Congressman Pascrell tells it, none of this is stopping Live Nation’s anticompetitive conduct. He wrote in a March 21 letter to the FTC and the DOJ Antitrust Division that the “disastrous merger” should be unwound for “the good of consumers and America.” In general, Pascrell wrote, the process of undoing anticompetitive mergers needs to be simplified. “A merger between companies is not written in stone,” says Pascrell, and when a merger “has harmed industry competition, stifled freedom of choice, and hurt workers, it should be undone.” Pascrell called the Live Nation / Ticketmaster union a “posterchild of consolidation gone bad.”
One contractual provision companies like Live Nation use is the “geographically and temporally broad radius clause” which restricts acts from playing within a specified radius of a booked show for specified period of time, preventing competing venues from booking artists. Radius clauses are common in the music industry, especially around music festivals. The justification promoters offer is that the clauses protect their financial investment in festivals.
According to its Dec. 31, 2021, Form 10-K filing with the SEC, Live Nation appeared to think it was out of the woods with regard to private antitrust litigation. It noted a number of cases were pending in Canada, but said “as of November 2020, each of the lawsuits filed in the United States [had] been dismissed with prejudice.” The concert company’s antitrust problems are not over yet, nor is the scrutiny of its merger.