In part II of a two-part series, Michael A. Carrier analyzes the merits and strengths of the government’s recent lawsuit against Live Nation and its subsidiary, Ticketmaster, for monopolizing the live entertainment market. See here for part I.
In part I of this series, I outlined the evidence the government gathered to support its lawsuit against Live Nation-Ticketmaster for monopolizing the live entertainment market. In part II, I assess the merits of the lawsuit and discuss four elements that reveal the complaint’s strength: 1) long-recognized anticompetitive harms, 2) weak procompetitive justifications, 3) a clear remedy, and 4) support from multiple antitrust perspectives.
Point 1: Long-recognized anticompetitive harms
First, the complaint focuses on an array of anticompetitive conduct that falls safely in the middle of the plate of longstanding antitrust case law. Allegations of market division agreements, tying, and exclusive dealing are the bread and butter of what courts have found to constitute antitrust violations for decades. That is because the harms can be severe. Market division is even more concerning than price fixing because there is no competition on any (price or non-price) element of competition. That is true in spades here with venue developer and management company Oak View Group, the self-described “pimp” and “hammer” that “protect[s]” Live Nation, “never want[s] to be competitors,” and divided the promotion and arena consulting businesses with Live Nation.
Exclusive dealing forecloses a market (here venues) from rivals for lengthy periods. Tying forces artists seeking to perform in Live Nation’s large amphitheaters to use the company’s promotion services. And each of these specific harms is compounded by a broader pattern of monopolization that includes direct and indirect threats, retaliation, and acquisitions. Although hindsight reveals the magnified anticompetitive effects many warned of at the time of the 2010 merger between Live Nation and Ticketmaster, that does not deny the incidence of “additional, different, and more expansive violations” in which the company is currently engaging.
Point 2: Weak procompetitive justifications
Second, for reasons I have explained more fully elsewhere, Live Nation is not likely to offer a procompetitive justification that would outweigh the wide-ranging anticompetitive effects. For starters, activity involving market allocation like that described in the previous section does not have a justification under antitrust law. The same goes for threats and retaliation like refusing entry to StubHub customers, re-routing concerts after venues switch to non-Ticketmaster ticketing, and using a “velvet hammer” to ensure that a rival understands: “Either we are together or we are competitors.”
The company likely will raise security justifications based on its SafeTix technology. But the use of this technology fits into an extensive pattern that is centered on harm to rivals and the market as a whole. In addition, as I summarized elsewhere (and also explained in detail), Ticketmaster talks a good game in claiming to fight bots and protect security. But it has been caught red-handed doing exactly what it claimed to be fighting against. In 2018, the Canadian Broadcasting Corporation and the Toronto Star sent undercover reporters to a conference where “representatives for Ticketmaster pitched them on TradeDesk,” the company’s “invite-only proprietary platform for reselling tickets.” The reporters “capture[d] a rep on camera saying that Ticketmaster’s ‘buyer abuse’ team will look the other way when such practices take place on its own platforms,” with the representative conceding that some brokers have “literally a couple of hundred accounts.” In fact, “[s]calpers get preferential treatment over consumers” and Ticketmaster provides incentives for large reselling activity through discounts that increase based on sales.
Exploring additional anticipated justifications, the typical defenses for exclusive dealing are not present here. One of the central justifications is preventing “free riding,” which occurs when one retailer takes advantage of another’s promotional activities, such as knowledgeable employees demonstrating a product’s features in a showroom. Ticketmaster, in contrast, is not spending money to promote its ticketing product, with rivals piggybacking on those efforts. Nor do ticketing fees have a strong connection with the services provided, as shown by the company’s loss-leader strategy that involves undercharging in the promotion market, which is not consistent with needing to exploit investments in that market.
Finally, the typical justifications for tying, by which “artists seeking to use . . . large amphitheaters for shows” must “also purchase promotion services from Live Nation,” do not apply. The leading antitrust treatise explains that those justifications center on: (1) protecting product quality (for example, where a company’s product “works well only with particular supplies”); (2) “reduc[ing] costs or rais[ing] value”; (3) “increasing price competition through indirect or selective price cuts”; and (4) bringing “a guaranteed volume of patronage in the tied market that might aid its entry into that market.”
High-priced counsel will have every incentive to muddy the waters by interjecting benefits similar to those raised in this section. But Live Nation likely will come up short based on (1) the lack of fit between the facts here and the typical scenario allowing these justifications and (2) the existence of conduct like market division, threats, and retaliation for which a justification could not be offered.
Point 3: A clear remedy
The third strength of the complaint is the appropriate request for a robust remedy. In 2010, the DOJ allowed Live Nation and Ticketmaster to merge on the condition that they not require venues wishing to book Live Nation artists to use Ticketmaster’s ticketing and not retaliate against venues using other ticketing companies. But in 2020, the DOJ took the rare action of extending the decree because the merging companies “failed to live up to their end of the bargain.” In particular, they “repeatedly conditioned and threatened to condition Live Nation’s provision of live concerts on a venue’s purchase of Ticketmaster ticketing services” and “retaliated against venues that opted to use competing ticketing services—all in violation of the plain language of the decree.”
In other words, we have evidence on a silver platter that the company cannot be trusted to follow a consent decree. Including in the range of requested remedies—which encompass an injunction against anticompetitive practices and termination of the ticketing agreement with Oak View Group—the structural remedy of divesting Ticketmaster promises to address core harms, allowing competition in the ticketing market and creating competition in multiple markets.
Nor is the typical challenge with breaking up a merged company—“unscrambling the eggs”—present here. The company divides itself into various business lines: Live Nation Concerts, Venue Nation, Ticketmaster, and Live Nation Sponsorship. And Ticketmaster is organizationally separate: a subsidiary of Live Nation Entertainment.
Point 4: Support from multiple antitrust perspectives
Fourth, adherents of different antitrust schools can line up behind the complaint. Applying the traditional consumer welfare standard, fans have suffered. They have “paid more in fees that are not transparent, not negotiable, and cannot be comparison-shopped because there are no other options.” And they “have been denied access to the benefits a competitive process would deliver, such as more choices in concerts and innovative fan-friendly ticketing options” that include “a more streamlined user interface and purchase flow, insightful presentation of ticket inventory, enhanced buying options, [and] more flexible refund policies.” These harms are not theoretical, as any fan who has paid ever-increasing fees or suffered through ticket sale fiascos would attest.
The company’s tentacles through the entire ecosystem additionally result in harms to other actors that a neo-Brandeisian perspective would appreciate. As the complaint alleges, “[a]rtists have had fewer opportunities to play concerts, and fewer real choices for promoting their concerts, selling tickets to their own shows, and performing at certain venues.” And venues “reasonably fear the disruption, retaliation, and complications of partnering with anyone other than Live Nation lest they lose access to culturally significant and lucrative concerts.” Nor are venues or artists “free to choose ticketers based on their own assessment of price, quality, or value.” Finally, promoters are unable to compete with Live Nation’s “loss leader” strategy of undercharging in promotion and overcharging in ticketing and other high-margin businesses.
Focusing on a lack of robust procompetitive justifications, Chicago School adherents would recognize that there is no justification for retaliation and market division and that the typical procompetitive explanations for exclusive dealing and tying are not present here. In fact, several forms of Live Nation’s conduct fail the most deferential analysis, which asks if the behavior makes any sense absent harm to a rival. Such a test is not satisfied when the company sacrifices profits by not opening its venues to non-Live Nation shows and when it pursues acquisitions to “[k]eep [rivals] out of the region,” “grow[] [the company’s] moat,” and “lower competition.” Even the point that mergers with and acquisitions of small firms should not be judged in hindsight is weaker in this setting given the smoking guns of intent, smaller market share of entities in a Live Nation-dominated ecosystem, and overall course of conduct.
Conclusion
The DOJ and 30 attorneys general have filed a strong complaint that highlights a vast array of anticompetitive effects ranging across multiple markets. Success in this litigation promises to reduce price, improve quality, and increase choice and innovation. In getting out from under Live Nation’s ecosystem-wide stranglehold, consumers, artists, venues, and promoters stand to gain.
Author’s Disclosure: The author reports no conflicts of interest in writing this article. Please see here for our disclosure policy.
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