The Justice Department is seeking Live Nation and severance from Ticketmaster in antitrust lawsuit

Fourteen years after a merger that transformed the concert industry, the US government is seeking to separate Live Nation and Ticketmaster.

In a lawsuit filed in New York by the Department of Justice and attorneys general from dozens of states and the District of Columbia, Live Nation is accused of using its market dominance to restrict competition and harm consumers.

“We allege that Live Nation relies on unlawful, anticompetitive conduct to exercise its monopoly control over the U.S. live events industry at the expense of fans, artists, smaller promoters and venue operators,” Attorney General Merrick B. Garland said in a statement statement. “As a result, fans pay more in fees, artists have fewer opportunities to play shows, smaller promoters are squeezed out and venues have less real choice in ticketing services. It is time to part ways with Live Nation-Ticketmaster.”

At the press conference, Garland emphasized that the reason for the lawsuit wasn’t just because Ticketmaster annoyed people — the latest wave of attention regarding the Ticketmaster-Live Nation merger came after Taylor’s frustrating November 2022 sell-off of Swift’s “Eras Tour,” which sparked a lot of media outcry and congressional hearings.

“We’re not here because Ticketmaster’s behavior is inconvenient or frustrating… we’re here because it’s illegal,” Garland said.

If the Department of Justice is successful and Ticketmaster is spun off from Live Nation, it would mark the most significant change in the live entertainment industry since the merger itself. For its part, Live Nation says nothing in the lawsuit will “resolve fans’ concerns about ticket prices, service fees and access to in-demand programming.”

“Calling Ticketmaster a monopoly may be a PR victory for the Justice Department in the short term, but it will lose in court because it ignores basic principles of the live entertainment economy, such as the fact that most service fees go to venues and that competition continually erodes market share and Ticketmaster’s profit margin,” Live Nation said in a statement. “Our growth comes from helping artists tour the world, create lasting memories for millions of fans and support local economies across the country by maintaining high-quality jobs. We will defend ourselves against these baseless allegations, use this opportunity to shine a light on the industry, and continue to push for reforms that truly protect consumers and artists.”

Bill Werde, director of the Bandier Recording and Entertainment Industries Program at Syracuse University, says he’s not sure how the lawsuit and its proposed remedies will benefit consumers.

“There is no denying that Live Nation is a giant in the live entertainment space. If you look at total revenue, Live Nation is literally 10 times larger than its closest competitors in AEG Live and CTS Eventim. “However, it is unclear to me how the Department of Justice lawsuit will actually help fans who only care about one thing: access to affordable concert tickets,” he says. “On the one hand, today’s artists have a very strong and distinct ability to set and control concert tickets – an ability that most artists prefer not to use. At the same time, the concert industry and fans have a fundamental supply and demand problem. There are simply exponentially more fans wanting tickets than seats on hot tours.”

The lawsuit attacks Live Nation’s flywheel strategy of strengthening its market position and driving out competitors.

“Live Nation-Ticketmaster’s self-reinforcing business model… takes fees and revenue from concert fans and sponsors, leverages that revenue to provide artists with access to exclusive promotional offers, and then leverages a powerful cache of live content to sign long-term exclusive tickets for transaction venues , thus starting the cycle all over again,” the Department of Justice said in a news release.

Specifically, the lawsuit alleged a variety of tactics that the Justice Department says are intended to “eliminate competition and monopolize markets.” Among them, Live Nation’s coverage of Oak View Group (Poll starparent company), which, according to the Justice Department, “avoided bidding against Live Nation for talent acquisition and influenced sports venues to sign exclusive contracts with Ticketmaster.”

The lawsuit also alleges that Live Nation used its influence to thwart TEG’s attempts to expand its promotional activities into the United States. According to the lawsuit, Live Nation attempted to prevent TEG from using StubHub as a ticket sales source for the Los Angeles Memorial Coliseum concert by refusing to honor any seats sold through StubHub.

The Justice Department, without providing specific examples, also maintains that Live Nation threatens – usually implicitly, the lawsuit claims, sometimes more directly – venues that if they do not use Ticketmaster, they will not benefit from the promoter’s prime tour dates. And as the lawsuit claims, it works the other way round: if an artist refuses to use Live Nation as a promoter, they can expect to be denied a seat at a Live Nation-owned venue.

In its statement, Live Nation indicated that Live Nation and Ticketmaster’s annual net profit of 1.4% was “the antithesis of monopoly power”; that competition in the live industry market is greater than ever; that “Ticketmaster’s market share has declined since 2010”; and that the lawsuit says the Justice Department ignores real solutions to “lower prices and protect fans – such as allowing artists to cap resale prices.”

Dan Wall, Live Nation’s executive vice president of corporate and regulatory affairs, posted a detailed rebuttal to the Justice Department’s allegations on the company’s website.

The lawsuit was filed after LN President and CEO Joe Berchtold spoke this week at J.P. Morgan’s Global Technology, Media and Communications conference and said that meetings between the company’s top executives and top Justice Department officials were ongoing.

The Department of Justice opened an antitrust investigation into Live Nation in November 2022 “Wall Street” daily in April he announced that a lawsuit was imminent.

Still, Berchtold believes the Justice Department has an “open mind.”

“We wouldn’t have gotten to this point if they hadn’t had concerns, but the good news is we’re still talking and they’ve said they have an open mind,” he told the conference. “Without going into the real details of the conversation, I think it’s safe to say that I still believe that we fundamentally have business practices that are completely defensible. However, we are also open to finding common ground to resolve this issue and continue work. But at this point we don’t know exactly what they want. “

Berchtold’s statement echoes what he told investors during the company’s quarterly earnings call on May 2, when said discussions between senior company officials and the Justice Department indicated that the feds were in the “final stages” of their investigation. During that conversation, Berchtold acknowledged that “competitors and interest groups” had pressured the Justice Department to separate Live Nation and Ticketmaster, but he did not believe that this was a legally available remedy because the Justice Department “has repeatedly stated in court filings that the merger and settlement were in the public interest.”

“The Department of Justice’s investigation appears to be focused on specific business practices and not on the legality of the Live Nation and Ticketmaster merger or our overall business structure. “Very little of the conduct that the Department of Justice has mentioned relates to the combination of ticketing and promotions resulting from the merger,” he said.

Live Nation entered into a consent decree with the federal government in 2010, following the 2009 merger of LN and Ticketmaster. The consent decree was amended in 2020 and is scheduled to expire at the end of 2025.

In January 2020, the Department of Justice filed a memorandum stating that Live Nation “retaliated against concert venues for using the services of another ticketing company or making or threatening to make Live Nation’s provision of concerts and other live events dependent on the venue’s purchase of the service Ticketmaster ticket sales… Specifically, defendants repeatedly conditioned and threatened to condition Live Nation’s provision of live concerts on the venue’s purchase of Ticketmaster ticketing services, and also took retaliatory actions against venues that chose to use competing ticketing services – all violation of the plain language of the decree. Indeed, Defendants’ well-deserved reputation for threats and retaliation in violation of the Final Judgment has so permeated the industry that venues are afraid to leave Ticketmaster lest they risk losing Live Nation concerts, making it more difficult to effectively compete in mainstream ticketing services.”

Despite strong words referring to the findings from the beginning of the consent decree, no antitrust proceedings were pending at that time.