Department of Justice Files Antitrust Lawsuit Against Live Nation/Ticketmaster

Events giant Live Nation Entertainment will soon be charging some fees – legal fees, that is.

On Thursday, the Justice Department announced it was suing Live Nation Entertainment on antitrust grounds. The lawsuit comes after long-running allegations of monopolistic practices and numerous federal investigations. The Justice Department’s action was largely expected after the Wall Street Journal’s April 15 report on the upcoming trial.

Live Nation Entertainment promotes and manages international events, as well as selling tickets through its more famous Ticketmaster division.

The antitrust lawsuit, joined by 30 states, was filed in federal court in the Southern District of New York. During a press conference following the announcement, Attorney General Merrick Garland detailed some of the Justice Department’s allegations against Live Nation Entertainment, including:

Blocking competition through long-term and exclusive contracts with major venues covering over 70% of event ticket sales.
Imposing a “seemingly endless” set of fees such as ticket fees, service fees, convenience fees, platinum fees, processing fees, and more.
Pressuring artists to use its services to promote events at venues with which it has long-term contracts.
Working “strategically and illegally to eliminate the threat of potential rivals” in the event ticketing industry, in some cases even when the deal made no financial sense for Live Nation’s business.

“Some monopolies are so entrenched and some problems are so intractable that they require strong and effective solutions,” Deputy Attorney General Jonathan Kanter said at a news conference. “We are demanding a remedy that has been used in antitrust law for over 100 years, namely, structural relief.”

Before the lawsuit was filed, during Live Nation Entertainment’s first quarterly earnings call of the year on May 3, president and chief financial officer Joe Berchtold said: “Based on the issues we are aware of, we do not believe that a breakup of Live Nation and Ticketmaster would be legally permissible remedy.”

The investigation began with Taylor Swift’s Eras Tour

The Department of Justice’s lawsuit stems from an investigation initiated in November 2022 following an incident in which Ticketmaster improperly sold tickets to Taylor Swift’s Eras Tour. The tour’s tiered pre-sale led to tickets selling out prematurely, meaning hopeful fans were unable to purchase them on public sale. Then, sellers who managed to get advance tickets put them up for sale at exorbitant prices.

Following this, fans of the pop star, also known as Swifties, filed a class-action lawsuit accusing the company of fraud, misrepresentation and anti-competitive practices.

The incident also prompted Congress to launch an investigation into the event ticketing company. In February 2023, lawmakers recommended that the Justice Department’s Antitrust Division also investigate Live Nation Entertainment.

Then in November 2023, the Senate Permanent Subcommittee on Investigations (PSI) issued a subpoena for records that it said Live Nation had not yet produced during the subcommittee’s investigation. The subcommittee also wrote a letter to the Department of Justice saying that the problems associated with Eras Tour “suggest that the Department’s past enforcement efforts have failed to protect competition.” It went on to say that if Live Nation had indeed abused its power in the event ticketing market, it might be prudent for the Department of Justice to separate Live Nation and Ticketmaster.

Live Nation Entertainment controls the majority of the event ticket market

In 2010, the Department of Justice approved the merger of event promoter Live Nation and ticketing company Ticketmaster to form Live Nation Entertainment. At the time of the companies’ consolidation, each was already a dominant player in the events industry: Ticketmaster in ticket sales and Live Nation in owning, operating and promoting venues.

Peter Cohan, a professor of practice in management at Babson College in Wellesley, Massachusetts, says the merger has been costly for consumers. Face value tickets have skyrocketed, but increasingly expensive fares have also been introduced. They are commonly called junk fees, and the Biden administration has made it a mission to put them on event ticket sales as well as travel and credit cards.

In a 2009 analysis Cohan wrote before the Live Nation merger, titled “Chokehold on Live Entertainment,” he looked at fees. Cohan says, “I came across a typical concert ticket – the Denver, Colorado, Green Day concert in 2009 – where the fee was 45% of the face value of the ticket. And now the fees are as high as 70% or 75%.”

In the more than ten years since the merger, Live Nation Entertainment has only strengthened its position in the market. During last year’s congressional investigation, PSI wrote to the Department of Justice, citing statistics showing Live Nation’s reach: 60% of the event ticket market is controlled by the company. This includes 80 of the 100 largest arenas in the US

Live Nation Entertainment’s ownership of and transactions with properties make it difficult for artists to use any other ticketing platform when touring, Cohan says. “If an artist wants to use another ticket provider, Live Nation will basically threaten to say, ‘Well, you can’t use this venue,'” he says.

This did not go unnoticed by the Department of Justice: In 2019, the Department of Justice determined that Live Nation had violated the consent decree agreed upon during the merger. The consent decree specifies that Live Nation Entertainment may not retaliate against concert venues for using other ticketing services. According to a December 19, 2019 press release, the Department of Justice found that “Live Nation” breached this agreement repeatedly and over several years.

The consent decree between the companies was set to expire after 2019, but the Justice Department extended the terms of the merger agreement through 2025. In the extension, the Justice Department clarified that Live Nation Entertainment cannot pressure venues to use Ticketmaster or risk losing Live programming Nation.

Live Nation Entertainment says the high prices are not to blame

In response to the analysis of the high ticket prices, Live Nation Entertainment sought to more fully explain the justification for the costs. Dan Wall, Live Nation Entertainment’s executive vice president of corporate and regulatory affairs, wrote in a March 4, 2024 open letter titled “The Truth About Ticket Prices” that high prices “have little to do with Live Nation or Ticketmaster.” Instead, high demand for high-profile concerts like the Eras Tour naturally leads to more expensive tickets. He went on to say that a contributing factor is artists’ increasing dependence on touring income – largely due to the prevalence of music streaming, which is not profitable for most artists.

Still, Wall wrote that artists tend to underprice tickets “primarily for the sake of their fans,” but the resale market shows artists how much their tickets might cost, which in turn leads artists to charge more because “when they don’t charge Those dealing with these prices will find a way to get their hands on the tickets and resell them at full market value.

He wrote: “The common thread in all of these factors is that they have nothing to do with who the promoter is or who is selling tickets to the show.” It is the artist’s business team that works with promoters to develop a strategy to ensure revenue by “doing right by their fans.”

Cohan says the secondary market has further tightened already high ticket prices – by several thousand percent markups. “If you go to buy a ticket and Ticketmaster says you can’t buy it, it’s because 90% of the tickets are reserved for secondary market players who immediately raise the price,” Cohan says. “Then you have to buy it on the secondary market and pay a lot more for it.”

Cohan says that on the secondary market, Ticketmaster charges more per transaction. However, Ticketmaster has publicly denied in the past that it is enabling a massive scaling system.

Live Nation reported record revenue of $22.7 billion in 2023.

This isn’t the Justice Department’s first rodeo with Ticketmaster

Anti-competitive accusations have been leveled against Ticketmaster for decades. In the early 1990s, grunge band Pearl Jam had a feud with Ticketmaster over service fees. A June 30, 1994 article in the Los Angeles Times stated that the band had accused Ticketmaster of refusing to sell tickets to the band’s tour at the price they wanted fans to demand: $18 or less and less than $2 in service fees (at the box office ). In total, Ticketmaster charged service fees ranging from $4 to $8 per ticket). Pearl Jam later tried to work outside the Ticketmaster system on its own low-cost tour, but the company allegedly influenced promoters and venues to boycott the tour altogether.

The clashes between Ticketmaster and Pearl Jam have led to a situation similar to the current investigation in the wake of the Eras Tour mess: The Justice Department launched an investigation into anticompetitive practices, while Congress called for hearings. Ultimately, Ticketmaster won.

What’s next

Cohan is skeptical that the merger will fall apart. He speculates that it’s more likely that Live Nation will hold off on legal proceedings as long as possible and possibly make changes to remedy some of the grievances, rather than go through the entire breakup of the companies.

Cohan, however, says that if the Justice Department does stop the merger, prices could increase somewhat because there would be less financial incentive for Live Nation to exclusively use Ticketmaster. But he says the completion of the merger is unlikely to have a significant impact.

“Things were pretty bad before they combined, and they probably would have been pretty bad afterwards if there hadn’t been a fundamental change in the way tickets were sold,” says Cohan, who suggests that direct sales between artists and consumers would probably be the next best option. He says artists need a way to sell tickets, but with existing e-commerce technology, large ticketing systems aren’t really needed.

“I’m sure a lot of artists – even smaller ones – could probably raise money and build a system where they could sell tickets directly to consumers without all these middlemen taking a cut where they’re not really adding any value,” he says. “It would probably still be expensive to go to a concert, but after excluding non-value-added costs it would be lower.”

This article regarding DOJ Files v. Live Nation/Ticketmaster antitrust lawsuit originally appeared on NerdWallet.