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DOJ and states sue Live Nation-Ticketmaster for monopolizing live concert markets | MoginRubin limited liability company

Posted on by darion

The Justice Department’s Antitrust Division, along with 30 state attorneys general, sued Live Nation Entertainment Inc. and its subsidiary Ticketmaster LLC (collectively, “LNT”) on May 23 in the Southern District of New York for illegal monopolization and exclusionary conduct that allegedly harmed competition in the live entertainment industry.

The long-awaited lawsuit formally kicks off federal and state antitrust authorities’ efforts to end the 14-year merger of two of the largest players in their markets: concert production/promotion and ticketing (US, et al. v. Live Nation Entertainment Inc. and Ticketmaster LLC, No. 1:24-cv-03973. Read our previous post).

Citing violations of Art. 1 of the Sherman Act (exclusive trading and tying), Art. 2 of the Act (antitrust section) and state antitrust laws, the complaint sought structural relief that would generally restore competition in the industry. Specifically, the relief would be, as the complaint states:

  • Lower barriers for competitors to enter the market.
  • Create more ticketing options for consumers and venues.
  • Reduce ticket prices, which have increased by 34% since 2018.
  • Bringing innovation back to ticketing and payment technologies.
  • Taking over Ticketmaster’s control over the primary and secondary ticket sales markets.
  • Break Live Nation’s control over artists, venues and independent promoters.
  • Increase the opportunities for all working artists to perform at venues and for venue owners to host them.

Broken industry, flywheel model

“America’s live music industry is broken because Live Nation-Ticketmaster has an illegal monopoly,” said Assistant Attorney General Jonathan Kanter, head of the antitrust division. “Our antitrust lawsuit seeks to break up the Live Nation-Ticketmaster monopoly and restore competition to the benefit of fans and artists.”

LNT’s exclusionary practices reinforce and protect its “flywheel” business model – a self-reinforcing paradigm in which LNT “captures fees and revenue from concert fans and sponsorships, uses that revenue to provide artists with exclusive promotional offers, and then leverages its powerful cache live content to sign long-term exclusive ticketing agreements with venues, thus starting the cycle all over again,” the Department of Justice said in a statement. “Live Nation-Ticketmaster’s anti-competitive conduct creates even more barriers for rivals to compete on the basis of merit.”

LNT, which owns or controls more than 265 concert halls in North America, including more than 60 of America’s top 100 amphitheaters, allegedly engages in anti-competitive tactics, including:

  • Exploiting its relationship with sports venue management company Oak View Group, a “potential competitor-turned-partner” that avoids bidding against LNT for performers and influences sports venues to sign exclusive contracts with Ticketmaster.
  • Financial threats and retaliation against potential new competitors in the concert promotion market.
  • Threatening and retaliating against venues cooperating with LNT’s competitors promoting concerts. As a result, venues that choose another promoter or ticket seller run the risk that TNT will take action to deny that venue shows, revenue and fans.
  • Locking venues into long-term exclusive contracts so venues cannot use tickets from competing vendors, even if the competing technology is better.
  • Enforcing exclusive contracts for venues, preventing them from using multiple ticketing services, and acting to impede the emergence of new ticketing promotions and competitors and creative new business models.
  • Restricting artists’ access to venues by purchasing venues directly, forming partnerships with venue owners, or entering into anti-competitive agreements with venues. Artists must use LNT’s promotional services to perform at these venues.
  • Acquiring smaller and regional competitors when the LNT stronghold is threatened, which harms competition and reduces artists’ remuneration.

As the dominant player in this space, LNT generates more than $22 billion globally from concert promotion, venue management, music festival production, ticket sales, and sponsorships and advertising. Ticketmaster is by far the largest concert ticketing company in the United States, many times larger than its closest competitor.

To illustrate the power of LNT and the impact of its actions, even its biggest competitor – a powerful enterprise in its own right – fears losing concerts if it does not use Ticketmaster.

Anschutz Entertainment Group (AEG), with revenues of $7.6 billion, owns 30% of Anschutz Spectacor Management (ASM), which operates more than 30 arenas in the United States. ASM was established in 2019 as a result of the merger of AEG Facilities and Spectacor Management Group (SMG). Prior to the merger, SMG had an exclusive contract with Ticketmaster; AEG Facilities had exclusive rights to the AXS ticketing platform. AEG wanted AXS to be the exclusive primary ticket seller for the new ASM company, which AEG partially owned. However, ASM’s majority shareholder, Onex, a Canadian investment management company, feared that Live Nation would retaliate by halting performances at ASM venues if they did not use Ticketmaster. Ultimately, AEG was forced to use Ticketmaster, even though AEG was able to provide an alternative ticketing platform.

Marketplaces and Macki

Stating that LNT has “tentacles in virtually every aspect of the live entertainment industry,” the complaint describes the following antitrust markets this way:

  • Basic markets for ticket sales services – Major ticket providers offer a variety of services to two distinct customer groups: major concert venues and fans. The specific products and services offered to these two customer groups and the competitive conditions facing these two customer groups are different but related.
  • Markets for services related to concert promotion – Concert organizers similarly offer a variety of services to two distinct customer groups: major concert venues and artists. The specific products and services offered to these two customer groups and the competitive conditions facing these two customer groups are different but related.
  • The use of large amphitheaters by artists – Owners, operators and exclusive bookers of large amphitheaters offer artists the use of large amphitheaters for their performances. The relevant market is the provision of artists with the use of large amphitheaters and ancillary services to artists as part of tours of large amphitheaters.

The Justice Department is joined by AGs from Arizona, Arkansas, California, Colorado, Connecticut, the District of Columbia, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Virginia, Washington, West Virginia, Wisconsin and Wyoming.