Former antitrust official: Justice Department lawsuit against Live Nation ‘ambitious’

June 4 (UPI) — The Department of Justice’s lawsuit against Live Nation aims to break up one of the largest ticket resellers in the United States in the latest swoop in the Biden administration’s antitrust cases.

The department filed a lawsuit in the Southern District of New York last week, alleging that Live Nation exercises monopoly power to empower venues and artists and maintain control over the event space. Live Nation has denied these allegations, arguing that the industry has never been more competitive.

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The lawsuit is the latest example of President Joe Biden’s administration taking action against potential antitrust violations. The Justice Department is pursuing lawsuits against Google and Apple, while the Federal Trade Commission has issued complaints against Amazon and Meta, formerly Facebook Inc.

According to legal experts, the legal theories used in the Live Nation case are not new. It is based on sections one and two of the Sherman Act, a federal law established in 1890 to prohibit attempted monopolization. But the scope of the case is ambitious, Douglas Melamed, a research fellow at Stanford Law School, told UPI.

Melamed was acting as deputy attorney general when President Bill Clinton’s administration filed a lawsuit against Microsoft, accusing it of monopolizing the computer software market.

“The allegation of monopolization of three separate markets is quite an ambitious case,” Melamed said. “At first glance, it is not obvious how they will prove this. It is factually ambitious.”

The three markets Melamed mentions are the venue market, ticketing and promotion. The government maintains that it has driven out competitors through intimidation, coercion and other means on all three fronts.

According to Attorney General Merrick Garland, this allows Live Nation to charge customers higher prices.

“It’s time to break it off,” Garland said in a statement. “We allege that LiveNation relies on unlawful, anti-competitive conduct to maintain this dominance. 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. “

According to a blog post by Dan Wall, Live Nation’s executive vice president of corporate and regulatory affairs, the lawsuit will not reduce ticket prices or service fees in any way. He also says Ticketmaster’s market share has declined since its merger with Live Nation in 2010, and competition is greater than ever.

Wall notes that Ticketmaster’s service fee rates are lower than those of other services such as airbnb, Uber, Playstation, Twitch and rival StubHub.

“DOJ fails to help consumers solve their real problems,” Wall writes. “That’s why the government has never been less popular – because it pretends to solve your problems when instead it panders to a narrow set of political interests.”

Live Nation Ticketmaster Merger

The Department of Justice approved the merger of Live Nation and Ticketmaster in a 2010 consent decree. This imposed certain conditions on the merger, prohibiting what were considered potentially anti-competitive practices.

Ticketmaster in particular has been struggling since then, with consumers complaining about difficulties purchasing tickets, long wait times and high prices.

The problems came to a head in 2022 when tickets for Taylor Swift’s Eras Tour went on sale. The Ticketmaster website was overwhelmed with ticket requests, leading to hours of downtime.

Many tickets were snapped up and resold at higher prices on the secondary market, in some cases for tens of thousands of dollars.

“I believe in capitalism and a strong capitalist system,” Sen. Amy Klobuchar, D-Minn., said during a 2023 hearing on competition in the live entertainment industry. “There has to be competition, there can’t be too much consolidation – something that, unfortunately for this country, in an ode to Taylor Swift, I’ll say we know all too well.”

George Hay, the Charles Frank Reavis Sr. Corness Professor of Law, said the Justice Department probably regrets allowing the merger.

“They have been looking at this issue for a long time,” Hay told UPI. “The Taylor Swift thing kind of highlighted that. The Department of Justice regrets that it allowed this merger to occur. ​​People have been complaining about this for some time.”

Hay mentions the United States vs. AT&T Inc. case. in 1982 as a case resembling the Live Nation lawsuit. It was claimed that AT&T had a monopoly on local telephone service. The government ordered it to get rid of control of Bell’s operating companies to break the monopoly.

“They were making sure that competitors like MCI couldn’t connect with local markets,” Hay said. “The remedy was to separate long-distance markets from local markets.”

Similarly, the Justice Department is trying to separate Ticketmaster and its Live Nation ticketing service from the rest of the company.

The Biden administration and monopolies

According to Hay, the Biden administration has been more aggressive than most in handling antitrust complaints. He said administrations are typically Democratic, but with cases against Google, Meta, Apple, Amazon and now Live Nation, the Biden administration could usher in monumental change in the digital arena.

However, so far none of the cases has set a new precedent.

“These are difficult issues. They did not come to light in the first week of the term,” Hay said. “It took time to build all of them.”

Monopolies similar to those allegedly built by companies like Google, Meta, Apple and Amazon are called platform monopolies. They differ from the classic brick-and-mortar monopolies of the past, such as AT&T, in their reach and in government concerns about their potential for longevity.

“IBM had a monopoly on computing in 1969. People thought the monopoly would last forever, but who today thinks of IBM that way?” Hay said. “There are concerns today that these platform monopolies are more durable than other monopolies, so the government must do something or they will continue.”

For example, Google is accused of monopolizing the digital advertising space through its search engine. The Justice Department says it favors certain advertisers in search engines, effectively tilting the scale of competition in far-reaching ways.

Meanwhile, consumers have widely adopted these platforms and made them an ever-present part of their daily lives. While they dominate their markets, they also have their own ecosystems that expand their presence even further.

While the Biden administration has aggressively gone after tech platforms, it has also focused on preventing mergers, Melamed said.

“They created an aggressive new set of merger guidelines. ​​They have been very aggressive in trying to prevent and stop mergers, he said. “The deterrent is that the FTC has been more aggressive. The Department of Justice has changed many policies and procedures. The effects of pre-merger review are much more onerous for merging parties.”

The role of the president

It will be at least a year before the case against Live Nation goes to trial. There may be a new board by then. Melamed said this could have an impact on these cases.

When President Ronald Reagan took office, two significant antitrust cases were outstanding. One involved a case against AT&T. The government reached a “favorable agreement” in this matter, Melamed said.

The second case was a case brought against IBM more than a decade earlier. After 13 years, the lawsuit was discontinued.

Melamed said that if former President Donald Trump is elected, there are two options: continuing the cases or settling on terms more favorable to the defendants.

“Antitrust law, at least since the 1970s and 1980s, has been somewhat of a technocratic area of ​​law in which there is broad consensus. If agencies bring a case, usually their successors will respect the seriousness of the case and pursue it, Melamed said.

“The Trump administration is unlikely to say we have to respect workers. They are more likely to show contempt for them because that is their style. The most likely thing, short of withdrawing the cases, would be for them to be settled, and probably on terms that are reasonably favorable to the defendant.”

If the Live Nation case does come to fruition, regardless of who is in office, Hay expects it will be a court case.

“Most civil cases handled by the government are bench trials. It makes things go faster,” Hay said. “The government attempted to bring a jury trial against Amazon, seeking damages. I’m not sure they did it here.”

“There is always the possibility of the government and Live Nation settling the matter if Live Nation promises to stop certain activities,” he continued. “The government clearly wants to spin off Ticketmaster. Live Nation is not going to agree to this. Live Nation has made promises in the past and the government says it has failed to keep them.”