US sues to unlink Ticketmaster and Live Nation in landmark monopoly lawsuit

Washington
CNN
—

In a landmark antitrust lawsuit that threatens to upend the way concertgoers pay for tickets, the U.S. government and dozens of states sued Live Nation on Thursday, alleging that for years parent company Ticketmaster abused its industry dominance to harm fans across the country.

The long-awaited lawsuit, filed in New York by the Justice Department and 30 state and district attorneys general, challenges the nation’s largest online ticketing website and concert promoter, which regulators say masterminded the scheme to stifle competition. The governments are demanding a jury trial and dissolution of the company.

If successful, the case could lead to radical changes in the live events market – an industry that has come under intense scrutiny in 2022 after glitches at Ticketmaster prevented millions of people from purchasing tickets for Taylor Swift’s “Eras” tour.

For many critics of Live Nation, Swift’s debacle exposed how a lack of competition has led to harm ranging from poor customer service, to misleading pricing, to high ticket fees, to restrictions on the resale of tickets – with many consumers complaining about the deaths of thousands of people cut .

But fans hoping to save money aren’t out of the woods yet, as the lawsuit will likely take years to go to trial. Meanwhile, the exorbitant fees they know all too well are unlikely to be dramatically impacted.

In a statement, Live Nation called the Justice Department’s allegations “baseless.”

“The Department of Justice’s lawsuit will not address fans’ concerns about ticket prices, service fees and access to in-demand programming,” Live Nation said in a statement. “Calling Ticketmaster a monopoly may gain PR for the Justice Department in the short term, but it will lose in court because it ignores the basic principles of the economics of live entertainment.”

Unlike some other companies the Justice Department has sued, Live Nation does not profit hugely from its market position, the company added.

“Live Nation’s net profit margin in the last fiscal year was 1.4%, lagging behind the Justice Department’s other technology targets,” the company said in a statement, noting that Apple and Google – both targets of Justice Department antitrust lawsuits – they have margins as high as 24%.

Shares of Live Nation (LYV) fell 5% on this news.

Attorney General Merrick Garland outlined a seemingly endless list of fees charged to Ticketmaster customers at a press conference Thursday. “These include, but are not limited to: ticket fees, service fees, convenience fees, platinum fees, order fees, processing fees and payment processing fees.”

Garland noted, however, that irritation was not the reason the Justice Department filed the lawsuit.

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

Prosecutors allege that Live Nation’s ultimate goal was to monopolize the ticketing and live events industry by terminating exclusive contracts with the country’s largest venues, thereby securing tickets to all future events through the company’s platform.

The lawsuit says Live Nation directly manages more than 400 artists, controls approximately 60% of concert promotions at major concert venues nationwide and controls more than 265 concert venues in North America. Through Ticketmaster, the lawsuit alleges, Live Nation controls approximately 80% or more of prime concert tickets at major venues.

“We allege that Live Nation relies on unlawful, anticompetitive conduct to exercise monopoly control over the live events industry in the United States at the expense of fans, artists, smaller promoters and venue operators,” Garland said in a 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.”

Musicians also complain about Live Nation’s tightly integrated operation, which combines event ticketing services with control of about 200 popular U.S. venues, which critics say allows the company to dictate terms and fees to artists.

In response to the Ticketmaster fiasco that enraged her fans in 2022, Swift wrote on Instagram that the situation was “terrible to me” and “infuriating.”

The company also has bad relationships with several other artists who have targeted Live Nation’s practices, including The Cure frontman Robert Smith, who said he was “bored” of Ticketmaster royalties, and country singer Zach Bryan, who in 2022 . released a collection of live performances titled “All My Homies Hate Ticketmaster (Live at Red Rocks)”.

At the press conference, Garland talked about his personal experience when he went to a Bonnie Raitt concert in high school and saw Bruce Springsteen as a warm-up act.

“We all knew we had just seen the future of rock and roll,” he mused. “The Department of Justice filed a lawsuit on behalf of fans who should be able to go to concerts without a monopoly standing in their way.”

Ticketmaster’s competitors were pleased with the lawsuit.

“For almost fifteen years, monopolies Ticketmaster and Live Nation have ignored the fan experience: fans have been confined to a single platform only to suffer through a consumer experience that has repeatedly failed them,” StubHub said in a statement. “We hope this will create a healthier ticketing market that strengthens competition, drives innovation and puts the fan experience at the forefront.”

Now the US government is taking a stand against Live Nation’s economic power for the first time since the company merged with Ticketmaster in 2010. Regulators then chose to tolerate it; instead of suing to block the transaction, they imposed certain obligations on the company aimed at anticipating the potential damage that the merger might cause.

The lawsuit is likely to be applauded by antitrust advocates, who say they knew from the beginning that the Live Nation and Ticketmaster merger would be troublesome. Critics of the agreement include US lawmakers, including Minnesota Democratic Senator Amy Klobuchar and Connecticut Democratic Senator Richard Blumenthal, who in 2019 called on the Justice Department to investigate Live Nation for failing to meet its obligations. Klobuchar, Blumenthal and many other senators, including Texas Sens. John Cornyn and Ted Cruz, have proposed numerous bills to regulate the ticketing industry.

“The Department of Justice is doing the right thing today in seeking to break up this monopoly that has long harmed fans, artists and venues,” Klobuchar said in a statement. “In addition to holding Live Nation accountable, I have also fought to create commonsense guardrails that promote healthy competition in the ticketing market, and I will continue to work to pass my bipartisan legislation that will do just that.”

The lawsuit highlights that after more than a decade, regulators believe the behavioral modifications to which Live Nation agreed have failed. These claims dovetail with a broader push by the Biden administration to increase antitrust enforcement across the economy, with officials blaming decades of lax enforcement for a wave of consolidation and diminished consumer power.

Requesting a jury trial is unusual: Recent antitrust trials have asked a judge to rule because they can be lengthy and lead to complex law.

The list of states and districts participating in Thursday’s trial includes Arizona, Arkansas, California, Colorado, Connecticut, 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, Wyoming and the District of Columbia, according to court records in the U.S. District Court for the Southern District of New York.

“For too long, Live Nation and Ticketmaster have unfairly and illegally governed the live events world, using their dominance to overcharge fans, abuse venues and restrict artists,” New York Attorney General Letitia James said in a statement. “Everyone agrees that Live Nation and Ticketmaster are the problem and it’s time for a new era.”

This is a developing story. It will be updated.