Federal courts can soon expect a filing from Uncle Sam against the biggest players in the live entertainment industry: Live Nation, the parent company of Ticketmaster. We don’t have much information about it yet — it’s been kept mostly under wraps and the government has declined to comment — but the feds have been investigating the company’s business practices for some time now. It seems that they’ve decided they finally have enough to bring charges, which could come as early as next month.
Two Become One
Ticketmaster and Live Nation were originally separate companies that merged only relatively recently. Founded in 1976, Ticketmaster focused on ticket sales and distribution, while Live Nation, founded in the 90s, specialized in concert promotion and artist management. In 2009, the two announced their agreement to merge.
Some mergers require government approval, depending on the size of the deal and its potential impact on competition. The main concern is preventing reduced competition. The government enforces antitrust laws to ensure a fair marketplace.
Companies must notify the Federal Trade Commission (FTC) and the Department of Justice (DOJ) about large mergers that meet a certain size threshold. The agencies then review the deal to assess its potential impact on competition. If the FTC or DOJ believes a merger would significantly harm competition, they can take legal action to block it.
The Live Nation-Ticketmaster merged was approved by regulatory bodies with certain conditions. One of those conditions was that Live Nation had to sell some of its holdings, such as a subsidiary company and its licensing software, to a competitor.
The result was that in 2010, the newly merged “Live Nation Entertainment” launched and shook up the entertainment industry. LNE has since handled many aspects of the industry — not just ticket sales and concert promotion, but also venue operation and artist management. Since the merger, the company has commanded more than 80% of the market for primary ticket sales at major U.S. venues.
Allegations of Market Dominance
Mergers like these that create industry giants are a red flag for the feds, and the DOJ’s antitrust division has been scrutinizing LNE for years following the merger.
With the company’s dominant position in the live music industry, the DOJ wants to keep tabs on it for potential violation of antitrust laws. LNE, through Ticketmaster, controls a significant portion of both ticketing and concert promotion. This raises concerns that it can squeeze out competitors and stifle innovation.
Investigators suspect LNE might be using its power to force venues to use Ticketmaster. This could limit choices for venues and potentially lead to higher fees for artists and fans. LNE could also stifle competition in concert promotion; by leveraging its ticketing dominance, LNE might make it harder for other promoters to compete.
Critics argue that Live Nation’s control over both concert promotion and ticketing is inherently anti-competitive. The company, however, maintains that it faces significant competition and denies any allegations of monopolistic practices.
The End of an Era?
In 2022, Taylor Swift’s “Eras Tour” ticket sales turned into a major controversy. Ticketmaster’s website crashed under immense demand, leaving fans frustrated and empty-handed. While they blamed bots and high traffic, fans suspected shady practices. Tickets vanished quickly, only to reappear for exorbitant prices on resale sites. Swift herself voiced her disapproval of the situation.
This fiasco sparked lawsuits from fans, a Senate hearing on ticketing industry practices, and increased scrutiny of Live Nation Entertainment’s dominance in the live music market. It signaled the need for legal reform to address unfair ticketing practices and empower both artists and fans. It also fueled concerns about LNE’s ability to handle high demand and potentially manipulate ticket sales.
LNE’s Legal History
Live Nation has a history with the DOJ. When the merger with Ticketmaster happened in 2010, the DOJ imposed limitations to prevent them from strong-arming venues into using Ticketmaster. The recent scrutiny suggests the DOJ might believe LNE hasn’t followed these agreements.
In past dealings with the DOJ, Live Nation has faced allegations of coercing venues into exclusive agreements with Ticketmaster. One of the conditions of approving the 2010 was that LNE would not retaliate against venues that choose a different ticketing service. But in 2019, the DOJ accused LNE of violating this agreement. After court involvement, a settlement was eventually reached.
In a January Senate Judiciary Committee hearing, industry experts and execs were grilled for three hours on whether the 2010 merger has allowed the company to grow so large that it’s hurting consumers as well as artists. Senator Richard Blumenthal of Connecticut called Live Nation an “800 pound gorilla” that has “clear dominance, monopolistic control.” He called our country’s concert ticket system “a monopolistic mess.”
Live Nation’s officials argue that accusations of their market power leading to high ticket prices and fees are unfounded, stating that these are often determined by artists and venues.
Lawsuit to Come
When the DOJ does bring its suit, it would likely be doing so under the Sherman Antitrust Act, a foundational piece of U.S. antitrust regulation originally enacted in 1890. It is aimed at addressing anticompetitive practices, and was the first federal law to limit monopolies.
Antitrust laws like the Sherman Act prevent monopolies that undermine competition and reduce economic fairness and consumer choice. Rooted in the principle that fair competition is critical for consumer protection, antitrust laws help reduce prices, improve quality, and foster innovation.
This lawsuit could join a series of major antitrust actions by the DOJ, including those against other large corporations like Apple and Google. The outcome of this legal challenge could set a precedent for how similar cases are handled in the future, especially regarding mergers that might stifle competition in significant markets.
Related Resources:
What Is Antitrust Law and Trade Regulation? (FindLaw’s Learn About the Law)
Microsoft and the Antitrust Laws in the Digital Age the Browser Wars and Beyond (FindLaw’s Corporate Counsel)
Why Is Ticketmaster Under Investigation? (FindLaw’s Courtside Blog)
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