The U.S. government may be signaling that it’s clamping down on monopolies and more broadly defining and enforcing antitrust law, experts say
The fiasco surrounding pre-ticket sales for Taylor Swift “The Eras Tour” last month — along with another snafu over tickets for Bad Bunny concerts in Mexico City earlier this month — have led to a major legal threat to the live-concert giant Live Nation Entertainment.
Live Nation, which has long been side-eyed since its 2010 merger with ticketing monolith Ticketmaster, now faces calls for congressional investigations by Sen. Amy Klobuchar (D-Minnesota) as well as an ongoing inquiry by the Department of Justice into possible violations of antitrust laws (the criminal investigation in fact predates the TSwift mess).
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Under the Biden administration, federal authorities have taken a more aggressive stance on antitrust matters — including the FTC’s lawsuit this month to block the merger of Microsoft and gaming giant Activision Blizzard as well as a federal judge’s decision to block the sale of Paramount’s Simon & Schuster to rival book publisher Penguin Random House.
“We just might be entering a period where the government is distorting a wider definition of broader expanse of the term monopoly and more willing to take action,” said Matthew Bilinsky, business attorney at Weinberg Gonser Frost LLP.
Live Nation has denied that it operates as a monopoly in the ticketing and live event space, but here’s what you need to know about what’s ahead for the embattled company.
What exactly is Live Nation accused of?
To put it simply: The Justice Department has launched an investigation into Live Nation Entertainment over concerns that it’s operating as a monopoly, breaking antitrust laws by controlling the live music concert industry. The company has declined the claims.
But authorities are focused on how the company, which owns and operates 400 venues and festivals, might be using its leverage to dominate the live-event space.
“There are allegations that the company is using its power over very desirable huge venues to help monopolize the ticket market by telling telling people that they won’t have access to the venues unless they use Ticketmaster,” said Eleanor M. Fox, Walter J. Derenberg Professor of Trade Regulation Emerita at New York University.
What happens if Live Nation is found in violation of the law?
Both the Justice Department and the FTC have gotten increasingly aggressive in antitrust matters, including the FTC’s recent challenge to the Microsoft-Activision Blizzard merger.
But blocking a proposed merger is different than confronting a long-merged company that dominates its industry. “The most accessible punishment would definitely be a fine, and theoretically — this seems to be a less likely or more far-reaching — an ordered breakup of Live Nation and Ticketmaster,” Bilinsky said. “So I’d say it’s three buckets: a fine; second, specific performance and corrective action for the benefit of consumers; and third, potential breakup or spin off of certain businesses — which is less likely.”
Why a cloud of doubt has always hovered over the Live Nation-Ticketmaster merger
In 2010, the U.S. Justice Department under Attorney General Eric Holder approved Live Nation’s $2.5 billion acquisition of Ticketmaster. As part of that merger, the company divested some of its assets to competitors, and agreed to abide by a consent decree limiting the company’s ability to abuse its dominance in the market.
The merger created a monster of a company. Today, Live Nation Entertainment puts on and promotes roughly 40,000 concerts a year, with Ticketmaster selling nearly 500 million tickets annually.
In December 2019, the Justice Department extended that decree — with some modifications — through 2025 even though it found the company “repeatedly conditioned and threatened to condition Live Nation’s provision of live concerts on a venue’s purchase of Ticketmaster ticketing services, and they have retaliated against venues that opted to use competing ticketing services — all in violation of the plain language of the decree.”
Klobuchar — who said she has always been “skeptical” of the merger — recently sent a letter to CEO Michael Rapino over concerns “that Ticketmaster continues to abuse its market positions.” She added that she’s uneasy about the state of competition in the ticketing industry and its harmful impact on consumers.
“There was controversy over whether that should have been approved, but [Ticketmaster and Live Nation] had arguments of efficiency and the Justice Department let it through under certain conditions,” Fox said. “The Justice Department has been investigating the company for not following the conditions they promised to fulfill — and those conditions with things like using the leverage of the company to steer people towards using Ticketmaster and not to use any other ticketing service if they wanted to use the venues and the stars that Live Nation has control over.”
How does the Taylor Swift Ticketmaster crash affect the investigation?
In reality, not at all. The fiasco exposed how Ticketmaster’s system couldn’t handle distributing the insanely large demand of tickets to millions of customers — and not having enough ticket inventory for Swift’s concert. Those failings forced Ticketmaster to cancel the public sale for the concert, even though it had previously invited fans to sign up for the pre-sale and confirmed some customers as “Verified Fans” two days prior. In the wake of the mess, the company says it will sell its remaining 170,000 Swift concert tickets for next year, and hopes to churn them out in the next several weeks.
The Taylor Swift ticketing drama may give the feds even more ammunition to crack down on the company — particularly in the court of public opinion, which has longed viewed Ticketmaster as an unpopular, inescapable giant in its industry.
“A lot of the recent issues with Ticketmaster — in terms of the Taylor Swift concert debacle — really didn’t have to do very much with anti-competitive behavior. The anti-competitive behavior, or anti-competitive impact of the merger had already kind of been set in the live ticketing, live event business,” Blinsky said. “However, when Ticketmaster runs into other difficulties with consumers, the [Federal Trade Commission] and the DOJ seems to be using that as a pretext to look more closely at the business generally. Whatever anti-competitive impact and market concentration impact Ticketmaster has had in that arena will be part of that investigation.”
Are monopolies actually illegal?
Not necessarily, but there are stipulations that a business must follow to not break the law. A basic definition of a monopoly is owning a market share of anything over 50% — to go over that threshold gives the courts reason to look into a company that could be operating as a monopoly. Ticketmaster controls over 70% of the market for ticketing and live events, as well as over 80% for live concerts, according to insights from Yale University.
“It’s not illegal to operate like a monopoly. If you’ve gotten your power through reasons other than anti-competitive acts. It’s not illegal to take the highest [price] in the United States under antitrust. It’s not illegal to get the highest price that people are willing to pay,” said Fox.
But, the definition of a monopoly has taken on different meanings depending on who’s in charge in Washington.
“The definition of a monopoly is somewhat subjective, and it’s constantly changing, different administrations, in different periods have a different definition or threshold for what’s considered a monopoly or monopolistic behavior. This has been both Republican and Democratic administrations,” Blinksy said.
“The Obama administration was not particularly strict with anti-competitive and enforcement of anti-monopolistic behavior,” he continued. “If this administration is more willing to take action and has a lower tolerance for certain anti-competitive behavior, they may try to assert a definition or accusations of a monopoly, where other administrations would not have.”
What does Live Nation Entertainment have to say about all this?
Not surprisingly, Live Nation reps have denied all claims of monopolistic behavior, noting that it faces competition from smaller ticketing sites like StubHub, SeatGeek and Vivid, among others.
“As we have stated many times in the past, Live Nation takes its responsibilities under the antitrust laws seriously and does not engage in behaviors that could justify antitrust litigation, let alone orders that would require it to alter fundamental business practices,” the company said in a statement from Nov. 18, adding that it has abided by the terms of the government’s consent decree for the last 12 years.
In addition, the company notes that it’s also a player in concert promotion, which is dictated by artist management. “The demand for live entertainment continues to grow, and there are more promoters than ever working with artists to help them connect with fans through live shows,” the company’s statement continued. “The Department of Justice itself recognized the competitive nature of the concert promotion business at the time of the Live Nation-Ticketmaster merger. That dynamic has not changed.”