UPDATED: Department Of Justice Files Antitrust Lawsuit Against Live Nation And Ticketmaster

UPDATED: NEW YORK, NY (CelebrityAccess)—This morning, the Division of Justice (DOJ) and 30 state and district lawyer generals filed swimsuit in opposition to Stay Nation (LN), alleging that Ticketmaster’s (TM) mum or dad firm has abused its dominance to hurt followers nationwide. Per CNN, The federal government is in search of a jury trial and a breakup of the corporate. A request for a jury trial is uncommon: Latest antitrust lawsuits have requested for a choose to rule as a result of they are often lengthy and get into difficult legislation.

LN has responded with a press release:

“The DOJ’s lawsuit received’t clear up the problems followers care about regarding ticket costs, service charges, and entry to in-demand exhibits. Calling Ticketmaster a monopoly could also be a PR win for the DOJ within the brief time period, however it’s going to lose in courtroom as a result of it ignores the fundamental economics of stay leisure, resembling the truth that the majority of service charges go to venues and that competitors has steadily eroded Ticketmaster’s market share and revenue margin. Our progress comes from serving to artists tour globally, creating lasting reminiscences for thousands and thousands of followers, and supporting native economies throughout the nation by sustaining high quality jobs. We are going to defend in opposition to these baseless allegations, use this chance to make clear the trade, and proceed to push for reforms that really shield customers and artists.”

• Stay Nation and Ticketmaster’s annual 1.4% annual web income are the alternative of monopoly energy.
• There’s extra competitors than ever within the stay occasions market – which is why Ticketmaster’s market share has declined since 2010.
• This lawsuit distracts from actual options that will lower costs and shield followers – like letting artists cap resale costs

Assertion by Dan Wall, Government Vice President (EVP), Company and Regulatory Affairs, Stay Nation Leisure:

By Dan Wall, Government Vice President, Company and Regulatory Affairs, Stay Nation Leisure, Inc

• This lawsuit in opposition to Stay Nation and Ticketmaster received’t cut back ticket costs or service charges.
• There’s extra competitors than ever within the stay occasions market – which is why Ticketmaster’s market share has declined since 2010.
• Internet income present Stay Nation and Ticketmaster don’t wield monopoly energy.
• This lawsuit distracts from actual options that will lower costs and shield followers – like letting artists cap resale costs.

The Division of Justice and a bunch of State Attorneys Normal have now filed the much-anticipated antitrust swimsuit in opposition to Stay Nation and Ticketmaster.  This follows intense political stress on DOJ to file a lawsuit, and a long-term lobbying marketing campaign from rivals attempting to restrict competitors and ticket brokers in search of authorities safety for his or her enterprise mannequin of scooping up live performance tickets and jacking up the worth.

The criticism—and much more so the press convention saying it—try to painting Stay Nation and Ticketmaster as the reason for fan frustration with the stay leisure trade.  Regardless of admitting that “[t]he face values of tickets are sometimes set or accepted by artists,” it blames live performance promoters and ticketing firms—neither of which management ticket costs—for top ticket costs.  It ignores every thing that’s really answerable for larger ticket costs, from rising manufacturing prices, to artist recognition, to 24/7 on-line ticket scalping that reveals the general public’s willingness to pay way over main ticket costs.  It blames Stay Nation and Ticketmaster for top service prices—and simply the truth that there are charges—however ignores that Ticketmaster retains solely a modest portion of these charges. The truth is, main ticketing is likely one of the least costly digital distributions within the economic system.

In mild of those knowledge, Assistant Legal professional Normal Kanter’s dodge of a reporter’s query about how a lot Ticketmaster contributes to charges was telling.

It’s also absurd to assert that Stay Nation and Ticketmaster wield monopoly energy.  The defining characteristic of a monopolist is monopoly income derived from monopoly pricing.  Stay Nation under no circumstances matches the profile.  Service prices on Ticketmaster aren’t any larger than on SeatGeek, AXS, or different main ticketing websites, and are often decrease.  The truth is, when Ticketmaster loses a venue to SeatGeek, service prices normally go up considerably.  And even accounting for sponsorship, an promoting enterprise that helps preserve ticket costs down, Stay Nation’s total web revenue margin is on the low finish of worthwhile S&P 500 firms.

The trendlines verify Stay Nation’s lack of market energy.  Yearly, competitors within the trade drives Stay Nation to earn decrease take charges from each live performance promotion and ticketing.  The corporate is worthwhile and rising as a result of it helps develop the trade, not as a result of it has market energy that squeezes extra revenue from much less output.

Within the weeks main as much as immediately, we met a number of instances with the DOJ entrance workplace. It was evident in our discussions that they only didn’t need to imagine the numbers.  The info conflicted an excessive amount of with their preordained narrative that Stay Nation belongs within the ranks of the opposite “tech monopolists” they’ve focused.

At backside, we’re one other casualty of this Administration’s resolution to show over antitrust enforcement to a populist urge that merely rejects how antitrust legislation works.  Some name this “Anti-Monopoly”, however in actuality it’s simply anti-business.  A central tenet of this worldview is that antitrust ought to goal firms which have grown massive sufficient that in some nebulous approach they “dominate” markets—even when they attained their dimension by success within the market, not practices that hurt customers, which is the precise focus of antitrust legal guidelines. One of the jaw-dropping elements of immediately’s criticism is the assertion that there are “limitations to entry”  as a result of “artists naturally want to work with a promoter who’s profitable in selling many high-demand exhibits at fashionable venues”—particularly, Stay Nation.  That could be a supreme expression of competitors on the deserves, successful by being higher.  However to this group it’s anticompetitive.

The brand new pondering can also be waging conflict on vertical integration, typically and notably within the case of so-called “dominant platform firms.”  There is no such thing as a authorized foundation for objecting to vertical integration on such grounds.  Antitrust legislation views vertical integration as procompetitive in most circumstances.  Because the main antitrust treatise states, “vertical integration is ubiquitous and … [in] the good majority of circumstances no anticompetitive penalties may be hooked up to it.”  And, critically, Stay Nation can supply and has supplied followers, artists, venues and the remainder of the stay leisure ecosystem higher costs and higher providers than they might obtain if these complementary companies had been separated.  Ticketmaster particularly is a much better, extra artist- and fan-focused enterprise beneath Stay Nation’s possession than it ever was as a standalone firm. The criticism is totally devoid of any response to that inescapable truth—as a result of DOJ has no reply for it.

The Obama Administration noticed issues in a different way.  It allowed Stay Nation and Ticketmaster to merge, and in defending that place acknowledged that there was no authorized foundation for difficult the vertical facets of the merger—particularly, permitting a big live performance promoter to mix with a big ticketing firm.  In a single submitting, it mentioned that it had “decided that it couldn’t show that the vertical integration ensuing from the merger would considerably hurt competitors within the live performance promotion market.”  There is no such thing as a factual foundation for concluding in any other case immediately.

Assistant Legal professional Normal Kanter’s protection of in search of a breakup at immediately’s press convention offered no reasoning to assist a breakup.  First, he has his antitrust legislation incorrect, as a result of the DOJ has much more energy to problem a merger, which is illegal whether it is probably to be anticompetitive, than beneath the monopoly commonplace which requires proof of precise anticompetitive results.  So the DOJ can’t shrug off the truth that it allowed Stay Nation and Ticketmaster to merge as a result of, because it admitted, it couldn’t show even a probability of anticompetitive results.  And even on this criticism, DOJ doesn’t contend the merger was illegal.  It’s simply pandering to the group with a request for aid that, in my view, it can’t probably hope to attain beneath these circumstances.

It’s also essential that the “different conduct” on this criticism is both precisely what the Obama DOJ addressed within the 2010 Consent Decree or has nothing to do with vertical integration.   It’s, as an alternative, a seize bag of disconnected alleged practices that would by no means justify the sort structural aid DOJ seeks.

Oak View Group

The criticism makes two principal claims regarding Stay Nation’s relationship with the Oak View Group (“OVG”), a venue administration firm.  The primary qualifies as disingenuous, in that it’s premised on the concept OVG was a severe potential rival to Stay Nation in live performance promotion.  OVG owns and manages venues.  It has by no means been a live performance promoter, nor aspired to be one—which is exactly the purpose being made within the e mail DOJ quotes.  DOJ’s declare is predicated on two incidents during which Stay Nation and OVG had been discussing what to do when an OVG venue wished to e book on occasional present itself on a darkish evening.  To painting that as an settlement to not compete in live performance promotion is farcical—notably when the criticism defines the related promotions market as a marketplace for regional or nationwide excursions, and explicitly disavows the suggestion that “self-supply” of exhibits from venue homeowners is a part of that market.

Regardless, OVG’s habits as a venue operator is totally according to each main enviornment and stadium within the nation—they should have an in home booker who helps fill in any other case darkish nights, however they’ve no real interest in systematically taking up the chance of ensures that may very well be within the thousands and thousands of {dollars} for a present or tens of thousands and thousands of {dollars} for a tour.

DOJ additionally claims it was anticompetitive for Ticketmaster to compete for and win a ticketing contract OVG supplied.  The speculation is that the contract gave Ticketmaster an unfair benefit in securing the enterprise of unbiased venues that had been managed by OVG as a result of it creates monetary incentives for OVG to “advocate for” Ticketmaster.  However there’s nothing remotely anticompetitive about that.  Business preparations that contain incentive or advertising funds are frequent all through this trade (and lots of others).  Venue administration firms like OVG and ASM are ready to advocate for a wide range of service suppliers, together with however on no account restricted to ticketing firms.  So there’s competitors for the enterprise alternatives at each the venues they personal, which they management, and the venues they handle, which they don’t management however can doubtlessly affect.  Ticketmaster competed and received the contract on the deserves as a result of OVG decided it was one of the best ticketing system out there.

Threatening Silver Lake

This declare reveals not solely a disregard for the details, but in addition deep hypocrisy.  The present DOJ and FTC have been vocal critics of personal fairness firms making a number of investments in the identical trade due to aggressive “entanglements.”  So was Stay Nation CEO Michael Rapino when, after it had already made an funding in OVG, Silver Lake Companions determined to put money into the Australian stay leisure firm, TEG.  Rapino’s criticism was essentially the identical because the DOJ/FTC concern with personal fairness rollups:  it created a battle between OVG, which had turn into an in depth companion to Stay Nation, and TEG.  So, in December 2021 when a TEG worker wrote to say that it didn’t intend to compete with Stay Nation within the U.S., Rapino replied to Silver Lake’s administration that he didn’t care about TEG, however nonetheless had an issue with Silver Lake’s resolution to make a number of conflicting investments within the trade.

There is no such thing as a fact that this transient trade had something to do with Silver Lake’s resolution to promote its stake in TEG.

Unique Contracting

The swimsuit challenges unique ticketing contracts between venues and ticketing firms.  That could be a apply that has been prevalent within the main ticketing enterprise for many years.  The truth is, DOJ investigated it within the Clinton Administration and selected to not problem it as a result of their investigation revealed that venues—the customers of main ticketing providers—most popular it.

That’s nonetheless how venues see it, and for good purpose.  Main ticketing methods embody far more than what a fan experiences when shopping for a ticket on-line.  They’re advanced venue field workplace administration methods, and every is exclusive.  Only a few live performance venues need to have multiple as a result of they see it as not well worth the added prices and complexity.  So, the choice for almost all live performance venues just isn’t whether or not to have two or extra ticketing providers suppliers, however moderately which one supplier to decide on. And since that’s how a venue seems to be on the world, it’s no shock that they—the venues—need to undertake the contracting construction and create the bidding dynamics that can get them the absolute best deal from their most desired supplier.  Aggressive bidding for unique rights is the confirmed approach for venues to create bidding stress and maximize the worth of their ticketing rights.  In different phrases, exclusivity is a product of competitors for venues, not an anticompetitive apply.

Serial Promoter Acquisitions

One other a part of the Grievance asserts that Stay Nation has violated the legislation by buying, in serial trend, numerous different live performance promoters.  The speculation is evidently that competitors has been thwarted as a result of, however for these acquisitions, the promoters would have acted as vital opponents to Stay Nation’s personal live performance promotion enterprise.

That premise is factually incorrect. Through the time interval at challenge (roughly the final ten years or so), Stay Nation has by no means acquired any U.S. promoter that would plausibly be considered as a significant potential competitor within the alleged nationwide touring market.  Have a look at the instance Legal professional Normal Garland raised:  Stay Nation’s 2016 acquisition of AC Leisure in Knoxville, Tennessee.  This was an acquisition of a one promoter, who was in his 60s and seeking to retire.  He approached Stay Nation seeking to discover a good, long-term house for his staff.  Stay Nation didn’t have a Knoxville workplace, so for $15 million it made the deal. Critically?  The DOJ is difficult that?

The truth is, most of our M&A exercise within the U.S. has been focused at discrete areas during which we successfully had no significant presence in any respect—most notably selling festivals, moderately than commonplace exhibits or excursions—or seizing alternatives to broaden into new geographies. Numerous these offers, like AC Leisure, have been with promoters who had been on the cusp of retiring and had been on the lookout for an alternative choice to winding down the enterprise. The notion that these acquisitions one way or the other materially altered the aggressive panorama in any approach that will be problematic is wholly untenable.

Amps

The Grievance has a wide range of allegations round Stay Nation’s conduct with respect to amphitheaters it operates. Most surprisingly, the DOJ has alleged that it’s anticompetitive tying for Stay Nation to solely e book its personal amps.  That’s legally specious.  First, if that’s tying, then it’s pervasive throughout the trade.  Numerous promoters solely e book venues they personal or function.  However it isn’t tying, legally; DOJ’s tying verbiage is an effort to bypass the bedrock antitrust precept that no enterprise, even a monopolist, has an obligation to cope with opponents.  The Supreme Courtroom has repeatedly affirmed this precept, and the slender exceptions to it don’t apply to this case.  Stay Nation—and each different vertically-integrated promoter/venue proprietor—has an almost unqualified proper to not cope with rivals.

The baseless nature of this declare is amplified by the truth that we’ve got—opposite to what DOJ alleges—allowed artists promoted by others to play our amps, and that, as we instructed DOJ repeatedly, we plan on voluntarily “opening” our amps to artists promoted by others.  The declare, subsequently, just isn’t solely legally groundless however virtually pointless.

Content material Leveraging and Barclays

For all of DOJ’s rhetoric about in search of “structural treatments” (i.e., a break up of the corporate), the huge bulk of the conduct the Grievance describes has nothing to do with the mix of a live performance promoter and a ticketing firm dwelling beneath one roof. There’s one exception, nevertheless, which is the set of allegations about threatening or retaliatory conduct by Stay Nation, the live performance promoter, if venues swap away from Ticketmaster.

That is among the many core habits regulated by the consent decree that DOJ agreed to in reference to the merger of Stay Nation and Ticketmaster nearly 15 years in the past. I’ve written intimately in regards to the context and background of that settlement elsewhere, and received’t reprise that historical past right here. For current functions, the important thing factor to understand is that for the previous 4 years, a Monitor appointed by DOJ itself has been maintaining shut tabs on Ticketmaster’s negotiations with venues and making certain that the corporate just isn’t utilizing live performance “content material” to drive ticketing offers. Throughout that interval, overlaying 1000’s of such offers, precisely one occasion of potential concern has come to the Monitor’s consideration.  In any other case, the Monitor has praised Stay Nation for its compliance program and an exemplary report of compliance.

The one occasion of a possible violation is in regards to the Barclays Heart in Brooklyn (referenced however not named within the criticism).  What the Grievance alleges about that drama is usually unfaithful. The brief model of a protracted story is that Barclay’s switched from Ticketmaster to SeatGeek. Six months earlier than that occurred, Barclays employed a serious New York legislation agency to threaten us with contract claims and consent decree violations for lowering Stay Nation present counts ought to Barclays swap to SeatGeek. We had been scrupulously cautious about documenting the enterprise the reason why actually each present within the NY space over the related interval went to the venue it wound up at.  This contemporaneous report unequivocally disproves the competition that there was even a single occasion of retaliatory re-routing or something prefer it.  And as has been reported elsewhere, SeatGeek’s know-how and repair had been less than the duty of servicing main onsales, leading to Barclays firing SeatGeek, primarily for trigger.

Extra considerably, although, even when DOJ’s model of the Barclay’s story had been true (which it isn’t), violating the consent decree with respect to one venue out of 1000’s wouldn’t quantity to a violation of the antitrust legal guidelines, which famously concern themselves with “competitors, not opponents.”  There’s a purpose that is the one instance really recognized within the criticism: regardless of 18 months of investigation, DOJ discovered nothing else. On the finish of the day, nothing about this remoted incident (which DOJ willfully mischaracterizes) or the rest on this criticism affords any foundation for DOJ to ignore, undo and upend the deal it made approving the Stay Nation-Ticketmaster merger and its personal statements to a federal choose that complaints about that vertical mixture lacked benefit.

Concluding Ideas

Stay Nation is within the enterprise of bringing the enjoyment of stay leisure to individuals and to that finish connecting artists to followers and supporting a productive stay leisure ecosystem. That’s what we do—higher than anybody else—and what we’ll proceed to do as we problem this lawsuit.  Is the ticketing market complicated to customers?  Sure, it actually is.  And we’ve got been very clear within the halls of Congress and on the DOJ that we favor real reforms that will really assist followers get tickets on the value the artist has set for them to pay.  Followers need to see the bands and sports activities groups they love, and it infuriates them that tickets promote out on Ticketmaster and are then out there by the a whole lot on secondary on-line websites at double and triple the price.  However the Authorities has chosen to do nothing about this.  As a substitute, it has filed a case which misleads the general public into pondering that ticket costs might be decrease if one thing is completed about Stay Nation and Ticketmaster.  DOJ just isn’t serving to customers with their precise issues.  For this reason the federal government has by no means been much less fashionable—as a result of they fake they’re fixing your issues when as an alternative they’re pandering to a slender set of political pursuits.

Unique Story Printed Thursday, Might 23, 2024 – 9:32 am

A number of media sources near the matter, together with leaks to ABC Information and CNN, say the Division of Justice (DOJ) and several other state lawyer generals are set to announce an antitrust lawsuit in opposition to Stay Nation (LN) and Ticketmaster (TM) as early as immediately (Might 23). The specifics of the lawsuit stay unclear, however the DOJ’s investigation has been ongoing for 2 years.

The investigation has centered on whether or not LN monopolizes the stay occasion ticketing market by its unique contracts with venues by its subsidiary TM. Some venues have accused the music trade big of utilizing coercive techniques or neglecting to e book their artists at venues that didn’t agree to make use of TM. A profitable antitrust case in opposition to LN and TM may power the businesses to separate. This might result in vital adjustments within the stay ticketing market, which has confronted elevated scrutiny in recent times.

In 2019, each firms paid fines for violating the phrases of a Justice Division consent decree issued when their merger was first accepted. Since their merger in 2010, LN and TM have confronted criticism for speculative ticket gross sales, misleading web sites, and hidden charges. The DOJ has intensified its scrutiny since 2022 following the mishandling of pre-sales for Taylor Swift’s Eras tour.

Holding over 70% of the ticketing and stay occasions market share, TM’s system crashed throughout the first day of Swift’s Eras tour pre-sales, leaving thousands and thousands of followers unable to buy tickets or pressured to purchase higher-priced tickets on the secondary market. This incident led to lawmakers harshly questioning LN President and Chief Monetary Officer (CFO) Joe Berchtold in January final yr in regards to the firm’s dominance within the trade and its impression on rivals, artists, and followers.

“There are issues within the ticketing trade—issues that we imagine can and must be addressed by laws,” Berchtold mentioned on the time, attributing the problems to ticket scalping as the first trigger. In June final yr, LN representatives met with President Biden, which led to the announcement of adjustments, together with an “upfront all-in” pricing mannequin that reveals all charges when customers store for tickets.

Talking on the J.P. Morgan World Know-how, Media and Communications convention in Boston on Tuesday (Might 21), Berchtold expressed optimism the matter may very well be efficiently mediated, avoiding a conflict with the DOJ’s prime antitrust lawyer, Jon Kanter.

“We wouldn’t get thus far in the event that they didn’t have issues, however the excellent news is we’re nonetheless speaking, they usually’ve mentioned they’ve an open thoughts. So with out stepping into the actual particulars of the dialog, I believe it’s truthful to say I proceed to imagine that we essentially have enterprise practices which might be totally defensible. However we’re additionally open to determining frequent floor to get this settled and moved on. However we don’t know precisely what they need at this level nonetheless.”

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