DOJ vs. Live Nation: What Happens Now?

Live Nation will have to prove it doesn't have a monopoly on live events if it hopes to avoid a rift with Ticketmaster, legal experts say. But looking ahead to a possible battle with the Justice Department after the bombshell, 124-page lawsuit, the world's largest concert promoter points to past antitrust cases as reasons not to worry about the lawsuit's outcome.

After a two-year investigation, the DOJ alleges that Live Nation, Ticketmaster's parent company, holds an illegal monopoly given the company's 80% market share of major ticket sales at the nation's largest venues. The suit describes how fees are collected from every aspect of a live event — from merchandise to concessions to parking — and claims that venues have no choice but to work with Ticketmaster to sell tickets to shows.

The company has said it has more competition than ever and that neither Live Nation nor Ticketmaster has unilateral control over ticket pricing – the artist sets the ticket price. The company argues that there is a strong demand for tickets at these prices, given how much consumers are willing to spend on secondary ticket sales.

During an investor call Thursday after the lawsuit, Live Nation executives emphasized that the fees are determined by the venues, which keep most of the profits. “They've gone from taking a significant part to even more of the cost of the service,” one executive said. Instead, fees are a negligible line item for the company, executives claim, arguing that “even if you get the full take rate” — the final profit a business makes from transactions after taxes and items like service fees are taken out – “this will have a single-digit impact on the ticket price.”

But a source familiar with the Justice Department investigation says that statement underscores why the lawsuit was brought to a bipartisan group of 30 state and district attorneys general.

“They might want to reduce the amount of money people pay for concerts. But that money means a lot to people. That cost is real for so many Americans,” the source says Rolling rock. “And I think they would be well served not to diminish the seriousness with which the public takes this issue.”

A Live Nation representative declined to make executives available for an interview. But top company representatives said on the call that they did not believe the Justice Department could seek a breakup, given the lack of accountability in the ticketing industry. “Under the circumstances, we just don't think there's a good argument to be made here,” said Dan Wall, Live Nation's Executive Vice President of Corporate and Regulatory Affairs.

But legal antitrust experts dispute the claim. “It's not a serious criticism. To say it's not a bona fide argument is ludicrous,” says Richard Powers, former Deputy Attorney General of the DOJ's Antitrust Division. Rolling rock. “This has been an ongoing issue ever since [Live Nation and Ticketmaster merged] in 2010.”

At the time, the Department of Justice enforced restrictions so that the company would pledge not to tie its services together or retaliate against venues that didn't use Ticketmaster. The terms of the settlement were set to expire after a decade. However, in 2019, the Justice Department revised its agreement to add an anti-retaliation clause after finding evidence that Live Nation threatened to stop shows from venues that did not sell tickets through Ticketmaster. The revised agreement also appointed an outside law firm to oversee compliance by Live Nation, which was subject to a $1 million fine for each violation of the new terms of the agreement. Live Nation released a statement then saying they had reached an agreement with the Department of Justice. “We believe this is the best outcome for our business, our customers and our shareholders as we turn our focus to our 2020 initiatives,” the statement said.

In the years that followed, Live Nation allegedly “colluded” with other competitors to avoid market fragmentation, according to the DOJ. forced its investors to force competitors into the markets; and had long-term exclusive agreements with venues that prevent any viable competition from those markets.

“The Justice Department's complaint attempts to portray Live Nation and Ticketmaster as the cause of fans' frustration with the live entertainment industry,” Wall said. “It blames concert promoters and ticketing companies – none of which control ticket prices – for high ticket prices. It ignores everything that is actually responsible for higher ticket prices, from rising production costs to the popularity of artists, to 24/7 online ticket scalping that reveals the public's willingness to pay far more than the original ticket cost.

Other legal experts say it's not that simple. “The complaint lies on many of these. It shows how in their internal communications, they worked to block competition by pressuring artists to pass them, [and] you control so many different key areas,” said Bill Baer, ​​the only person to lead antitrust enforcement at both U.S. antitrust agencies, serving as Assistant Attorney General for the DOJ's Antitrust Division and as Director of the Office of Competition at Federal Trade Commission.

During the investor call, Live Nation executives referenced the Google and Microsoft antitrust cases, arguably the two biggest antitrust cases of the past 25 years. The company said Microsoft was able to win its appeal and avoid dissolution because the monopolistic practices were not “rooted in the corporate structure.”

In 1998, the DOJ, along with 20 states, filed a lawsuit against Microsoft alleging that the company had illegally monopolized the web browser market for Windows computers by restricting both computer manufacturers and consumers from uninstalling Internet Explorer and use other web browsers such as Netscape. and Java. Two years later, a judge ruled that Microsoft had a monopoly on web browsers because the company bundled Internet Explorer with its operating system and ordered the company to split into two separate companies: one for its operating system and one for any other software.

Microsoft appealed the ruling, insisting that Internet Explorer was a feature, not a product, and cited the judge's violation of the Code of Ethics for giving an interview before the case was determined. Microsoft won the appeal, and instead of breaking up, the company had to allow other web browsers to work on their systems.

Fortnite developer Epic Games sued Google in 2020 for using its size and power to block other app stores from selling Android phones. The suit said Google intentionally made it too cumbersome and inconvenient for Android users to download apps from a marketplace other than the Google Play Store. Epic argued that users should be able to download content directly from developers, just as they can on a desktop computer. In December 2023, Google agreed to settle the case and was ordered to pay $700 million to American consumers.

Karma Giulianelli has worked on both Microsoft and Google antitrust cases, serving as counsel for Microsoft's trial team and as Google's lead consumer counsel. He said the biggest hurdle for the Justice Department would be actually defining what is a “market,” the main point of contention in an antitrust case.

“Both Live Nation and Google act as distribution points and charge fees to distribute the products they distribute. Imposing a fee alone does not violate an antitrust law. So you can't be held liable for overcharging,” says Giulianelli Rolling rock. “The problem arises when there is no competition in the distribution store or in the store. It is the alleged anticompetitive conduct that could violate the law. Not the fact that they charge a high fee.”

Live Nation says its 80% market share figure represents only a small portion of the venues it operates in across the country and is not representative of the market as a whole, meaning Live Nation faces more competition and less profits everywhere else.

Bayer is at fault with this defence. “Don't we make that much money? You can't go market by market. If you are a monopolist who behaved badly in Market A, you cannot take away the fact or defend on the grounds that in Market B you do not monopolize. That's not how antitrust legislation works.”

The Justice Department is choosing to try the case before a jury, which Live Nation executives called “a ploy and strategy that the Justice Department used in the Google ads case and is unusual for antitrust cases.” Powers pointed to “pretty strong support from a bipartisan group of state attorneys general” as to why Live Nation might not appreciate a jury trial. “It's different from New York to Texas, the attorneys general have signed off on it,” Powers said. “It's like you're trying to deflect blame. It's almost like personalizing it.”

Criticizing the case being tried before a jury “goes against our antitrust and antitrust jurisprudence,” Baer said, explaining that neither the FTC nor the DOJ has the authority to seek monetary damages unless there is another government entity that has been injured. is not part of this complaint. “But the fact that you have over half the states in the Union, they have this express authority to seek monetary damages on behalf of their injured consumers. They have every right to request a jury trial.”

Despite statements and depictions that it is facing financial difficulties with increased competition, Live Nation is doing well. Its profits topped $23 billion last year, up 36% from the previous year. Even news of the lawsuit appeared to stabilize for investors later in the week. When reports of a potential lawsuit first broke in April, its stock fell nearly eight percent. On Thursday, it fell 6.6 percent before showing signs of improvement ahead of the weekend.