The U.S. Justice Department, in collaboration with 30 state and district attorneys general, has launched a groundbreaking antitrust lawsuit against Ticketmaster and its parent company, Live Nation Entertainment.
The lawsuit claims that the company's dominance over ticket sales, artist management, and venue ownership unjustly limits competition and inflates prices, ultimately hurting consumers. Read this article to understand better the case, the allegations, and the defense.
Allegations Of Monopoly Power
U.S. Attorney General Merrick Garland emphasized the importance of dismantling Live Nation-Ticketmaster, citing the company's extensive control over the market.
The DOJ asserts that Live Nation's dominance in ticket sales, promotions, artist management, and venue ownership gives it an unfair edge, limiting consumer choice, inflating ticket prices, and deterring competition.
The "Flywheel" Effect
The lawsuit aims to reverse the 2010 merger between Live Nation and Ticketmaster, accusing the company of creating a self-perpetuating cycle of revenue known as the "flywheel." This cycle allegedly involves the following steps.
-
- Capturing fees from fans.
- Using revenue to secure exclusive deals with artists.
- Signing long-term exclusive ticketing agreements with venues.
- Repeating the process to maintain market control.
Criticism over the 2010 merger approval has resurfaced, with allegations that it allowed the company to dominate the industry excessively. DOJ antitrust chief Jonathan Kanter argued that some monopolies are so entrenched they require robust action to dismantle them.
Recent Developments And Scrutiny
In 2019, the DOJ updated and extended its consent decree with Live Nation to mitigate anticompetitive behavior without breaking up the company. However, recent claims suggest broader and newer violations, focusing on antimonopoly laws rather than only merger issues.
Live Nation's control came under intense scrutiny in November 2022 when Ticketmaster's website crashed due to overwhelming demand for Taylor Swift's Eras Tour tickets, prompting the DOJ's antitrust investigation.
Alleged Anticompetitive Practices
The lawsuit outlines several alleged anticompetitive practices by Live Nation-Ticketmaster, including exploiting its partnership with Oak View Group, avoiding competition for artist talent, threatening financial retaliation against new market entrants, and enforcing exclusionary contracts preventing venues from switching to rival ticketing services.
Live Nation's Defense
Live Nation has dismissed the lawsuit's claims, defending its pricing and service fees as competitive. The company attributes high ticket costs to the following:
- production expenses;
- artist popularity; and
- online ticket scalping.
Live Nation argues that it does not wield monopolistic power, noting that its service charges are often lower than competitors and are not highly profitable.
The Road Ahead
The government has requested a jury trial for the case, which involves claims under various state laws. The lawsuit, filed in the Southern District of New York, joins other significant antimonopoly cases against tech giants like Google and Apple, spearheaded by Kanter's division. As the case progresses, it will test the strength of antimonopoly laws and potentially restore competition and fair pricing for consumers.
