Live Nation and Ticketmaster Could Face Federal Case but Have ...

The Department of Justice is reportedly nearing a move to sue multimedia entertainment company Live Nation and its subsidiary, Ticketmaster, for alleged violations of antitrust law.

The case could reshape how Americans buy and resell tickets to concerts and sporting events. 

The chief concern for the feds is Live Nation’s and Ticketmaster’s extent of control over the ticket sale market. Live Nation is blamed for rising prices to attend events and causing consumer frustrations. Among the targeted business practices are venue exclusivity contracts, wherein venues agree to use Ticketmaster as the sole method of selling tickets. Various contractual restraints that limit or block the resale of tickets are also in the DOJ’s crosshairs.

To that point, the American Antitrust Institute notes Ticketmaster allegedly requires venues to bundle sports and concert tickets upon threat of losing events. The Justice Department has voiced sports-related ticket concerns related to Ticketmaster at multiple points over the last 15 years. In 2010, the agency stressed that (at the time) 66 major concert venues hosted pro teams, including those that sell season tickets. Connections between Live Nation and sports run deep, including with Liberty Media—which spun off the Atlanta Braves last year—having a large stake in Live Nation through its Liberty Live arm.

Sports ticket sales are different from concert ticket sales. That stems from the role of season tickets; the increased reliance on reselling sports tickets; and because, according to a Congressional report on ticket sales, teams sell as much as 30% of seats directly to brokers. Still, any disruption to the larger ticket sale market brought on by litigation would bring shifts for sports fans, too.

Although competition concerns about Live Nation aren’t new, they recently piqued the interest of elected officials and regulators when Taylor Swift fans tried to buy tickets to her Eras Tour. It was a debacle for Swifties. They relied on invalid codes to buy tickets, experienced website crashes and confronted unexpectedly pricey processing fees. It seemed to some, as economist Florian Ederer summarized in a Yale University article, that Ticketmaster “abused its dominant market position by underinvesting in site stability and customer service.”

Ederer noted there are persistent allegations the company “caused harm by providing inferior quality—which it could not have done had it faced credible competitors.” 

Congress held hearings and consumers filed lawsuits. Commentary circled around the same basic critique: The company overseeing the sale of tickets to big events lacks legitimate rivals and consumers suffer as a result. Although StubHub, Eventbrite and other companies compete for the same consumers, Ticketmaster reportedly controls more than 70% of the market for ticketing and live events. 

Until their merger in 2010, Live Nation and Ticketmaster were rivals. The Justice Department approved their merger despite concerns it would spawn a monopolistic goliath that (to varying degrees) controls multiple levels of the delivery of entertainment services. From artists to promoters to venues to ticket dealers, the same company has a hand in the pot. 

As a condition of approval, Live Nation and Ticketmaster agreed to a 10-year consent decree—essentially a performance-improvement plan for a company suspected of engaging in anticompetitive practices. Among other things, Ticketmaster undertook to license self-ticketing software and Live Nation pledged to cooperate with venues that don’t use Ticketmaster. 

In 2019, the DOJ claimed Live Nation had “repeatedly” engaged in prohibited conduct, such as applying undue pressure on venues to use Ticketmaster. To assuage federal prosecutors, Live Nation agreed to heightened measures and penalties. The amended consent decree is set to expire in 2025. 

Critics contend the consent decree arrangement has proven ineffective, slow-moving and antiquated. Some economists and antitrust attorneys are convinced the ticket sale market desperately needs a refresh. To that end, the DOJ could sue for price fixing, fraud and related antitrust claims and demand the breakup of Live Nation and Ticketmaster. Requirements that venues bundle sports and concerts might become a practice of the past.

Whether a DOJ lawsuit would succeed and compel a company breakup are no slam dunks. 

As reported by The Hollywood Reporter, Live Nation CFO and president Joe Berchtold has forcefully defended his company while signaling he’s open to changes to avert a DOJ lawsuit. “Based on the issues we know about,” Berchtold recently said, “we don’t believe a breakup of Live Nation and Ticketmaster would be a legally permissible remedy.” He added that his company is “prepared to defend” itself in court.

As a preview of potential legal defenses, Live Nation posted a statement in 2022 that essentially serves as a rebuttal without legalese. The statement acknowledges Ticketmaster enjoys a “significant share of the primary ticketing services market” but contends—and this is key for an antitrust defense—the share doesn’t indicate anticompetitive practices and instead reflects merit. As Live Nation sees it, there is a “large gap” in “quality” between Ticketmaster’s system and those offered by rivals. 

The company also argues that Ticketmaster doesn’t “set or control ticket prices,” that it has adopted consumer-friendly measures, including transparency in pricing and strategies that enhance ticket security and reduce bots, and that it refrains from “speculative ticketing” practices used by some websites. Expect Live Nation attorneys to argue that the government constraining or dismantling Ticketmaster would hurt, not help, consumers by depriving them of a superior product and service. 

Live Nation also rejects the insinuation it isn’t incentivized to innovate. The company’s statement maintains that because of technological innovation, consumers have moved away from paper tickets and toward scannable tickets on phones—and that Ticket Master has been at the forefront of this evolution. Live Nation also insists that the market for secondary ticketing is “extremely competitive,” with Ticketmaster fending off challenges from “StubHub, SeatGeek and Vivid” for consumers’ dollars.

The presence of a consent decree would also be stressed by Live Nation attorneys in any DOJ litigation. Live Nation’s statement draws attention to a former federal judge monitoring compliance and how “there never has been and is not now any evidence of systemic violations.”

If there was actionable evidence that the company punishes venues that don’t use Ticketmaster, Live Nation can assert there are existing measures to correct the problem.

Should U.S. v. Live Nation materialize, the litigation could last many years, especially given that antitrust cases are often complicated and dependent on economic analysis and expert testimony. Live Nation has the financial wherewithal–the publicly traded company is worth about $23 billion—to play the long game and pay the necessary millions in attorneys’ fees. 

The government doesn’t sell tickets to trials, but if there’s one for U.S. v. Live Nation, expect heavy competition for a courtroom seat.