In a stinging 58-page White Paper released this week, The American Antitrust Institute (AAI), a non-profit advocacy group, said it opposed the proposed merger...

In a stinging 58-page White Paper released this week, The American Antitrust Institute (AAI), a non-profit advocacy group, said it opposed the proposed merger between Ticketmaster and Live Nation, in part because the deal would create vastly more problems for the concert and ticketing industries, and consumers, than it would solve.

The report, which can be viewed by clicking here, was written by James D. Hurwitz, a research fellow for AAI and a retiree from the Federal Trade Commission, who argues that because the two companies already control huge portions of vertical segments within the marketplace, their power and influence would further increase their dominance to enormous heights.

“The vertical aspects of the merger are also problematic. The merger is between two, already vertically integrated firms. Live Nation now ranks first in event promotion, second in venue management, and second in primary ticket sales, while Ticketmaster ranks first in artist management, first in primary ticket sales, and second in secondary market ticket sales,” the report stated. “If the combination is permitted, Live Nation Entertainment [the planned name of the merged companies] will have a powerful or dominant position in virtually all of the industry’s markets. Viewed in combination, the merger will give Live Nation Entertainment unarguable control of most competition within the industry, including the capacity to foreclose or discipline rivals that seek to compete vigorously in any individual market.”

Legislators, recording artists such as Bruce Springsteen and Trent Reznor of Nine Inch Nails and others have made similar arguments against the proposed deal, but both companies have said that because the concert and ticketing industries are broken allowing them to merge will help the two survive and make positive changes in the marketplace.



Both companies reported big losses in 2008 in part due to write downs for stock losses and goodwill.

Bert Foer, President of AAI, told TicketNews that he does not buy that argument because while lots of businesses are faced with the difficulties of the current recession, neither company is failing or even on the verge of failure.

“What we have is the equivalent of two giant ocean liners on a collision course because they have been encroaching on each other’s turf for some time, and they simply prefer not to compete with each other. This is a proposed merger because they don’t want to compete, not a merger for survival,” Foer said.

If allowed to merge, both companies, through exclusive ticketing deals with dozens of major arenas, stadiums and amphitheaters, “would effectively eliminate almost all remnants of competition in the market for primary ticket sales for events in large venues,” the report stated.

“Like the interlacing of fingers, the proposed merger between Live Nation and Ticketmaster Entertainment would join the parties’ powerful positions in all the various markets within the live entertainment industry. The horizontal merging of the two leading positions in the primary ticket distribution market would create a virtually unshakable hold on that market. The merger would also shelter other markets from competition by bringing into the new entity’s fold the firms most likely to enter and compete on their own” the report stated. “Moreover, the impact of the merging parties’ two-handed grip would become stronger – and more exploitable – by Live Nation Entertainment’s vertical integration. Not only would every finger, every market position, be individually powerful, but flexed in unison, Live Nation Entertainment — as a buyer or seller – could actually strengthen the hold that the merging parties held on their respective domains. Markets subject to such control are not competitive; they are deprived of the lower prices, increased output, and enhanced innovation that vigorous rivalry promotes.”