After a year-long investigation, the U.S. Department of Justice (DOJ) Monday officially approved the merger of Ticketmaster and Live Nation, but the DOJ imposed conditions on the deal that it believes will foster competition in the concert and ticketing industries.

Under terms of the deal, Ticketmaster must license its ticketing software to Anschutz Entertainment Group (AEG) to help it become a viable competitor instead of a customer of Ticketmaster. In addition, Ticketmaster must sell its Paciolan primary ticketing division to Comcast-Spectacor, which currently controls much of Philadelphia’s sports, venue and ticketing ventures.

Ticketmaster and Live Nation will also be subject to a 10-year consent decree that will prohibit them from retaliating against venues, teams, artists or other entities that choose to end their relationships with the combined company. DOJ teamed up with attorney generals in 17 states, including California, Massachusetts, Nevada, Ohio, Illinois and Florida to file a civil lawsuit to block the merger, but at the same time filed the consent decree that if upheld would satisfy their initial antitrust concerns.

Assistant Attorney General Christine Varney, who leads the DOJ’s antitrust division, said during a press conference Monday announcing the agreement that the DOJ will be “vigilant” in its role as watchdog over the combined companies.

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“The Department of Justice’s proposed remedy promotes robust competition for primary ticketing services and preserves incentives for competitors to innovate and discount, which will benefit consumers,” Varney said. “The proposed settlement allows for strong competitors to Ticketmaster, allowing concert venues to have more and better choices for their ticketing needs, and provides for anti-retaliation provisions, which will keep the merged company in check.”

The consent decree does not address the secondary ticket market at all, and does not offer any insight into what Ticketmaster should or will do with its TicketExchange division or its TicketsNow subsidiary, which has been the focus of much criticism over the past year. Ticketmaster was forced to settle a complaint by New Jersey Attorney General Anne Milgram over the way it allegedly redirected customers from Ticketmaster’s Web site to TicketsNow’s higher-priced secondary market tickets when tickets were sold out on the primary market.

“The relief here is both structural and behavioral. The settlement requires Ticketmaster to divest more ticketing than it will gain through its acquisition of Live Nation,” Varney said. “Simultaneously, the licensing solves a second competitive issue by giving AEG, an integrated competitor, the ability and incentive to compete with the combination of Ticketmaster and Live Nation for concert promotion, venue management, and ticketing.”

In prepared statements released today, Live Nation President and CEO Michael Rapino and Ticketmaster Entertainment CEO Irving Azoff expressed their gratitude in the deal being approved. Rapino will lead the new company, Live Nation Entertainment, as its president and CEO, while Azoff will be Executive Chairman of Live Nation Entertainment and CEO of Front Line Management, the artist management company he sold to Ticketmaster in 2008.

“This is a good and exciting day for the music business, and we are close to finalizing the creation of a new company that will seek to transform the way artists distribute their content and fans can access that content,” Rapino said. “The Department of Justice was thorough and aggressive in their analysis and their remedies, and we are confident that with this resolution the playing field is competitive and broader as a result of this transaction. We believe that this merger will now create a more diversified company with a great selling platform for artists and a stronger financial profile that will drive improved shareholder value over the long term.”

“We appreciate the Department of Justice’s effort. Their resolution is a great win for fans,” Azoff said. “The entertainment industry needs innovation and we are ready to deliver. I’m truly excited that as this new company goes forward, we will be able to create more choices for family entertainment, sports, artists, teams and other rights holders.”

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U.S. Rep. Bill Pascrell, Jr., a vocal critic of the deal who gathered signatures from 50 members of Congress on a letter to Varney opposing the merger, said he is troubled by its approval.

“I am currently reviewing the Justice Department’s decision, but clearly I am disappointed. One has to wonder what it was that U.S. antitrust authorities saw as a greater priority than American consumers and the free market,” Pascrell said. The Congressman was one of several people to testify against the merger last year during government hearings on the matter, and he introduced legislation to regulate the ticketing industry.

“The American people need to be told how DOJ decided that this deal, even with the concessions made, passes muster with our nation’s anti-trust laws. Moving forward, as these two companies with a history of anti-consumer behavior are poised to join together into an entertainment behemoth, I will be keeping a close eye on how the Department of Justice and Federal Trade Commission enforce any conditions they impose on this new entity to ensure consumers are protected. I will also be looking toward the passage of my BOSS ACT as a vehicle to regulate the ticket marketplace, which is about the get a whole lot more complicated, as it gets more anti-competitive,” Pascrell said.

Don Vaccaro, CEO and founder of TicketNews’s parent company TicketNetwork, said, “The remedies in the merger agreement don’t go far enough to protect consumers rights and reduce fees that consumers will pay in service charges to primary ticketers.”

Legendary concert promoter and club owner Seth Hurwitz said he hopes DOJ will follow through on its planned role of enforcer of the agreement. Hurwitz was a vocal critic of the deal, and in an unrelated matter sued Live Nation on alleged antitrust grounds last year.

“Though I’ve not had the opportunity to review it yet fully, it seems the Department of Justice has dictated in the consent decree that Live Nation and Ticketmaster can’t engage in anticompetitive behavior on any level going forward — and if that’s true, it’ll be a better world for everyone,” Hurwitz said. “The department seems to understand the issues, our concerns and the fears the entertainment industry holds about Live Nation’s and Ticketmaster’s predatory and uncompetitive behavior. This puts Live Nation Entertainment under a microscope, a place we wished Ticketmaster and Live Entertainment were under a long time ago. It all comes to down to whether the DOJ will indeed be the watchdog they claim they’ll be.”

Timothy Leiweke, president and CEO of AEG, said he believes consumers will ultimately benefit from the provisions under the DOJ’s approval.

“Together with other provisions of the Department of Justice’s proposed final judgment, including required divestitures and significant behavioral remedies, we are confident that the arrangements we have reached with the parties will serve to increase competition and further the interests of consumers and other participants in the live entertainment industry, not only in the United States, but in a number of key international markets (including Canada and the United Kingdom, among others),” Leiweke said.

Last Updated on January 26, 2010

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