Antitrust Institute Slams DOJ Missed Opportunity in Live Nation Settlement Antitrust Institute Slams DOJ Missed Opportunity in Live Nation Settlement
The American Antitrust Institute submitted a letter to the U.S. Department of Justice, Antitrust Division this week regarding its recent enforcement action against Ticketmaster... Antitrust Institute Slams DOJ Missed Opportunity in Live Nation Settlement

The American Antitrust Institute submitted a letter to the U.S. Department of Justice, Antitrust Division this week regarding its recent enforcement action against Ticketmaster and its parent company Live Nation’s decade-long merger.

In the letter, penned by AAI’s president Diana L. Moss, the AAI notes that Live Nation and Ticketmaster have persistently violated the modifications to its 2010 settlement and believes that “a far stronger enforcement response than modifying the failed conduct remedies contained in the 2010 settlement is warranted.”

“The DOJ did not need a crystal ball in 2010 to have predicted the imminent failure of its remedies contained in the 2010 decree,” the letter notes. “Ticketmaster’s monopoly in ticketing was a fact, as acknowledged by the government at the time.”

Moss points to the court proceedings against the entertainment giant, which were ultimately halted by the company’s quick settlement that extended the decree by five years to 2025. As part of the settlement, Live Nation will pay for the costs of the DOJ’s enforcement, set at $3 million, and agreed to harsher penalties for future violations.

The letter states that several factors are to blame for the failed attempt to restore competition lost by the merger, including presumptive illegality of the merger when it was first proposed, evidence of persistent violations of the 2010 settlement, and the company’s ongoing exercise of market power over other ticket sellers in the last decade. It notes that structural remedies are the only remedial mechanism capable of deterring the company’s anticompetitive practices.

“…Modifying the conduct remedies in the 2010 Decree does little or nothing to deter further anticompetitive conduct by Live Nation-Ticketmaster,” the letter notes. “Repeating a decadeold enforcement error, while expecting a different result, does a disservice to competition and
consumers.”

The DOJ asked the court to forego public comment on the amended decree, which AAI notes is a “disappointment that the public was not given the opportunity to comment.”

See the full letter below.

February 4, 2020
Makan Delrahim
Assistant Attorney General
U.S. Department of Justice Antitrust Division
950 Pennsylvania Avenue, N.W.
Washington, D.C. 20530

Re: Amended Final Judgment: U.S v. Ticketmaster Entertainment, Inc., and Live Nation
Entertainment, Inc.

Dear AAG Delrahim:

The American Antitrust Institute (AAI) writes in regard to the recent enforcement action taken by
the U.S. Department of Justice (DOJ or Antitrust Division) in the matter of U.S v. Ticketmaster
Entertainment, Inc., and Live Nation Entertainment, Inc. In January 2020, the Antitrust Division
submitted a Motion to Modify Final Judgment and Enter Amended Final Judgment (“Motion to
Amend”) and Amended Final Judgment (“2020 Decree”) in this case.  The Motion to Amend
proposed modifications to the decade-old Final Judgment (“2010 Decree”) that unsuccessfully
settled the government’s competitive concerns regarding the merger of Live Nation, the world’s
leading concert promoter and a nascent entrant into self-ticketing at the time, and incumbent
ticketing behemoth Ticketmaster.

For the reasons discussed in this letter, AAI believes a far stronger enforcement response than
simply modifying the conduct remedies contained in the 2010 Decree is warranted in this case.
Several factors support AAI’s view that the action taken by the DOJ does not address the failure of
the remedies contained in the 2010 Decree, and will not restore competition lost by the merger or
deter future anticompetitive conduct.4 These factors include: (1) the presumptive illegality of the
Live Nation-Ticketmaster merger when it was originally proposed; (2) evidence of persistent
violations of the conduct remedies contained in the 2010 Decree; and (3) the company’s ongoing
exercise of market power over the last decade against ticket resellers, facilitated by the ineffective
remedies contained in the 2010 Decree.

The DOJ asked the court to forego public comment on the Amended Decree, which was entered
without meaningful review under the procedures outlined in the Antitrust Procedures and Penalties
Act (i.e., the Tunney Act).5 Given the serious implications of this matter for merger enforcement
and for protecting competition and consumers, AAI is disappointed that the public was not given
the opportunity to comment. We present analysis herein that supports our concerns.

I. THE IMPORTANCE OF THE COMPETITIVE ISSUES RAISED BY THE MERGER OF LIVE
NATION-TICKETMASTER

The merger of Live Nation and Ticketmaster melded together artist management, concert
promotion, venue operation, and ticketing in a monolithic, multi-level supply chain in the live music
business. The $2.5 billion transaction combined Ticketmaster, the market leader in artist
management and dominant seller of tickets to live music events across the country, with Live
Nation, the leading concert promoter. In 2008, Ticketmaster held contracts for more than 80% of
large venues and Live Nation handled one-third of major concert events, was the second leading
owner-operator of concert venues in the country, and also provided ticketing services.

The DOJ’s investigation of the proposed merger was joined by seventeen states. In challenging
the deal, the government raised significant vertical and horizontal competitive issues related
how the proposed merger would lessen competition substantially for primary ticketing
services to major concert venues located in the United States. Vertical concerns centered on
enhanced post-merger incentives for Live Nation-Ticketmaster to exclude rivals by “explicitly
or practically” requiring venues to take: (1) their primary ticketing services if the venues only
wanted concerts promoted by, or concerts by artists managed by, the merged company; or (2)
concerts they promoted, or concerts by artists they managed, if those venues only wanted to
obtain the merged company’s primary ticketing services.

Moreover, the horizontal combination of Ticketmaster’s dominant position in primary ticketing
services with Live Nation’s upstart self-ticketing service eliminated an important rival that could
have–but for the merger–grown to challenge Ticketmaster’s dominance in primary ticketing.9
Nonetheless, DOJ approved the merger, subject to conditions contained in the 2010 Decree.10
The 2010 Decree set forth conduct remedies to address vertical concerns, including
prohibitions on anticompetitive conduct and retaliation against venue owners.
The 2010 Decree also required the merged company to license its ticketing platform (Host) to
AEG, the second leading concert promoter and an operator of a number of major venues, and to divest
Paciolan, the venue-based ticketing division, to Comcast-Spectacor, a small and primarily
regional ticketing service.

II. THE PRESUMPTIVE ILLEGALITY OF THE MERGER GUARANTEED THE FAILURE OF THE
CONDUCT REMEDIES CONTAINED IN THE 2010 DECREE

Retrospective analysis of consummated mergers plays an increasingly important role in informing
merger enforcement. Empirical studies, policy analysis, and antitrust agency reports have identified
numerous major failures of past merger remedies.12 Of course, there is no more compelling evidence
of failed remedies than that spelled out in the DOJ’s Motion to Amend.13 It features accounts from
six anonymous venue operators describing Live Nation-Ticketmaster’s violations of the 2010 Decree
since it went into effect. These violations include threats, conditions, and retaliation designed to
force venue operators into contracting with Ticketmaster as their primary ticketing service.14 This
long-term and unmitigated exercise of market power by Live Nation-Ticketmaster demonstrably
restrained competition and harmed consumers.

Evidence that the parties persistently violated the 2010 Decree is highly relevant for DOJ’s choice of
enforcement path in responding to Live Nation-Ticketmaster’s ongoing exercise of market power.
The evidence proves that the conduct remedies imposed by the government did not deter future
anticompetitive conduct by Live Nation-Ticketmaster.15 As such, the remedies failed to fully restore
competition lost by the merger. Perhaps most important, evidence that Live Nation-Ticketmaster
persistently violated the 2010 Decree confirms that the merger was illegal at the time it was
challenged by the DOJ in 2010.

Vertical mergers in the mold of Live Nation-Ticketmaster should be treated as presumptively illegal.
Section 7 of the Clayton Act is designed to prevent mergers that may enhance market power and
lead to anticompetitive effects. The agencies treat highly concentrative horizontal mergers as
presumptively illegal based on the high likelihood that they violate Section 7 by threatening to harm
competition and consumers. In contrast to horizontal mergers, vertical mergers do not increase
market concentration. But market concentration nonetheless reveals conditions under which vertical
mergers are highly likely to facilitate the exercise of market power resulting from enhanced postmerger
incentives to exclude rivals.

The DOJ did not need a crystal ball in 2010 to have predicted the imminent failure of its remedies
contained in the 2010 Decree. Ticketmaster’s monopoly in ticketing was a fact, as acknowledged by
the government at the time: “Ticketmaster has dominated primary ticketing, including primary
ticketing for major concert venues, for over two decades.”18 The merger “supercharged” the firm’s
incentives to foreclose competing venue operators, or raise their costs, by cutting them off from
access to critical inputs (i.e., concerts), unless they contracted with Ticketmaster for ticketing
services. The harmful effects of the Live Nation-Ticketmaster merger were therefore
virtually guaranteed by pairing up Live Nation’s concert promotion services with Ticketmaster’s
entrenched monopoly in ticketing.

When the harmful effects of a merger are sufficiently obvious ex ante or – as we witness here – they
are both obvious ex ante and confirmed ex post by evidence like that provided by venue operators
and described in the Motion to Amend, merging parties should have to clear a higher bar. The
government stopped short in 2010 of moving to obtain a full-stop injunction in the Live NationTicketmaster
merger, but that was the appropriate remedy then and it remains the appropriate
remedy now.

III. THE INEFFECTIVE REMEDIES IN THE 2010 DECREE FACILITATED LIVE
NATIONTICKETMASTER’S STRATEGY OF LEVERAGING ITS MARKET POWER THROUGHOUT THE
TICKETING MARKET

The failed conduct remedies in the 2010 Decree did nothing to prevent Live Nation-Ticketmaster
from engaging in the exclusionary conduct that animates the government’s Motion to Amend. The
remedies did not restore, much less spur, competition in primary ticketing market. This outcome
should come as no surprise. It is well established, for example, that behavioral remedies do nothing
to change the merged firm’s incentive to exercise market power.19 They create a system of quasiregulation under which conduct must be continually monitored – a task for which the agencies and
courts are ill-suited.

Because conduct remedies invoke rules and requirements designed to constrain powerful profit
motives that are driven by the exercise of market power, they create strong incentives for the
merged company to find “workarounds” to the remedies. Moreover, conduct remedies rely heavily
on smaller rivals to report violations of the consent decree – an expectation that is invariably
quashed by rivals’ fear of retaliation from powerful incumbents. These problems were acknowledged
by the current AAG for Antitrust when he stated in 2017 that “[i]nstead of protecting the
competition that might be lost in an unlawful merger, a behavioral remedy supplants competition
with regulation.”

In addition to foreclosing rival venue operators and blocking entry into the primary ticketing market,
Live Nation-Ticketmaster has engaged in a systematic campaign to leverage its market power
throughout the ticketing market. This market includes both primary and resale ticketing.21 Resale
markets can enhance efficiency by providing a venue for fans to sell and buy tickets, balance supply
and demand, and even expand demand for live music, to the benefit of artists and concertgoers
alike. But Live Nation-Ticketmaster has acted to impede the development of resale ticketing through
actions designed to disadvantage resellers. These include restrictions on the transferability of tickets,
holding back ticket inventory, and releasing tickets only 48 hours before show times.

But for Live Nation-Ticketmaster’s conduct – enabled by the ineffective remedies contained in the
2010 Decree – the benefits associated with resale ticketing would likely be higher today. Indeed,
these problems are significant enough that a number of states have passed or are considering
legislation to reform ticket resale laws.
23 The ineffective remedies contained in the 2010 Decree not
only facilitated Live Nation-Ticketmaster’s violations but also the exercise market power against
resellers. These factors should have been a major factor in DOJ’s decision to amend and extend the
decree instead of pursuing stronger enforcement responses.

IV. VIOLATIONS OF THE 2010 DECREE WARRANTED STRUCTURAL REMEDIES, OBTAINED
THROUGH ENFORCEMENT ACTIONS WITH A HIGHER PROBABILITY OF SUCCESS

The foregoing analysis tells a compelling story for why a different enforcement approach to
addressing Live Nation-Ticketmaster’s illegal conduct would have better served competition and
consumers. In 2010 and today, the magnitude of the competitive problems raised by the LiveNation
-Ticketmaster merger cannot not be understated. Indeed, one need look no further for a “durable”
monopoly than the one that dominates the live music market. The harmful nature of the
Live Nation-Ticketmaster merger is one of the best documented stories in U.S. merger history. For
example, in 2018 the New York Times reported:

“Eight years after the merger, the ticketing business is still dominated by Live Nation and its
operations extend into nearly every aspect of the concert world. Ticket prices are at record highs.
Service fees are far from reduced. And Ticketmaster, part of the Live Nation empire, still tickets 80
of the top 100 arenas in the country. No other company has more than a handful. No competitor
has risen to challenge its pre-eminence.”

The 2020 Decree is arguably a boon to Live Nation-Ticketmaster. With the extension of five and a
half years, the 2020 Decree further codifies the conduct requirements that the company has so ably
violated for the last decade. With amended conduct remedies, the company is free to engage in
behavior that went undetected by the government or was not reported by market participants out of
fear of retaliation, and to perfect new “workarounds.” Other avenues available to the Antitrust
Division would have directly and effectively addressed demonstrated harms and the failure of the
remedies contained in the 2010 Decree.

A far more effective enforcement approach in this case would have permanently reduced or
eliminated Live Nation-Ticketmaster’s incentive to engage in the anticompetitive conduct cited in
the Motion to Amend and against ticket resellers. Structural remedies are the only remedial
mechanism capable of deterring the anticompetitive conduct unsuccessfully addressed by the 2010
Decree. A structural remedy would have: (1) separated Ticketmaster’s ticketing services from Live
Nation’s concert promotion and venue operation; or (2) required divestiture of a share of
Ticketmaster’s position in the ticketing market sufficient to eliminate the demonstrated incentives to
foreclose rivals or raise their costs.

A structural remedy could have been obtained by the Antitrust Division through a consummated
merger challenge under Section 7. The agencies have imposed structural remedies in consummated
mergers for which there is evidence of post-merger adverse effects, as is the case in Live Nation
Ticketmaster. A Section 2 case against Live Nation-Ticketmaster would have obtained similar, if
not stronger, relief. Documented evidence of abuse is the strongest basis upon which a Section 7
challenge or Section 2 case rests. Both of these alternatives would have been more effective in
protecting competition and consumers from the harms enabled by ineffective remedies for a
presumptively illegal merger.

In sum, the AAI believes that modifying the conduct remedies in the 2010 Decree does little or
nothing to deter further anticompetitive conduct by Live Nation-Ticketmaster. Repeating a decadeold
enforcement error, while expecting a different result, does a disservice to competition and
consumers. A more effective approach the second time around would have furthered the goal of
strengthening merger enforcement, including setting a precedent that conduct remedies are largely
ineffective in restoring competition and thus counseling against their future use.

Respectfully,
Diana L. Moss, Ph.D.
President
American Antitrust Institute
1025 Connecticut Ave. NW
Suite 1000
Washington DC 20036
202-828-1226 (office)
720-233-5971 (mobile)
[email protected]

Cc: Joseph Simons, Chairman, Federal Trade Commission
Arizona Attorney General’s Office Antitrust Unit, Unit Chief Counsel


end