The market dominance of Live Nation and its ticketing subsidiary Ticketmaster got a fresh round of scrutiny at the highest levels of government this week, during a hearing of the Senate Judiciary’s Subcommittee on Competition Policy, Antitrust, and Consumer Rights. Wednesday’s hearing, which took a look at “Trends in Vertical Merger Enforcement,” was led by Sens. Amy Klobuchar (D-MN) and Mike Lee (R-UT), who also led the January senate hearing on the company’s enormous market power and whether or not it’s harmful to consumers and in need of structural remedy.

“[The Live Nation and Ticketmaster merger] has decimated competition in the ticketing industry and resulted in higher fees for consumers,” Sen. Klobuchar said in her opening statements. “Unfortunately, this is not a surprising result. At the time of the merger, DOJ was so concerned that something like this might happen, that it made Live Nation promise not to retaliate against concert venues for using another ticketing company. But guess what? That didn’t work.”

The hearing was not specifically about Live Nation/Ticketmaster, but covered multiple instances of the so-called “vertical” merger, which involves two or more companies coming together that don’t themselves directly compete (which is the case in a “horizontal” merger), but rather when one company comes together with a supplier, distributor, or retail location above or below them in the distribution chain. The problems inherent to the world’s largest live event promoter merging with the world’s dominant ticketing retail operation were central in the discussion, right from the start.

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United States Senate Judiciary Subcommittee hearing on Trends in Vertical Merger Enforcement
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Senators Lee, Klobuchar, Richard Blumenthal (D-CT), and Marsha Blackburn (R-TN) all discussed the ticketing ecosystem and the harms of the vertical merged companies with the witnesses at the hearing. Those witnesses included Charlotte Slaiman, Competition Policy Director of Public Knowledge, MIT Economics professor Nancy Rose, and former DOJ Assistant Attorney General Makan Delrahim, who led the investigation of Live Nation and Ticketmaster that culminated in the extension of the company’s consent decree. Delrahim was prevented from speaking on his experience in that matter before the committee, due to the ongoing investigation of Ticketmaster and Live Nation by the DOJ.

Some selected highlights:

“It became so clear in the Ticketmaster case that consumers were not well served by the lack of competition against Ticketmaster… Taylor Swift felt the need to talk about why this terrible consumer experience happened to her fans, and one of the things that she mentioned was that she likes to take as much of this process as she can, and with Ticketmaster, that wasn’t an option.

I think that’s because of these exact agreements, because Live Nation has such strong control over the venues that someone doing a nationwide tour… has to work with Live Nation and as a result, has to work with Ticketmaster.”

-Charlotte Slaiman

The Department of Justice reportedly has an investigation underway about the potential violations of the consent decree… assuming that it finds there has been, yet again, I think it’s the third time, a violation of that consent decree, Isn’t it time to break up that merger, to roll it back, to admit it ain’t working out for consumers?

-Sen. Richard Blumenthal

Companies understand when they’re negotiating those [consent] decrees, sort of what they can agree to, that will still preserve their ability to exercise the market power. That [market power] was often the target of that vertical merger, the goal of that merger. So I would have to say, I think if you wanna remedy this problem in this particular context, that probably divestiture is the only solution that will give you a lasting remedy to it.

-Professor Nancy Rose

If I can combine the upstream manufacturer and the distributor, I can foreclose access to the distributor network for my upstream rivals, and they’ve got to go through some more costly way. To go back to the discussion of Ticketmaster, [potential Live Nation competitors] hvae to go through some more costly way of selling tickets.

Then I’m able to raise prices kind of at the expense of these rivals who have lost because their costs are higher. And so we understand now that vertical mergers can create the ability for firms to exclude rivals or to raise their costs, advantage themselves in competition and harm consumers in that way.