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Justice Department Sues to Break Up Live Nation Over Antitrust Violations

 |  May 23, 2024

The U.S. Department of Justice (DOJ) has filed a lawsuit to dismantle Live Nation Entertainment, the parent company of Ticketmaster, alleging antitrust violations and monopolistic practices in the live events industry. According to CNBC, the legal action, supported by 30 states, was initiated following a DOJ investigation launched in 2022.

“We allege that Live Nation relies on unlawful, anticompetitive conduct to exercise its monopolistic control over the live events industry in the United States at the cost of fans, artists, smaller promoters, and venue operators,” said Attorney General Merrick Garland in a statement. “The result is that fans pay more in fees, artists have fewer opportunities to play concerts, smaller promoters get squeezed out and venues have fewer real choices for ticketing services. It is time to break up Live Nation-Ticketmaster.”

The lawsuit, filed in the U.S. District Court for the Southern District of New York, accuses Live Nation of maintaining a self-reinforcing business model. The DOJ contends that Live Nation captures significant fees and revenue from fans and sponsorships, which it then uses to secure exclusive promotion deals with artists, ensuring their access to key venues. This dominance allegedly forces new concert venues into long-term exclusionary contracts, perpetuating the cycle, per CNBC.

Additionally, the complaint highlights that Live Nation, through its ticketing arm Ticketmaster, controls about 80% of primary ticketing for major concert venues. This dominance has allowed Live Nation to stifle competition by threatening financial retaliation against potential competitors and venues that collaborate with rivals, and by acquiring smaller competitive threats.

Related: Live Nation May Face Antitrust Lawsuit

Live Nation responded to the lawsuit by calling the allegations “absurd.” Dan Wall, Live Nation’s executive vice president for corporate and regulatory affairs, stated, “The DOJ’s complaint attempts to portray Live Nation and Ticketmaster as the cause of fan frustration with the live entertainment industry. It blames concert promoters and ticketing companies — neither of which control ticket prices — for high ticket prices. It ignores everything that is actually responsible for higher ticket prices, from increasing production costs to artist popularity, to 24/7 online ticket scalping.”

The DOJ’s investigation into Live Nation’s practices gained traction after the ticketing debacle for Taylor Swift’s Eras tour, which saw overwhelming demand and system failures. The incident led to a Senate subcommittee subpoenaing Live Nation and Ticketmaster in November 2023, following concerns over inflated ticket prices.

Live Nation’s stock fell by 5% on Thursday morning following the announcement of the lawsuit. Despite the legal challenges, Live Nation recently reported robust financial performance, with a 21% increase in first-quarter revenue compared to the previous year.

Live Nation argues that it does not benefit from monopoly pricing and maintains that its service charges are competitive. The company asserts that ticket prices are determined by artist teams, and venues set and keep the majority of ticket fees.

“Some call this ‘anti-monopoly’, but in reality it is just anti-business,” Wall added. “There is no legal basis for objecting to vertical integration on these grounds.” The DOJ, however, remains firm in its stance, highlighting that U.S. music fans are deprived of ticketing innovation and are forced to use outdated technology while paying more for tickets compared to fans in other countries.

Source: CNBC