DOJ and states sue Live Nation, could seek breakup of company

The Justice Department and dozens of states and the District of Columbia sued to break up Ticketmaster and its parent company Live Nation on Thursday alleging that they have illegally monopolized the live music industry harming fans, artists and venues, through a mix of exclusive contracts, self-preferencing, retaliation and acquisitions.

Attorneys general from states including California, Colorado, Texas and Florida signed onto the antitrust case filed in New York federal court. It adds to the embattled company’s myriad policy and legal battles, and if successful, could potentially lead to Live Nation being forced to sell Ticketmaster 14 years after it acquired the company following a DOJ settlement. In an unusual move, the DOJ and states are seeking a jury trial.

A behemoth in the live music industry and playing a leading role in all facets of the business, Live Nation is a perennial target for lawmakers, regulators, artists and music fans. The latest wave of criticism kicked off in earnest following the botched sale of concert tickets for Taylor Swift in November 2022.

The company’s conduct is pernicious and widespread, according to the lawsuit, not only squeezing out rivals but harming the entire industry and ultimately hitting artists, venues and fans in the wallet.

“The live music industry in America is broken because Live Nation-Ticketmaster has an illegal monopoly,” Jonathan Kanter, who heads the DOJ’s antitrust division, said in a statement. “Our antitrust lawsuit seeks to break up the Live-Nation-Ticketmaster monopoly, which will restore competition to the benefit of fans and artists alike.”

At a press conference Thursday morning Attorney General Merrick Garland reminisced about seeing a young Bruce Springsteen open for Bonnie Raitt, saying Live Nation illegally harms all facets of the business. "It's time to break it up," he said. The DOJ declined to quantify the financial harm, saying it would be determined in court.

Live Nation blasted the case as part of an aggressive antitrust movement led by the Biden Administration and said it would defend itself against the suit’s “baseless allegations.”

“This follows intense political pressure on DOJ to file a lawsuit, and a long-term lobbying campaign from rivals and ticket brokers seeking government protection for themselves,” said Dan Wall, who heads the company’s corporate and regulatory affairs. The case “ignores everything that is actually responsible for higher ticket prices, from increasing production costs to artist popularity to 24/7 online ticket scalping that reveals the public’s willingness to pay far more than primary tickets cost,” Wall said.

“It is also clear that we are another casualty of this Administration’s decision to turn over antitrust enforcement to a populist urge that simply rejects how antitrust law works,” Wall added.

POLITICO first reported last year that the DOJ was planning to sue Live Nation.

The lawsuit is the latest in a series of major antitrust cases brought by Biden Administration enforcers keen to see through the President’s aggressive economic competition agenda. The Justice Department sued Apple in March, and the FTC sued Amazon last fall. There are also a pair of pending cases against Google, and the FTC is challenging a major grocery deal and a merger in the fashion industry.

At the heart of the case is the company’s so-called flywheel, with allegations it uses its market power in each of its various business lines — including concert promotion, artist management, venue ownership and management and ticketing — to reinforce its dominant position in the others.

“The flywheel is Live Nation-Ticketmaster’s self-reinforcing business model that captures fees and revenue from concert fans and sponsorship, uses that revenue to lock up artists to exclusive promotion deals and then uses its powerful cache of live content to sign venues into long-term exclusive ticketing deals, thereby starting the cycle all over again,” the DOJ said in a statement. The DOJ says the “anti-competitive conduct creates even more barriers for rivals to compete on the merits.”

Live Nation has touted just such an effect in recent earnings releases, saying last year “As we then look to 2024 and beyond, we have all the necessary levers to build our flywheel globally."

Live Nation maintains that the venues prefer exclusivity and are their main beneficiary, while the DOJ says Ticketmaster steers concerts it promotes to venues with exclusive Ticketmaster contracts.

The contracts, which cover about 70 percent of ticket sales at major venues, according to the lawsuit, allow Live Nation to “reduce competitive pressure to improve its own ticketing technology and customer service,” the DOJ said.

According to the complaint, which referenced internal Live Nation documents, “Ticketmaster is quite clear about why it focuses on these deals: they are, in Ticketmaster’s own words, a ‘[h]edge against significant improvements by the competition or even a new competitor because the ‘client is under contract for longer and not able to leave [Ticketmaster] or price the competition’s offer into our new deal for an extended time.’”

Live Nation controls more than 250 concert venues in North America, including a majority of the largest 100 amphitheaters in the U.S. According to the lawsuit, the company restricts access to those venues unless artists use its promotion services.

The DOJ is also taking issue with Live Nation's dealmaking, saying it has "acquired dozens of companies across the industry to expand its reach and entrench its positions."

One such acquisition was its 2016 purchase of a majority stake in AC Entertainment, which promotes concerts including the Bonnaroo music festival in Tennessee. According to internal documents, Live Nation doubted the financial viability of the deal but called it a "defensive move" against a rival making headway in the state, according to the DOJ.

While antitrust lawsuits typically first focus on whether a company violated the law before a judge decides how to remedy any problems, the DOJ and states are seeking structural relief including a break up of Live Nation and Ticketmaster. The two merged in 2010 after a settlement with the Obama Administration DOJ, in which the company sold some ticketing assets and promised not to force venues to use Ticketmaster.

The request for a jury trial is unusual in antitrust cases. Such trials are typically heard by a judge, while juries are reserved for criminal cases and trials involving damages. The DOJ though has sought to try antitrust cases in front of juries, arguing that everyday people are best positioned to decide whether the companies they regularly interact with act illegally. It is currently set to try a case against Google and its advertising business before a jury in Virginia in September. While the federal government is not seeking damages in the Live Nation case, the jury demand stems from the involvement of the states, who can seek financial penalties under their own laws.

If Live Nation is found to be violating antitrust law, a judge will decide what action to take.

While the primary ask is to force the sale of Ticketmaster, the complaint also suggests forcing Live Nation to divest control of venues as well as ending the exclusive contracts. In an interview California Attorney General Rob Bonta said "the possibilities are limitless," but it will ultimately be up to a judge to decide.

The DOJ and states have been investigating the company since 2022, but it has been under federal oversight since 2010 after the merger. Thursday’s lawsuit goes far beyond problems arising from the merger, with the DOJ and states alleging more recent and expansive anticompetitive conduct.

At its most recent earnings call, Live Nation’s finance chief cast doubt on the legality of a breakup. “Very little of the conduct that DOJ has raised with us relates to the combination of ticketing and promotion resulting from the merger," Joe Berchtold said. "And most of what does was anticipated and addressed by the consent decree allowing the merger to go forward."

Live Nation has also drawn the ire of Congress. Sen. Amy Klobuchar (D-Minn.), who leads the Senate Judiciary antitrust subcommittee, along with other Senate Democrats, urged the DOJ to seek a breakup if its probe finds anticompetitive conduct. At a Senate hearing in January 2023, Sen. Mike Lee (R-Utah) questioned the wisdom of allowing the Live Nation-Ticketmaster merger to happen.

"Ticketmaster’s use of anticompetitive contracts that blocked competition makes a break up now necessary," said Gene Kimmelman, a senior fellow at Harvard and Yale, who helped lead the DOJ's 2010 settlement. "Efforts to use less severe constraints clearly have not been sufficient to open the ticketing market to competition."

Northeastern University law professor John Kwoka, who advised state attorneys general on the 2010 investigation, said simply separating the two companies is not enough. "You can't just reverse the merger," he said, adding that other assets might need to be sold off and Ticketmaster's exclusivity undone.

Ticketmaster says that its market share has fallen in recent years and is now significantly less than the 80 percent alleged by the DOJ in its 2010 case against the Live Nation deal. It says companies including SeatGeek, AEG and Paciolan are chipping away at its dominance, and the company estimates it controls just half of the market if sporting events are factored in.

Before the 2020 expiration of the initial DOJ settlement, the company settled with the DOJ again in late 2019 over violations of the earlier agreement, including allegations of forcing venues to use Ticketmaster and retaliating when they didn’t. As part of the new agreement, the company agreed to extend court oversight via an independent compliance monitor through 2025, and agree to not retaliate, a bargain it has not lived up to according to the current case.