DOJ Sues Live Nation Over Monopoly, Shares Drop 6% After Hours

Key Takeaway

• DOJ and 29 states filed an antitrust lawsuit against Live Nation Entertainment, alleging illegal monopoly over the live events industry.
• Following the lawsuit news, Live Nation's shares fell over 6% in after-hours trading, indicating investor concerns.
• The scrutiny intensified after Ticketmaster's 2022 Taylor Swift ticket sale fiasco, highlighting high fees and market power issues.

DOJ to File Antitrust Lawsuit

The U.S. Department of Justice (DOJ), along with attorneys general from 29 states and Washington, D.C., has filed an antitrust lawsuit against Live Nation Entertainment. The lawsuit, filed in the Southern District of New York, accuses Live Nation of maintaining an illegal monopoly over the live events industry through its control of Ticketmaster. The DOJ is seeking remedies that could include breaking up Live Nation Entertainment, which was formed by the 2010 merger of Live Nation and Ticketmaster.

Attorney General Merrick Garland stated, “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.” The lawsuit alleges that Live Nation has used its dominant position to increase ticket prices, limit opportunities for artists, and squeeze out smaller promoters and venue operators. Following the news, Live Nation's shares fell over 6% in after-hours trading, reflecting investor concerns.

Historical Context and Legal Background

The merger of Live Nation and Ticketmaster in 2010 was initially approved by the DOJ under a settlement agreement that included several conditions. These conditions required Ticketmaster to license its ticketing software to rival Anschutz Entertainment Group and divest certain ticketing assets. Additionally, the DOJ barred the company from retaliating against venues that chose alternative ticketing or promotional services.

In 2019, the DOJ modified and extended the agreement, citing repeated violations by Live Nation. The modifications included new provisions to prevent retaliation against venues hosting "one or more" live events, rather than "all Live Nation content." Despite these measures, the DOJ has continued to scrutinize Live Nation's business practices, leading to the current investigation.

Live Nation's Chief Financial Officer Joe Berchtold recently stated that the DOJ's investigation appears to focus on specific business practices rather than the legality of the merger or the company's overall business structure. "Based on the issues we know about, we don’t believe a break-up of Live Nation and Ticketmaster would be a legally permissible remedy," Berchtold added.

Public and Political Pressure

The scrutiny on Live Nation and Ticketmaster has intensified following several high-profile incidents, most notably the 2022 fiasco during the sale of tickets for Taylor Swift's Eras Tour. The overwhelming demand caused Ticketmaster's website to crash, leaving many fans frustrated and unable to purchase tickets. The incident led to widespread criticism from fans, lawmakers, and artists, and prompted a congressional hearing where Live Nation executives were called to testify.

Lawmakers from both parties have expressed concerns over Ticketmaster's market power and lack of transparency. U.S. Sen. Amy Klobuchar, a Minnesota Democrat, highlighted the high ticket fees, which now average 27% of the ticket cost and can climb as high as 75%. Competitors, like Seat Geek CEO Jack Groetzinger, have also criticized Live Nation for signing multi-year contracts with venues, making it difficult for other ticketing services to compete.

Street Views

• Merrick Garland, Attorney General (Bearish on Live Nation Entertainment):

  "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. 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."

• Jonathan Kanter, Assistant Attorney General of the Justice Department’s Antitrust Division (Bearish on Live Nation-Ticketmaster):

  "The live music industry in America is broken because Live Nation-Ticketmaster has an illegal monopoly. Our antitrust lawsuit seeks to break up Live Nation-Ticketmaster’s monopoly and restore competition for the benefit of fans and artists."