December 19, 2019
By: Jem Aswad
Originally Posted on: Variety
UPDATED: Live Nation has reached a tentative settlement with the Department of Justice’s antitrust division and will extend the 2010 consent decree regarding the company’s merger with Ticketmaster until 2025, a source close to the situation confirmed to Variety. The consent decree will feature updated guidelines regarding the company’s reported retaliation against venues that use other ticketing services. The news was first reported by Billboard.
“We have reached an agreement in principle with the Department of Justice to extend and clarify the consent decree,” a statement from Live Nation obtained by Variety reads. “We believe this is the best outcome for our business, clients and shareholders as we turn our focus to 2020 initiatives.”
A source tells Variety that Live Nation will not be fined for the action but has agreed to pay the DOJ’s attorney fees, which are in the low millions.
Reps for the DOJ did not immediately respond to Variety‘s requests for comment.
Attorneys with the DOJ reportedly identified five separate instances over the past decade in which Live Nation violated the consent decree, involving threats that Live Nation would withold tours from the venues in question if the venues did not renew their deals with Ticketmaster, which is the world’s largest ticketing company. Under the consent decree, Ticketmaster officials are prohibited from threatening or retaliating against venues that sign with a competing ticketing service, although there is a tacit understanding of the company’s legal prerogative to favor venues that use its ticketing services, ostensibly rendering such threats unnecessary.
The investigation was being led by Makan Delrahim, assistant attorney general for the DOJ’s antitrust division.
The settlement will ease a significant source of stress for the company, which has been saddled with allegations of anticompetitive practices and seen members of Congress, most recently Senators Richard Blumenthal of New Jersey and Amy Klobuchar of Minnesota, ask the DOJ’s antitrust division to investigate competition in the ticketing industry.
While the September letter from Sens. Blumenthal and Klobuchar of Minnesota asked Delrahim to look at the overall business, there is little question that the target of the probe was Live Nation. The request stems from the 2010 Live Nation/ Ticketmaster merger that resulted in an online live-event ticket marketplace that the senators say is not working for consumers.
Live Nation/ Ticketmaster has operated under a consent decree that bars Live Nation from withholding concerts and tours from venues that do not use Ticketmaster and from retaliating when venues go with a competitor.
“The consent decree has been criticized as ineffective, and there have been disturbing reports that Live Nation has flouted its conditions,” the letter read, leaving “Live Nation’s dominance virtually unchallenged.” Blumenthal and Klobuchar ask the DOJ to “investigate the state of competition in the ticketing industry.”
“The Department of Justice should act to reinvigorate competition in the ticket market to help consumers,” the letter reads, and asks for the DOJ to “enforce the terms of the Ticketmaster-Live Nation consent decree, including the anti-retaliation merger conditions” and “not hesitate to seek appropriate remedies to ensure compliance with the merger conditions.”
Live Nation chairman Michael Rapino addressed the issue during Goldman Sachs’ Communicopia conference in September. When asked by a moderator, he sighed, “Yes, the question we all want!”
“The decree gets a lot of misconception,” he continued. “I negotiated it and it’s very simple: It says we can’t threaten venues. We can’t say to a Ticketmaster venue that says they want to use a different ticketing platform, ‘If you do that, we won’t put shows in your building.’ It also says we can do what’s right for our business, so we have to put the show where we make the most economics, and maybe that venue [that wants to use a different ticketing platform] won’t be the best economic place anymore because we don’t hold the revenue.
“Now, we’re eight-plus years into the decree, and with 30,000 shows a year and 30,000 employees, you can imagine all the emails flying around. Every now and then one of our competitors runs to the DOJ and says ‘We lost the Kansas City venue, [Ticketmaster] threatened!’ We get an inquiry from the DOJ, ‘Hey, can we get some emails from over the years,’ they’ve done it and we’ve never found anything wrong. We’re very compliant, we understand it clearly — trust me, after eight years and all those emails, if you weren’t compliant, with your competitors playing that game, you’d have been exposed as being in violation long ago.
“With all the recent press” about the senators’ requests, he continued, “there’s no new litigation, no new claims, no new anything. We educate all of our employees: ‘This is how you go to market [with] Ticketmaster versus Live Nation, this and this is what you can’t say. Win the business straight: You can bundle the business, you can add value, you can present together — it’s great to have Ticketmaster ticketing your building and have Live Nation as your content partner. That’s how we generally win a business: because of the strong value proposition we provide. When we win a venue in Kansas City or L.A., where we took over a venue from a competitor, of course they’re gonna run to the DOJ. But we’re too smart for that, we’re very clear on what we can and can’t do.
“To an investor in the business,” he concluded, “be reassured that our business model has been continually tested over the years, that we are compliant, we will be compliant, we see no reason not to be compliant, and it’s business as usual.”