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News April 4, 2018

Live Nation investigated by Dept of Justice for “strong arm tactics” after complaints from rival AEG

Staff Writer
Live Nation investigated by Dept of Justice for “strong arm tactics” after complaints from rival AEG

The US Dept. of Justice is investigating  “strong arm tactics” allegedly employed by Live Nation.

It follows “serious accusations” by its major rival, AEG.

Live Nation is the world’s largest live-entertainment company, and AEG the second.

The report surfaced in the New York Times, that the investigation will focus on whether Live Nation took revenge against those venues that did not use its ticketing service Ticketmaster.

Those who didn’t found themselves not used by Live Nation on its tours.

The Times piece was headlined, “Live Nation Rules Music Ticketing, Some Say With Threats.”

Live Nation has strenuously denied the claims.

Ticketmaster already had 80% of the US concert business with strong ties to venues ranging from super-stadiums to small clubs.

These grew even more after it merged with Live Nation in 2010.

At the time, the Dept. of Justice stated that a “vertical integration” between promoter and ticketing agency was healthy.

Bit it warned the two companies through a Consent Decree that they were banned from forcing a client to purchase both talent and ticketing.

But in a grey area, the rules also allow Live Nation to “bundle” services “in any combination.”

This effectively means the promoter can redirect a show to a venue it owns or that uses Ticketmaster if it can defend the decision as sound business.

In any case, the Dept of Justice’s decision that the 2010 merger would lead to healthy competition has been wrong, and it has been slammed by artists and live music executives for having allowed it to go through in the first place.

The New York Times grumbled, “The ticketing business remains dominated by Live Nation and its operations now extend into nearly every aspect of the concert world.

“Ticket prices are at all-time highs. Service fees are far from reduced.

“And Ticketmaster, now part of the Live Nation empire, still tickets 80 of the top 100 arenas in the country. No other company has more than a handful.”

According to figures released in February 2018 by Live Nation, in 2017 revenue grew 24% to $10.3 billion, concert attendance was up 21% to 86 million, and sponsorship and ad revenue grew by 18%.

It invested $5.6 billion to promote 30,000 shows in 40 countries.

Ticketmaster fee bearing gross transaction value (GTV) was up 15% and secondary GTV up 16%.

Beau Buffier, head of New York Attorney General’s Antitrust Bureau, pointed out, “The Consent Decree was supposed to prevent Live Nation from using its strength in live entertainment to foreclose competition in ticketing.  

“But it is now widely seen as the poster child for the problems that arise when enforcers adopt these temporary fixes to limit the anticompetitive effects of deeply problematic vertical mergers.”

Live Nation defended itself in the Times with one of its legal team Daniel Wall saying: “You have a disgruntled competitor that is trying to explain their loss around the boogeyman that there were threats made that nobody can document.”

He said Live Nation never used aggressive, anticompetitive tactics and “never threaten(s) or retaliate(s).”  

Ticketmaster president Jared Smith slammed the Times piece, insisting on its Ticketmaster Insider blog, “The DOJ studied this issue very closely and determined that vertical integration between content suppliers (i.e. concert promoters) and ticketing companies was generally a good thing as long as it did not stifle competition.

“In fact, the DOJ decided it actually wanted more vertically integrated competition, so it required the creation of a second company that could offer both content and ticketing.

“To achieve this, the DOJ required Live Nation to spin off some of its ticketing assets (namely a copy of one of its ticketing systems) to the second-largest concert promoter in the United States, AEG, so that AEG would become ‘a new, independent, economically viable, and vertically integrated competitor in the market for primary ticketing services to major concert venues.”

AEG itself is in legal trouble over a “block booking policy it introduced mid last year where acts which played O2 London also had to play Staples Center in Los Angeles.

It argued it had to do this because Azoff/MSG Entertainment (Irving Azoff and Madison Square Garden) had stitched up a similar tie-up between Madison Square Gardens in New York and the Forum in LA – which Azoff denies.

In any case, AEG’s Staples deal has seen Ozzy Osbourne file court action against it as a result.

The metal icon complained in court papers that he had to play the Staples first if he wanted to perform at the O2.

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