Drawing on their research, John Kwoka and Tommaso Valletti refute criticisms of the Department of Justice’s lawsuit to break up Live Nation-Ticketmaster that argue such actions irreparably ruin the operations of the constituent firms. The authors highlight the many examples of successful breakups and conclude that only a breakup will now repair the market for live entertainment.


The Justice Department, together with 30 states, filed suit in late May against Live Nation-Ticketmaster for abusing its dominant position in the live entertainment business. For those who have followed the company since it was allowed to merge in 2010, its behavior comes as no surprise. What might surprise is the bold nature of the DOJ’s challenge and its proposed remedy. The challenge revisits a merger the agency previously approved, subject only to some ineffective conduct remedies. Too often in the past, the antitrust agencies (the DOJ Antitrust Division and Federal Trade Commission) have not looked back, much less taken action, against consummated mergers that have proven to be anticompetitive. Rather, they have averted their eyes and moved on.

This action highlights the fact that decades of lax enforcement against mergers and dominant firms have left countless industries excessively concentrated and uncompetitive. Leaving these firms unexamined and untouched results in continued harm to consumers and competition until at some future date possible entry or technological change reins in their market power. The DOJ’s lawsuit also signals a new and bold willingness by the current leadership of the antitrust agencies to acknowledge past enforcement failures and revisit consummated mergers if hindsight reveals them to have been harmfully anticompetitive.

But more remarkable yet is the agency’s proposed remedy in this case. Rather than simply imposing new conduct rules against the company’s anticompetitive practices, the DOJ has stated that it will seek to split Ticketmaster off from Live Nation, effectively undoing the 15-year-old merger.

Breakups are hard, but how hard?

Critics have said, and will continue to argue, that such breakups are infeasible, or impractical, or a bad idea since they are likely not just to fail but also damage the companies themselves. Our recent work, “Unscrambling the eggs: breaking up consummated mergers and dominant firms,” has shown that these claims are false. Companies break themselves up all the time. One study of 86 of the Fortune 100 companies found that they spun off or otherwise divested parts of their businesses two-thirds as often as they merged or acquired other companies. Recent examples include major companies such as DuPont-Conoco, eBay and PayPal, Pfizer, AOL-Time Warner, HP, GE repeatedly, and even Illumina Grail. These breakups were not court ordered, but they nonetheless demonstrate the feasibility of corporate separation.

There have also been divestitures mandated by antitrust action, perhaps most famously the AT&T divestiture in the 1980s. Like AT&T, the Live Nation-Ticketmaster case has been brought as a monopoly case, rather than seeking to reopen a prior merger matter. More recent examples in the U.S. include Dean Foods, where a previous acquisition of two milk-processing plants was partially reversed as a result of antitrust action. As we also discuss in our article, there are dozens of other consummated mergers where the DOJ or the FTC has brought actions after the fact, prevailed, and imposed both divestiture requirements and conduct orders in tandem.

Indeed, breakups of dominant firms are quite common around the world. Over the past 25 years, competition authorities have broken up hundreds of electricity and telecom companies, as well as some rail, gas, post, and ports companies, in order to introduce competition to parts of their businesses. While there may be debate about the degree of success they have achieved, there is little evidence that these have harmed their business operations.

The AT&T divestiture has been especially well documented thanks to a book written by the AT&T executive charged with its dismemberment. That executive described in minute detail the process of divestiture, which he firmly opposed but, once mandated, proceeded to implement with commendable diligence. The company was vast: it had one million employees, 70 customer accounts, 25,000 buildings, and 175,000 motor vehicles spread across multiple divisions. Divestiture was nonetheless achieved in the required two-year time frame. The author concluded his account as follows:

The process of managing divestiture was, on balance, remarkably successful.  Divestiture was accomplished in minimal time, with the least possible impact upon the corporation’s constituencies, and with no major disruption in the nation’s telephone service.

These examples of breakups of dominant firms illustrate another important practical point. Almost all the breakups have been along what we call “fault lines,” that is, lines along which the company’s businesses can be identified. These might be products or subsidiaries or facilities, but in any event they are natural starting points for divestitures. In the case of AT&T, for example, its long-distance division and its seven regional operating companies became the basis for breakup. For many companies, such vertical stages of production tend to remain operationally distinct while for others fault lines exist as the result of past mergers.

Such is the case with Live Nation-Ticketmaster. Those two original firms remain largely separate within the merged company’s organization, so the DOJ’s intent to require divestiture of Ticketmaster seems feasible, even simple, by comparison with AT&T. In addition, within Live Nation, artist management, promotion, and venue ownership are quite different businesses, each with its own name and structure, and with fault lines to distinguish them and, if necessary, to split any of them off.

Why breaking up Live Nation-Ticketmaster is necessary

We’ve refuted claims that a breakup is infeasible or will irreversibly damage Live Nation. So, what is the actual necessity of breaking up Live Nation-Ticketmaster? The basic reason is that nothing short of divestiture works. The DOJ has twice attempted to rein in Live Nation-Ticketmaster’s market power with conduct remedies, and each time this has failed. In 2010, the settlement included prohibitions on conditioning and on retaliation, that is, providing ticketing services (via Ticketmaster) to a venue owner only if it also books the artists who have signed up with Live Nation’s management and promotional services, or retaliating against the venue if it chooses not to do so. The DOJ itself acknowledged that almost immediately after the 2010 merger and despite the prohibition, Ticketmaster engaged in conditioning and retaliation, relying on rather strained interpretations of the language in one part of the order.

In 2019, after nearly a decade of competitive harm, the DOJ finally revised the language of the earlier ineffective order. At the same time, however, it included new language that Ticketmaster proceeded again to interpret in ways that allowed it to engage in anticompetitive conduct. In short, the DOJ is now seeking to break up the company after two failed efforts at conduct remedies over 15 years. In that time, the live entertainment ticketing market, of which Ticketmaster controls 70%, has experienced persistently high fees, little entry, and an ever tighter ecosystem, making clear that nothing short of divestiture will work. 

If the DOJ’s recent action is bolder, its historical enforcement of Live Nation-Ticketmaster also illustrates something older and, unfortunately, familiar: the consequences of a competition agency trying repeatedly—and ultimately futilely—to rely on conduct orders to avoid restructuring. Examples abound. Federal and state competition authorities’ efforts to restructure electricity companies in the U.S. to allow for competition at the generation stage are one prominent example of how pursuing conduct orders instead of restructurings despite firm structures and incentives proves counterproductive. Starting in the 1980s, state and federal policy sought to create market opportunities for independent power producers facing large vertically integrated incumbents. The latter had no incentive to open up their transmission grids to independent producers. In 1992, the Federal Energy Regulatory Commission ordered equal access to the grid by independent power producers, supported by accounting systems. When that failed, it instituted functional unbundling paired with open access tariffs. When that failed, FERC ordered utilities to cede control (but not ownership) of their transmission assets to so-called Regional Transmission Organizations. Together with state mandates to the utilities to divest their own generation assets, some measure of open markets and competition was finally achieved more than 20 years later.

Similar stories can be told about other U.S. industries as well as countless examples elsewhere. The AT&T antitrust case in the U.S. was brought only after the failure of the Federal Communications Commission to force the company to accommodate nascent competition from MCI and Sprint in its long distance business. In 2007, the FTC successfully challenged Evanston Northwestern Healthcare Corporation’s acquisition of its nearest northerly competition, Highland Park Hospital. At the remedy stage, the agency expressed its doubts about an ex post breakup and instead imposed a conduct remedy that is widely viewed as ineffective. A similar reluctance characterized the remedy in the DOJ’s case against Microsoft. Despite initial court interest in possible divestiture, ultimately the DOJ approved a conduct remedy that, famously, resulted in nearly a decade of foot-dragging by the company in complying with one crucial part.

In the United Kingdom, Ofcom grappled with the dominant BT (formerly, British Telecom) for many years in repeated efforts to open up the telecom network. In the digital arena, the Google shopping case brought by the EU is a nearly decade-long story of the inability to devise a meaningful and effective conduct remedy for its anticompetitive practices. The more recent Google Android case is moving along the same protracted path.

This record speaks directly to the DOJ’s experience with Live-Nation Ticketmaster. The failure to prohibit the merger in the first instance, the reliance on a conduct remedy in 2010, the mere revising of that remedy in 2019: all that this has accomplished is to prolong, for 15 years, the company’s harm to competition and consumers. And it has now led to the need to break up a consummated merger, usually more challenging than ex ante prohibition. But as our research has documented, there is considerable and generally successful experience with breaking up dominant firms and consummated mergers. 

We can only hope that this bold action will help put to rest the old practice of putting into place conduct remedies that have no real chance of success but simply serve to prolong unchecked market power.

Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.