In part I of a two-part series, Michael A. Carrier outlines the evidence behind the government’s recent lawsuit against Live Nation and its subsidiary, Ticketmaster, for monopolizing the live entertainment market. Read part II here.

The recent lawsuit that the United States Department of Justice (DOJ) and 30 state and district attorney generals filed against Live Nation Entertainment and wholly-owned subsidiary Ticketmaster is not a case that presents a “close call.” It is a case in which consumers, artists, promoters, and venues all have suffered from anticompetitive conduct, and have done so for years. And it is one in which the company will likely not be able to offer countervailing justifications. In short, it is one of the strongest monopolization cases in the modern era.

Monopoly power

Much of the plaintiffs’ complaint focuses on the unilateral conduct of Live Nation-Ticketmaster (hereinafter Live Nation). As a result, the relevant antitrust offense is monopolization. This cause of action has two requirements: monopoly power and exclusionary conduct. On the issue of monopoly power, for starters, Live Nation is a company for which popular and antitrust conceptions align.

As the DOJ explained in 2010, Ticketmaster, which at the time controlled more than 80% of the primary-ticketing market, had dominated the market “for over two decades.” This market dominance has not changed. As the DOJ and 30 states explained in their complaint filed in late May, Live Nation still controls at least 80% of the ticketing market and 60% of the promotion market at major concert venues. These market shares are buttressed by barriers to entry as potential rivals are required “to enter multiple markets simultaneously and at scale to compete effectively.” Making the case even stronger, Live Nation’s monopoly power is revealed by not only circumstantial evidence based on market share but also direct effects such as mixed quality and high prices.

One example of mixed quality is presented by the fiasco that accompanied the 2022 Taylor Swift Eras tour. As I have summarized elsewhere, “[s]ome fans waited for hours in a queue before being kicked out.” Others made “multiple failed attempts” to buy tickets that “had been removed from their basket without adequate time to check out.” In addition, “some ‘Verified Fans’ were waitlisted, unable to buy tickets until the general public sale,” with this sale ultimately canceled. In response, the company’s president claimed that “‘industrial-scale ticket scalping’ from automated ‘bots’ was ‘the real problem,’” and a former company CEO offered “no sympathy for people whining about high ticket prices” because “[t]he public brought all this on itself.”

Another example of the direct effects of Live Nation’s monopoly is high prices. In this case, the fees to attend a concert in the United States “far exceed” those elsewhere. The complaint catalogs an array of fees that fans must pay, including “service” or “convenience” fees, “[p]latinum” fees, “VIP” fees, “per order” or “handling” fees, “payment processing” fees, and “facility” fees. Live Nation may claim that “service fees are decided by the venue,” but it “ha[s] a hand in setting nearly all these fees” and “benefit[s] financially” from them.

Exclusionary conduct

In a monopolization case, the plaintiff must prove not only that the defendant has monopoly power but also that it engaged in exclusionary conduct. In some cases, it is not clear if the defendant’s conduct is—to quote the Supreme Court’s leading formulation in United States v. Grinnell—“willful acquisition or maintenance of [monopoly] power” as opposed to a “superior product, business acumen, or historic accident.” As shown by the vast array of behavior alleged in the complaint, this is not one of those ambiguous cases. Some of the conduct is unambiguously anticompetitive. And other activity shows the company’s exploitation and entrenchment of its power in multiple markets.

The plaintiffs refer to Live Nation’s business model as a “flywheel.” In particular, the company uses its profits from high-margin businesses like Ticketmaster to support its less profitable promotions business. Rival promoters cannot compete because Live Nation subsidizes offers to artists from its ticketing and other high-margin businesses. This business model is fueled by six types of exclusionary conduct detailed in the complaint.

Example 1: Market division with a “hammer”

The first example of exclusionary conduct involves Oak View Group, a venue development and management company “uniquely positioned to compete against Live Nation.” But instead of competing, Oak View “operate[d] as an agent and a self-described ‘pimp’ and ‘hammer’ for Live Nation, often influencing venues and artists for the benefit of Live Nation.” At its core, the plaintiffs alleged a market division agreement by which “Oak View Group effectively ceded the concert promotions space to Live Nation,” while “Live Nation effectively ceded its arena consulting business to Oak View Group.”

The plaintiffs alleged, for example, that the companies “agreed to a competitive détente in concert promotions to avoid competition between the two companies over artists and tours. For example, “after learning that Oak View offered to promote an artist Live Nation had previously promoted, Live Nation’s CEO immediately emailed Oak View: “whats up? We have done his [touring] and vegas[.] Let’s make sure we don’t let [the artist agency] now start playing us off.” In response, Oak View’s CEO conceded: ‘Our guys got a bit ahead. All know we don’t promote and we only do tours with Live Nation,’” and pledged: “I never want to be competitors.”

Example 2: Threats to rivals to restrict expansion into promotion market

A second example of exclusionary conduct involved retaliatory threats “against private equity firm Silver Lake, unless one of its portfolio companies, TEG, stopped competing with Live Nation for artist promotion contracts in the United States.” Upon hearing that TEG booked an artist for a concert at the Los Angeles Coliseum, Live Nation “threatened to deny entry to any fan using a StubHub-issued ticket.” Consequently, “hundreds of StubHub’s customers” were denied entry. After hearing about the concert, Live Nation’s CEO continued the threats, “fail[ing] to understand” why Silver Lake “continue[d] to invest in a business that competes with” it.

Example 3: “Carrots” and “sticks” to lock in venues

Third, the plaintiffs alleged that Live Nation forces venues to use Ticketmaster and “receive a significant payment for long-term exclusivity” because use of another ticketer results in “losing access to the vast array” of Live Nation concerts. Live Nation’s “reputation and history of retaliation are so well known in the industry” that the company does not need to “explicitly threaten” venues. Live Nation’s CEO, for example, offered a more general threat that it typically hosts concerts “where we make the most economics,” meaning venues where Ticketmaster provides the ticketing.

The plaintiffs highlighted “a number of punitive tools” Live Nation “can use to retaliate.” For example, it can reduce the number of concerts, move shows to less desirable dates, and reduce promotional efforts. As one example, “Live Nation threatened retaliation against a venue that had decided to switch from Ticketmaster to SeatGeek,” and “[o]nce the venue switched to SeatGeek, Live Nation followed through on its threats, re-routing concerts to other venues.”

Example 4: Foreclosure of venues through long-term exclusive agreements

Buttressing the company’s “carrots” and “sticks,” the plaintiffs alleged that “Ticketmaster’s long-term, exclusive agreements with venues are a key tool to protect Live Nation’s stranglehold on the live concert industry.” Pursuant to these agreements, Ticketmaster is the only provider of primary ticketing services at a venue for as long as 14 years. On the key element of foreclosure, the plaintiffs alleged that the agreements “cover more than 75% of concert ticket sales at major concert venues.” The company also prevents rivals from competing by renewing or extending the agreements before they expire. The plaintiffs pointed to the combination of exclusive and high market share as “fool-proof ways to maintain [Live Nation’s] empire,” which was reflected by primary ticketing fees that are uniquely high in the United States and by the failure to develop different business models.

The plaintiffs also discussed the company’s use of its “encrypted mobile ticket program, SafeTix,” to “protect[] its position in primary ticketing, expand[] its position in secondary ticketing, and undercut[] the ability of rival ticketers to compete in either aspect of ticketing.” Pursuant to this program, Ticketmaster used a “constantly refreshing and encrypted barcode.” Even though the company “marketed this change as reducing the risk of ticket fraud from stolen or illegal counterfeit tickets,” the restrictions made it “more difficult for a fan who wishes to buy or sell a SafeTix-encrypted ticket through a secondary platform to use a rival platform like StubHub or SeatGeek.” The change also “introduce[d] uncertainty” regarding ticket transfers since ticketholders and buyers are required to create accounts, download the Ticketmaster app, and “wait for Ticketmaster to determine when or whether the transfer can be completed.”

Example 5: Tying venues to Live Nation promotion

Fifth, the plaintiffs alleged that Live Nation has a longstanding policy of “preventing artists who prefer and choose third-party promoters from using its venues.” As a result, artists who wish to use a Live Nation venue “almost always” must use the company as the promoter. Raising significant antitrust concern, the company’s “senior executives kn[e]w the company . . . restricted the use of its amphitheaters and other venues for years,” which involved the “sacrifice” of “profits the company could be earning as a venue owner by opening its venues to non-Live Nation promoted shows.” One example of such a profit sacrifice is provided by the company’s conclusion that “its top 10 amphitheaters are ‘dark,’ or without shows, ‘on nearly 50% of their Saturdays in the summer,’” which was the “highest performing day of the week.”

Example 6: Acquisitions to grow “moat”

As a sixth form of conduct, the plaintiffs alleged that “[t]o protect and expand its positions across the live entertainment industry, Live Nation has pursued a strategy of acquiring nascent threats and neutralizing rivals” that it viewed as “some of its ‘biggest’ threats.” The strategy “included acquiring promoters, amphitheaters, festivals, other venues, and even small ticketers, as well as entering into long-term exclusive booking contracts with many venues.” The plaintiffs discussed seven examples, of which I will mention three.

One involved AC Entertainment, “a regional independent promoter in the Southeast and one of Live Nation’s internally designated ‘Biggest Competitor Threats.’” Live Nation “pursued the acquisition even though it had doubts about the standalone economics of the deal,” with a senior official explaining that “[t]he numbers are not super exciting and this feels like more of a defensive move to . . . [k]eep [rival] AEG out of the region.” Live Nation admitted that “the acquisition helped ‘grow[] our moat in the [Nashville] market’” and would result in “lower competition in the Region and specifically in Nashville.”

Another example concerned Red Mountain Entertainment, “a regional promoter that promoted shows in Alabama and Mississippi.” As the company grew, “Live Nation unleashed what it called a ‘velvet hammer’ by warning that it would cut off ‘the content flow on artist[s]’ to Red Mountain venues if Red Mountain continued to compete as a promoter.” A company executive explained: “Either we are together or we are competitors.”

A third example involved 313, a Detroit-based company whose predecessor organizations Live Nation viewed as “competitors” because they “ma[d]e direct offers to artists.” Live Nation and Oak View Group’s co-founder “concocted a ‘scheme’ to ‘put [one of the predecessor rivals] out of the promoting side.’” Pursuant to the market allocation, “Live Nation stopped competing with 313 over venues in the Detroit market” and “313 stopped competing against Live Nation for artist talent.”

As I will explain in part II, there are several reasons why these allegations constitute such a strong complaint.

Part II of this two-part series will come out tomorrow.

Author’s Disclosure: The author reports no conflicts of interest in writing this article. Please see here for our disclosure policy.

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