In recent years, there has been growing scrutiny over Ticketmaster’s business practices and market dominance in the ticket sales industry. In January 2022, a group of members of Congress requested that the Department of Justice open an investigation into whether Ticketmaster was engaging in anticompetitive conduct and abusing its market position. However, it is unclear if the DOJ has actually launched a formal investigation into Ticketmaster at this point in time.
Background on Ticketmaster
Ticketmaster is the largest primary ticket outlet and ticket resale marketplace in the United States. The company sells tickets for concerts, sports events, theater shows, and more. Ticketmaster provides ticketing services for many of the country’s major entertainment venues and promoters.
According to reports, Ticketmaster controls around 70% of the primary ticket sales market and 80% of the ticketing services market in the US. The company merged with Live Nation in a controversial deal in 2010, which combined the largest concert promoter in the country with the dominant ticketing company. This merger essentially created a vertically integrated monopoly in the live events industry.
Criticisms of Ticketmaster’s Practices
In recent years, Ticketmaster has faced growing criticism over a number of its business practices:
– Exorbitant fees – Ticketmaster tacks on a variety of fees to ticket purchases that can add more than 30% to the base ticket price. These fees include an order processing fee, service fee, and facility charge. Many customers feel these fees are excessive.
– Dynamic pricing – Ticketmaster utilizes demand-based pricing, raising prices for hot tickets to whatever level the market will bear. This leads to incidents where ticket prices skyrocket within minutes of going on sale.
– Resale sites – Ticketmaster owns several ticket resale sites like Vivid Seats and TicketNetwork where tickets are resold at significant markups over face value. Critics allege Ticketmaster deliberately withholds tickets to drive more sales to these resale sites.
– Locking up major venues and promoters – Through exclusive ticketing deals, Ticketmaster locks up much of the live event market. This makes it very difficult for competitors to challenge their dominance.
– Poor customer service – Customers routinely complain about poor customer service and lack of responsiveness when issues arise with ticket orders. There is a perception that Ticketmaster does not have to care because consumers lack alternatives.
Calls for DOJ Investigation
In light of these issues, a group of around a dozen Democratic lawmakers sent a letter to the DOJ in January 2022 urging them to open an investigation into Ticketmaster.
In the letter, they accused Ticketmaster of “anticompetitive conduct” that prioritizes profits over fair treatment of customers. They contended that Ticketmaster’s market dominance enables them to charge “exorbitant fees” with impunity. They also accused Ticketmaster of throttling ticket supply to drive sales to their own resale sites where tickets are sold at higher markups.
The letter argued that the circumstances warranted an antitrust investigation to determine if Ticketmaster was engaged in anticompetitive behavior in violation of Sections 1 and 2 of the Sherman Act. They claimed an investigation was necessary to ensure a fair marketplace that promotes competition and benefits consumers.
Ticketmaster’s Response
Ticketmaster responded to the request for an investigation by defending their business practices. A company spokesperson stated:
“Ticketmaster delivers great value to fans by providing the most innovative ticket sales, distribution and enforcement technology in the industry. Ticketmaster exists for one reason – to ensure as many fans as possible can purchase tickets to events at their fair prices. We do not make or set ticket prices, our clients do.”
They positioned themselves as an innovator that helps facilitate affordable access to live events for millions of people. They claimed the calls for an investigation were unfounded.
Prior Legal Issues and Investigations
While no formal DOJ investigation has been announced, Ticketmaster has come under legal scrutiny in the past over antitrust concerns.
In the mid-1990s, the DOJ actually filed suit against Ticketmaster over allegations they had engaged in anticompetitive behavior and attempted to monopolize ticket distribution services. That case ended in a settlement requiring Ticketmaster to modify some exclusivity agreements with promoters.
In recent years, Ticketmaster has also faced multiple antitrust lawsuits from disgruntled consumers. These lawsuits have accused them of monopolistic behavior, price-fixing, and racketeering. While none of these consumer cases have succeeded, they demonstrate ongoing legal pressure on the company.
The merger between Ticketmaster and Live Nation also raised significant antitrust concerns when it was proposed. It was approved in 2010, but only after Live Nation agreed to let an independent monitoring entity ensure they were in compliance with antitrust laws for a period of 10 years. That monitoring agreement expired in 2020.
Potential Issues for a DOJ Investigation
DespiteValid criticisms about Ticketmaster’s business practices and market power, there are some potential obstacles the DOJ could face in pursuing an antitrust case against them:
– Market definition issues – Ticketmaster could argue the market should encompass all ticket sales platforms, including primary competitors like AXS and secondary sites like StubHub. This dilutes their market share.
– No evidence of overt collusion – There is no clear evidence Ticketmaster explicitly colludes with venues and promoters on prices. Vertical integration alone is not an antitrust violation.
– Benefits to venues and promoters – Ticketmaster can claim their systems, distribution channels and large customer base benefit partners, allowing them to increase ticket sales and optimize prices.
– Innovation claims – Ticketmaster invests heavily in ticketing technology and may claim to be an innovator driving improvements in the industry. Enforcement action could chill further innovation.
– International reach – Ticketmaster’s parent company Live Nation is a global leader in live entertainment ticketing and promotions spanning 70 countries. This international scope could complicate any US antitrust case.
Potential Antitrust Violations
However, a DOJ investigation could potentially uncover evidence that Ticketmaster is violating Sections 1 and 2 of the Sherman Act:
Section 1 Violations
– Exclusive dealing arrangements – Ticketmaster’s exclusive ticketing contracts with major venues and promoters could be deemed anticompetitive if they substantially foreclose competition in a certain market.
– Resale price maintenance – If Ticketmaster is coordinating with partners to fix minimum resale prices on their ticket exchange sites, that could constitute illegal price fixing.
– Boycotting competitors – The DOJ could see if Ticketmaster applies pressure or coercion using its market leverage to squeeze out competing ticket sellers.
Section 2 Violations
– Monopolization – Ticketmaster’s dominance across primary and secondary ticket sales markets could be deemed monopolization if they engaged in exclusionary conduct.
– Attempted monopolization – Tactics like interfering with competitors’ business relationships could be evidence of attempted monopolization by unfair means.
– Predatory pricing – Dynamic pricing algorithms could come under scrutiny if they are intended specifically to undercut and eliminate rivals.
So there are credible antitrust concerns around Ticketmaster’s practices that may warrant DOJ investigation. But the case would face challenges and require compelling evidence ofconsumer harm.
Likelihood of DOJ Actually Investigating
As of October 2022, the DOJ has not publicly indicated it intends to pursue an antitrust investigation of Ticketmaster. There are several reasons why action may be unlikely at this point:
– Current DOJ antitrust leadership – The new head of the DOJ Antitrust Division, Jonathan Kanter, does seem intent on more aggressive enforcement. However, to date he has focused mostly on areas like big tech, healthcare and agriculture. There is no evidence ticketing is a top priority.
– Burden of other investigations – The DOJ has a full plate with major antitrust investigations already underway against Google, Apple and other large companies. They may lack the bandwidth to open another huge case.
– Insufficient support in Congress – Beyond the initial group of Democratic lawmakers who wrote the letter, there does not appear to be any major Congressional push for investigating Ticketmaster. Broader momentum may be needed.
– Challenges building case – As outlined earlier, there are some complexities around demonstrating consumer harm and meeting the legal standards for antitrust violations. The DOJ may be uncertain about their prospects.
– Wait and see approach – The DOJ may want to wait to see the outcome of pending private lawsuits against Ticketmaster before deciding if action is warranted.
So while not impossible, the odds of the DOJ actually launching an investigation anytime soon appear relatively low. But public scrutiny over Ticketmaster is growing, so the pressure on regulators to act could certainly increase over time.
Conclusion
In summary, while a group of US lawmakers has pushed for an antitrust investigation of Ticketmaster by the DOJ, there is no indication such an investigation has actually begun as of late 2022. Ticketmaster undoubtedly holds enormous market power in ticket sales, and has drawn accusations of monopolistic and anticompetitive conduct. However, the DOJ faces some legal and practical challenges in building an antitrust case against the company. Given other priorities, the DOJ may be unlikely to initiate a probe absent mounting public pressure. But Ticketmaster’s market dominance and aggressive business practices will likely keep them under the regulatory microscope in the years ahead.