In 2008, Ticketmaster and Live Nation announced plans to merge into a new company called Live Nation Entertainment. This merger essentially created a near-monopoly in the live entertainment and ticketing industries, raising significant antitrust concerns. Yet despite objections, the merger was approved in 2010. So why were Ticketmaster and Live Nation allowed to combine into what is now the world’s largest live entertainment company? There are a few key reasons.
The Companies Claimed the Merger Would Benefit Consumers
Ticketmaster and Live Nation argued that the merger would ultimately benefit music fans and consumers. They claimed that combining forces would improve efficiency and result in lower prices for tickets and fees. The companies asserted that the merger would allow them to better serve artists and fans by streamlining operations and providing more comprehensive services. They promised to expand promotional services for artists and pledged to maintain competitive ticket fees and prices.
Specific Benefits Claimed by the Companies:
- Lower ticketing fees for fans
- More efficient ticketing systems and wider access to tickets
- Enhanced touring and promotional services for artists
- Improved economies of scale resulting in cost savings
The companies essentially maintained that while they were consolidating into a dominant market position, consumers would still win due to improved products, services and efficiency.
The Merger Did Not Violate Antitrust Laws on Paper
According to the Justice Department’s antitrust division, the Ticketmaster-Live Nation merger did not violate any existing antitrust laws on paper. While the combined company controlled a massive portion of the live entertainment market, it did not technically break any monopolistic thresholds in the eyes of regulators.
Specifically, the merger did not violate the Herfindahl-Hirschman Index (HHI) that is used to measure market concentration and competition. The Justice Department stated that while the merger substantially raised HHI numbers in relevant markets such as primary ticketing services, the post-merger numbers were not above antitrust violation thresholds.
Market | Pre-Merger HHI | Post-Merger HHI | HHI Threshold for “Highly Concentrated” |
---|---|---|---|
Primary ticketing services | 4000 | 6000 | 2500 |
Promotion services | 2100 | 3000 | 2500 |
So based strictly on HHI measurements and standards, the merger passed antitrust review, despite resulting in a highly consolidated market.
The Government Accepted a Consent Decree
Ultimately, the Justice Department accepted a consent decree or settlement agreement with Ticketmaster and Live Nation. Under this agreement, the merged Live Nation Entertainment would be subject to certain conditions for 10 years to help mitigate monopolistic concerns.
The consent decree prevented Live Nation from retaliating against venues that used another ticketing service. It also prohibited bundled sales of ticketing and promotional services. Additionally, Live Nation was required to license its ticketing software to two competitors, to help foster competition.
By accepting this consent decree, the Justice Department effectively approved the merger, while imposing limited conditions to address competitive impact. It was a compromise outcome.
Key Conditions of the Consent Decree:
- Cannot retaliate against venues for using another ticketing service
- Cannot bundle ticket sales and promotion services
- Must license ticketing software to two competitors
Objections Were Raised But Overruled
A number of interested parties objected to the merger and challenged the consent decree. Consumer rights groups warned that the combined company would become too powerful and dominate the industry. Independent promoters and venues argued they would be harmed by the anti-competitive environment. And competing ticket sellers like Ticketmaster’s AEG and Comcast-Spectator opposed the merger.
But the judge tasked with assessing the consent decree, Mary Ellen Coster Williams, ultimately rejected the objections. She ruled that the objectors lacked sufficient evidence that the decree would harm consumers or competitors. And Live Nation agreed to some small modifications to the decree’s terms to address certain objections.
In the end, the merger was allowed to proceed with the limited restrictions in place. The objectors’ concerns proved insufficient to halt the consolidation.
Key Objectors Overruled:
- Consumer rights and advocacy groups
- Independent promoters and venue operators
- Competing ticket sellers AEG and Comcast-Spectator
The Companies Were Persuasive and Promising
Throughout the review and objections process, Ticketmaster and Live Nation argued persuasively that the merger would benefit consumers and amplify live entertainment. They touted data and promised efficiencies that ultimately won over regulators.
The companies touted how the merger would allow them to improve services through better allocation of resources. They claimed events and venues would benefit from their expanded expertise and technological capabilities. And they insisted fierce competition would remain, rejecting monopoly concerns.
Ultimately, Ticketmaster and Live Nation were effective in convincing regulators that the merger would have pro-consumer benefits and limited anti-competitive drawbacks. Despite high market concentration, their promises and arguments won the day.
Conclusion
The approval of the Ticketmaster-Live Nation merger into an industry giant was concerning to many at the time. But regulators accepted the companies’ arguments that efficiencies and consumer benefits would result. Limited restrictions on anti-competitive behavior were put in place, but the massive consolidation was allowed. Time will tell whether consumers suffer over the long-term, but the merger passed muster despite valid objections and concentrations of power.