DOJ Dismisses Merger Objections

The merger of Live Nation and Ticketmaster was all but finalized June 21 with the U.S. Department of Justice swatting away objections from independent promoters and 16 states to the consent decree filed by the DOJ in January.

The only step remaining is to put the motion to enter the final judgment before a U.S. District Court in Washington, D.C. – considered a mere formality.

The DOJ, in rejecting several complaints filed with the court after the January decree, cited its “broad discretion to settle with the defendant within the reaches of the public interest” and the court’s inability to “engage in an unrestricted evaluation of what relief would best serve the public.”

In plain English, the DOJ can issue a decree that’s less than perfect, as long as it is “reasonably adequate,” and there’s not much a court can do about it.

The DOJ brief took aim at some of the comments from the 60-day filing period, particularly those submitted by It’s My Party’s Seth Hurwitz, Jam Productions’ Jerry Mickelson and Stone City Attractions’ Jack Orbin.

The filing suggested that IMP undermined its objections by attempting to focus its arguments on Live Nation’s share of specific markets in which LN actually does dominate, like popular music shows in amphitheatres. IMP claimed Live Nation controls 70 percent of those shows, whereas the DOJ’s much broader survey of venues and concert genres yielded a figure closer to 33 percent.

And the DOJ pointed to IMP’s own announcement that it has made an exclusive ticketing deal with upstart Ticketfly, saying in a press release that “It’s possible to have a choice. We wanted to make that choice.”

“The United States respectfully suggests the IMP’s analysis of the market is too focused on IMP’s own issues in competing with Live Nation in the amphitheatre business to inform analysis of the merger’s likely effects,” the DOJ said in its filing. “IMP exaggerates Live Nation’s position in the concert promotion market by ignoring many venues that purchase primary ticketing services and many artists that play at those venues. … IMP’s comment therefore casts little light on competition in the actual product market alleged in the United States complaint – the provision of primary ticketing.”

The DOJ wasn’t much kinder to Jam Productions.

“While Jam’s comment provides more in the way of a list of alleged past Live Nation misconduct than a cogent analysis of the merger in light of the antitrust theory and precedent applicable to vertical mergers, the core argument advanced by Jam is clear,” the DOJ said. It dismissed Jam’s “core argument” as an irrelevant challenge to a deal Jam suggests is an unlawful horizontal merger.

The argument is “not a valid basis” for rejecting the proposal, according to DOJ. “Jam, however, seeks to ‘construct [its] own hypothetical case and then evaluate the decree against that case,’” the filing said.

DOJ asserted that neither Live Nation, Ticketmaster nor Front Line Management have enough control over venues, ticketing or artists to pose a threat to competition with the merger.

And DOJ addressed Mickelson’s argument that the U.S. Supreme Court’s 1948 Paramount decision applied to the merger. The DOJ said it does not, because the prior case fashioned a remedy for price-fixing between movie studios and theatres, a condition that does not apply to the LN/TM merger. “The defendant studios had to divest themselves of their movie theaters in order to ‘uproot’ the long-running price fixing agreement,” according to the filing.

The justice department also dismissed Jam’s concerns the anti-retaliation and firewall provisions of the decree are insufficient, saying the decree contains “robust mechanisms” to enforce both.

The department also brushed off Orbin’s comments, often referring to them as “unsupported” or “inaccurate,” particularly about the enforcement mechanisms.

“The firewall set forth … prohibits the sharing of information between Live Nation Entertainment’s ticketing business and its promotions and artist management business,” DOJ said. “Live Nation has technical safeguards in place to prevent the disclosure of sensitive information to those not appropriately authorized to access it.

“Live Nation also has created a corporate policy governing access to this information, disseminated that policy to all employees, and instituted a training program to ensure that those with access to sensitive data understand and uphold their obligations.”

The filing effectively ends the challenge by indie promoters, concertgoers and some state governments to the merger. As DOJ represents the United States as a party against the merged companies, the filing essentially means it is satisfied the settlement agreement and consent decree meet at least an imperfect, but acceptable, standard that mitigates antitrust and anti-competition concerns.