Clear Channel to face anti-trust action

December 2007

Live event industry, radio

United States District Court Judge Stephen V Wilson has given the green light to a class-action lawsuit that claims that Clear Channel Communications Inc., the USA’s largest media and entertainment company, used its market dominance to illegally inflate ticket prices to live rock concerts across the country. Judge Wilson has granted class-action status to five lawsuits on behalf of concert-goers in regions across the United States which are being lead by the Seattle-based law firm Hagens Berman Sobol Shapiro. The suits claim that Clear Channel used its market dominance in anticompetitive activities that unfairly increased ticket prices for consumers and coerced artists to use Clear Channel for concert promotion.

The plaintiffs will claim that Clear Channel uses predatory practices to keep potential competitors from entering regional markets. In some cases, the complaints state, Clear Channel bids up the fees paid to artists so it becomes impossible for other promoters to compete. The complaints also state that Clear Channel’s dominance in FM leads to uncompetitive behaviour. The complaints will also cite a study which indicates that the rate of inflation and Clear Channel’s rise in ticket prices is disproportionate. During the time when Clear Channel’s consolidation of the industry began and its anticompetitive practices were implemented, ticket prices ballooned by 61 percent while the Consumer Price Index only rose by 13 percent. The suit cites that Clear Channel violated the Sherman Act for attempting and achieving monopolization. The suit seeks relief for plaintiffs and members of the class for company’s unjust enrichment as the result of unlawful conduct.

Our Special Contributor Marc Holmes adds:

With entertainment conglomerates seeking to further expand their portfolios of companies, competition law is rapidly emerging as a practice area highly relevant to the music industry. In 2005 Clear Channel Communications, the American media giant, ‘sold off’ its live concert division, splitting the company into three, with the live music division being re-branded ‘Live Nation’. Live Nation now controls a truly dizzying array of live music events and festivals throughout Europe, Scandinavia and the UK. However, it now appears that the mumblings of discontent that have long since dogged Clear Channel’s pursuit of dominance in live music both at home and abroad may have finally landed the company in hot water in the US as is reported. The suits will claim that Clear Channel’s activities since its campaign of market consolidation began in earnest in the mid 1990s, constitute wide ranging infringements of US anti-trust law. Specifically, in relation to ticket prices, the claimants allege “unfair” increases, citing a study indicating that since Clear Channel’s entry into the live music market ticket prices have “ballooned by 61% while the Consumer Price Index only rose by 13%”. Furthermore, the suits allege that artists were “coerced” into using Clear Channel venues through a series of “predatory practices”, including the payment of ‘bid up’ fees that effectively priced competitors out of the market. The claimants will claim that these practices “violated the Sherman Act for attempting and indeed achieving monopolization in a market” and now seek relief for the company’s “unjust enrichment as the result of unlawful conduct.” The progress and eventual outcome of the litigation will be followed closely by those in the US keen on cutting Clear Channel down to size – and there are many – especially in the radio sector where the company has bought 1,200 stations countrywide since deregulation in 1996. That they too could eventually, depending on the outcome, file a complaint along the same lines could spell extremely bad news for a company that has grown from ownership of a single San Antonio radio station on its inception in 1972, to a worldwide mega-brand spanning 4 continents and over 15 countries.


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