US Congressman calls for Ticketmaster investigation

October 2018

COMPETITION

 

Representative  Bill Pascrell, who helped instigate the planned Federal Trade Commission “workshop” to examining live event ticketing which is set for spring of 2019, and who was a critic of the 2010 Live Nation-Ticketmaster merger, has now asked the US Department of Justice to investigate the activities of Ticketmaster in the US. In a letter to Attorney General Jeff Sessions, Pascrell highlights “The concentrated market power of Ticketmaster has made it a behemoth with little incentive to protect consumers in the live event industry,” and adding that the “DOJ can, and should, thoroughly investigate and take strong steps to address any and all consent decree violations and anticompetitive practices of Ticketmaster/Live Nation.” The full letter reads:

The Hon. Jeff Sessions

Attorney General

U.S. Department of Justice

950 Pennsylvania Ave NW

Washington, DC 20530


Dear Attorney General Sessions:


I commend the Department of Justice (DOJ) for opening an investigation into Live Nation’s anticompetitive behavior and write to bring to your attention new investigative reporting and further lines of inquiry. The Canadian Broadcasting Channel (CBC) conducted a new investigation that reveals the ways in which Ticketmaster appears to collude with ticket scalpers to sell higher volumes of tickets on its platform — distorting the marketplace and harming consumers in the process.


This comes on the heels of an April New York Times report that Live Nation may be in violation of the consent decree it agreed to as part of its 2010 merger with Ticketmaster. According to the New York Times, DOJ is looking into “possible cases where parent Live Nation Entertainment Inc. pressured venues in Atlanta, Las Vegas, and other cities into using Ticketmaster to sell tickets to those shows or lose the venue business.”


Live Nation owns most venues and has management contracts with artists. Through Ticketmaster, they claim rights to ticketing for these artists’ and venues’ events. This arrangement allows them to profit immensely, as ticket fees are routinely 27 to 31 percent above the base ticket price.


The CBC investigation demonstrates the ways in which Ticketmaster also withholds tickets during public on-sales to limit availability and control the supply of tickets to drive up prices and redirect consumers to the secondary market, where Ticketmaster (Live Nation) can get a second round of fees on tickets. Live Nation, in fact, reported its first $1 billion in annual profits from ticket reselling last year.


Scalpers are using fake identities to set up multiple accounts with Ticketmaster to buy and sell tickets. In the CBC investigation, Ticketmaster employees admitted to not policing these accounts. They’ve allowed brokers to continue to use fraudulent accounts to crowd out actual consumers trying to buy tickets to their favorite live events. These scalpers buy up all the tickets to an event immediately upon them going on sale to the public, in order to repost them for sale on the secondary market, where they can charge higher prices and higher fees.


CBC reporting revealed that Ticketmaster even has a secretive tool called TradeDesk that assists professional scalpers in reselling tickets in ways that would seem to violate Ticketmaster’s own rules. In the CBC video reporting, a Ticketmaster employee claims that 100 ticket resellers were using TradeDesk to sell a few thousand to several million tickets per year each. Ticketmaster even encourages volume reselling and knocks percentage points off its fees as scalpers sell more and more tickets.


Online ticketing services represent an estimated $9 billion market. Ticketmaster is the largest ticketing company, holding more than 80 percent of market share in 2008, and still the market leader as of 2017. They also hold the second-largest market share of secondary ticket sales as of 2016. With their hegemonic role in the ticket-selling marketplace, Live Nation can manage artists and bully venues into exclusively using Ticketmaster for event ticketing; can collude with scalpers to buy up all the tickets to crowd out consumers from the primary ticket selling marketplace; and can charge exorbitant, nontransparent fees on both the initial and secondary sale of the same tickets.


It is important to note that there is no additional value added to the consumer by Ticketmaster reselling its own tickets a second time and in so doing collecting additional fees; these fees are purely rent-seeking that squeeze consumers and add to Ticketmaster’s profits.


In 2009, before the merger, Live Nation’s then-CEO, Irving Azoff, told the Senate Judiciary Antitrust Subcommittee that he believed “scalping and resale should be illegal.”


When the DOJ approved the Live Nation and Ticketmaster merger, they issued a consent decree, valid until 2020, that was intended to block monopolistic behavior. A violation of this consent decree allows the DOJ to petition the court to “carry out of construe this Final Judgement, to modify any of its provisions, to enforce compliance, and to punish violations of its provisions” (Sec. XIV). Furthermore, the consent decree also acknowledges that the final judgement can be “modified or vacated” (Sec. XI) by the Court should it fail to comply with the consent decree.


Live Nation using its control over concert tours to pressure venues into contracting with Ticketmaster, as reported by the New York Times, is expressly prohibited by the consent decree, as per Sec. IX(A), which states that “Defendants shall not… Condition or threaten to Condition the Provision of Live Entertainment Events to a Venue Owner based on that Venue Owner refraining from contracting with a company other than Defendants for Primary Ticketing Services,” among other things.


We respectfully request more information regarding the Department’s investigation into Live Nation. Specifically, are you investigating potential violations to the 2010 consent agreement, as mentioned above? If the consent decree has been violated, is the DOJ prepared to take further action? Lastly, are you investigating additional monopolistic abuses resulting in higher prices and anticompetitive market distortions, like ticket holdbacks that drive up prices and colluding with scalpers to collect higher fees from consumers?


The concentrated market power of Ticketmaster has made it a behemoth with little incentive to protect consumers in the live event industry. DOJ can, and should, thoroughly investigate and take strong steps to address any and all consent decree violations and anticompetitive practices of Ticketmaster/Live Nation. Thank you for your prompt attention to this matter.


Sincerely,


Bill Pascrell, Jr.

Member of Congress

 

https://www.ticketnews.com/2018/10/rep-bill-pascrell-asks-for-dept-of-justice-investigation-of-ticketmaster/

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