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Rep. Bill Pascrell Asks for Dept. of Justice Investigation of Ticketmaster

IndustryLegalTop Story

October 9, 2018
TicketNews

Rep. Bill Pascrell, who helped spur a Federal Trade Commission (FTC) “workshop” to examining live event ticketing set for spring of 2019, has asked the Department of Justice to investigate Ticketmaster in a letter to Attorney General Jeff Sessions. The letter “highlights Live Nation/Ticketmaster market malfeasance” according to a release issued by the New Jersey democrat’s office on Friday afternoon.

“The concentrated market power of Ticketmaster has made it a behemoth with little incentive to protect consumers in the live event industry,” Pascrell writes. “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.”

This letter comes on the heels of the FTC workshop announced last week, which Pascrell helped spur by way of a letter co-written Frank Pallone, Jr. – a fellow congressman from New Jersey asking the FTC to review Ticketmaster/Live Nation earlier this summer.

Pascrell has long been a vocal critic of Live Nation and Ticketmaster. He strongly urged the administration of President Barack Obama to reject the merger of Live Nation and Ticketmaster back in 2010, warning that it would “crush competition and harm consumers.” More recently, he penned a scathing letter to the editor published by the New York Times in the wake of a report detailing allegations of anti-competitive practice by Live Nation Entertainment. A month later, following the publication of a Government Accountability Office report on the ticketing industry, Pascrell wrote an Op-Ed published by the Los Angeles Times titled “Everyone’s Worst Fears About Live Nation-Ticketmaster Merger Have Come True.”

The more recent calls for government action have come on the heels of more bad press for Live Nation and Ticketmaster, in the form of a series of articles published by the CBC and Toronto Star detailing price-inflation tactics stemming from implied scarcity at primary sale, as well as pro-broker policies in the secondary ecosystem that run against the company’s stated rules for ticket purchasing limits.

The full text of Pascrell’s letter to Sessions is included below:

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

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Rep. Bill Pascrell Asks for Dept. of Justice Investigation of Ticketmaster