After a year-long review closely watched for signs of the direction the Obama administration’s antitrust regulators will take, the Justice Department today signed off on the merger between ticket giant Ticketmaster and concert promoter Live Nation. But DOJ insisted on a number of changes in the deal.
In order to win regulatory approval, the combined firm agreed to a list of DOJ’s changes to the deal: Ticketmaster will license its ticketing software and divest some ticketing assets, and refrain from bundling tickets with other services in an anticompetitive way, retaliating against venues that choose other ticketing services, or using consumer data in to gain an unfair advantage in its promotion business, according to documents filed today in federal court in Washington, D.C.
“We were prepared to litigate the case, and I told the parties that,” Attorney General for Antitrust Christine Varney told reporters in a briefing to announce the settlement. “The linked structural and behavioral remedies in this settlement preserve and protect competition, while allowing the parties to achieve any consumer benefits that are associated with the merger.”
The Justice Department, along with 17 state attorneys general, filed both a lawsuit and a proposed settlement that attempts to bring two new firms into the ticketing market to compete with Ticketmaster’s primary business. Under the proposed settlement, Ticketmaster will license ticket software to rival concert promoter AEG, and divest a ticketing company to Comcast-Spectator or another DOJ-approved buyer.
The settlement also subjects the combined firm to 10 years of heightened scrutiny of its attempts to sell bundled services, and Varney vowed to follow through on that requirement.
“I will decide what an anti-competitive bundle is,” Varney said in the briefing.
But the long list of remedies doesn’t necessarily represent a major change in antitrust enforcement under the Obama administration, since many observers had expected the Justice Department to block the merger outright.
The companies were interested in the merger for the vertical integration it would provide, and critics of the deal had also focused on the so-called vertical concerns the merger raised, or the kinds of access the deal might close off for rival promoters or ticketing outlets.
“Parties who preserve the basic core of a controversial acquisition are usually relieved — and I’d guess these two are,” said Wayne State University Law School professor Stephen Calkins, in an e-mail to Main Justice.
The remedies in the proposed settlement focus on the horizontal issues of the deal and how to create competing ticketing firms. Neither Comcast nor AEG is currently a major player in the ticketing market, and no substantial competitor to Ticketmaster has emerged in several years.
“It is less than perfect, and you have got to be a little bit uncomfortable” with companies that don’t already have a presence in the market, said Marc Schildkraut, a partner at the Washington, D.C., Howrey law firm, who worked at the Federal Trade Commission’s competition bureau. ”But they are pretty substantial companies, and DOJ probably tried pretty hard to vet these people [to ensure] that they were going to be serious competitors.”
Ticketmaster’s antitrust counsel, Gibson, Dunn & Crutcher partner Steven Sletten, said the Justice Department focused on the horizontal issues because the vertical case was a tough one to make. ”It is quite rare to find legitimate antitrust concerns in vertical mergers,” Sletten said, in a statement. “We felt that the DOJ’s case against the merger was not particularly strong on existing antitrust law.”
Both parties said they had been prepared to go to court. ” DOJ and the parties spent a lot of time negotiating a resolution … that meets the DOJ’s concerns and allows the merger to proceed without the need for lengthy litigation,” Sletten said, “and the business guys at Ticketmaster and Live Nation can get on with integrating the two companies for the benefit of consumers, artists, sports teams, venues, and pretty much everyone in the chain of live entertainment.”
Irving Azoff, CEO of Ticketmaster, said, “We appreciate the Department of Justice’s effort. Their resolution is a great win for fans.”
Michael Rapino, CEO of Live Nation said: “the Department of Justice was thorough and aggressive in their analysis and their remedies, and we are confident that with this resolution the playing field is competitive and broader as a result of this transaction.”
The deal’s critics said they remained concerned about the proposed remedies. ”While we appreciate the efforts of the DOJ to extract meaningful concessions from the parties, we remain concerned that these two companies, with a history of anti-consumer behavior, will abide only by the letter, and not the spirit of the settlement agreement,” said Sally Greenberg, executive director of the National Consumers League, a watchdog group that has been opposed to the deal.
“It is therefore critically important that the DOJ hold the merger company’s feet to the fire to ensure that the settlement will have its intended effect,” she said in a statement.