Written by: Megan Donaldson
Call it what you want, the Taylor Swift | The Eras Tour presale illuminated numerous potential antitrust violations of one conglomerate in the live event sales industry: Ticketmaster. The final straw that caused bad blood between Ticketmaster and Taylor Swift fans were the site glitches that occurred during two separate ticket presales. The system crash left millions without tickets and no other way to obtain them due to the grasp Ticketmaster has on the live event sales industry. Because Ticketmaster is the main live event sales ticketing company and controls 70% of the industry, the Department of Justice (DOJ) is launching an investigation into its partnership with Live Nation.
There are two potential ways that Ticketmaster could be found liable for antitrust violations by the DOJ. First, Ticketmaster’s merger with Live Nations may be found to violate § 7 of the Clayton Act. Second, the Ticketmaster-Live Nation partnership may be in violation of the Sherman Act and the Federal Trade Commission (FTC) Act, all for prospective monopolization. Long story short, this investigation may be the end of Ticketmaster’s innocent reputation.
Section 7 of the Clayton Act
Even twelve years after Ticketmaster’s merger with Live Nation, § 7 of the Clayton Act could be one way the DOJ finds Ticketmaster liable. In 2010, Ticketmaster merged with Live Nation to form one of the biggest monopolies of the live event sales industry. At the time, the government approved the merger, but only under the specific conditions that Live Nation be placed under federal oversight and the companies agree to sell off ticketing assets, license ticketing software, and not force venues to use Ticketmaster. This agreement between the government and the Ticketmaster-Live Nation partnership was set to end in 2020, but in 2019, violations of the agreement came to light. Specifically, the DOJ accused the company of using its dominant position in the live music industry to force artists and venues to use both its ticketing and concert promotion services. The government and Ticketmaster-Live Nation formed a new agreement based on these violations, with this agreement set to end in 2025.
Although the merger was 12 years ago, per the Fourth Circuit case of Steves & Sons, Inc. v. Jeld-Wen, Inc., private parties, the DOJ, and the FTC can pursue relief under § 7 of the Clayton Act even if years have passed since the merger occurred. However, just because the case can be brought does not mean that the DOJ will succeed. Success in bringing a claim against a company years after a merger depends on the defense of “laches.” Laches is a defense in equity that operates like a statute of limitations. To succeed on a laches defense, a defendant must prove that (1) the plaintiff unreasonably delayed in filing suit, and (2) the delay prejudiced the defendant. This defense is exactly what the social media site Facebook used when the New York Attorney General filed suit against it in 2020 and alleged a § 7 violation for its acquisitions of Instagram in 2012 and WhatsApp in 2014. In New York v. Facebook, the court ruled in favor of Facebook and its laches defense, finding that a § 7 violation would cause economic prejudice to Facebook since the merger took place so many years ago.
If the DOJ alleges a § 7 violation against Ticketmaster, its best defense would be the same as Facebook’s: laches. However, if the government can prove that during Taylor Swift | The Eras Tour presale violations of the 2019 agreement occurred, then Ticketmaster may be unable to satisfy the elements of a laches defense. Even if these violations are nothing new substantially, the government may succeed because the short time frame will not allow Ticketmaster to assert the defense of laches.
The Sherman Act & the Federal Trade Commission Act
Another way that Ticketmaster could be held liable is through the Sherman Act and the Federal Trade Commission Act for monopolization. The Sherman Act, established in 1890, outlaws “‘every contract, combination, or conspiracy in restraint of trade,’ and any ‘monopolization, attempted monopolization, or conspiracy or combination to monopolize.’” The Supreme Court has interpreted this differently throughout the years, but the general rule is that the Sherman Act does not prohibit every restraint of trade, only those that are unreasonable. To interpret this, courts have looked to a firm’s market share within the economy. Some courts require higher percentage, but the FTC Federal Trade Commission has stated that monopoly power is likely present when a firm or group of firms have more than 50% of sales, therefore exiling all other competition.
The Ticketmaster-Live Nation partnership controls 70% of the live event sales industry. If the government can prove that 70% is an unreasonable percentage per the definition of monopoly by the Sherman Act, then Ticketmaster will also be held liable for a Federal Trade Commission Act violation. The Supreme Court has held that all violations of the Sherman Act also violate the FTC Act. So, although the FTC does not technically enforce the Sherman Act, it can bring cases under the FTC Act for the same kinds of activities that violate the Sherman Act.
So It Goes…
Although the DOJ has not officially filed a lawsuit against Ticketmaster, investigations are underway—especially because the only response from Ticketmaster after Taylor Swift | The Eras Tour presale debacle was “don’t blame me.” If violations of § 7 of the Clayton Act, the Sherman Act, and the FTC Act are all found to have occurred, the Ticketmaster-Live Nation partnership will likely end without any chances of getting back together, like ever.