How Live Nation Reached A Settlement With The DOJ In The Consent Decree Investigation

Courtesy of Live Nation
      

It's not a threat if you're just laying out a person's option, Live Nation attorneys argued to the DOJ.

As 2019 came to a close, Live Nation was preparing for the possibility of a trial with the DOJ over charges that the concert promoter repeatedly violated a 2010 consent decree tied to its merger with Ticketmaster.

Lawyers from assistant attorney general Makan Dehlrahim had asked Live Nation to agree to have the dispute adjudicated in a 12-week trial, with a limited number of witnesses called and legal arguments made. As the Christmas holiday break approached, the government and Live Nation reached a settlement after months of legal threats, depositions and debates about semantics in the case. 

One of those debates -- referenced in a settlement document submitted to the court on Thursday -- was a disagreement over the meaning of the words “threat” and “retaliation,” highlighting the difficulties of understanding the decree and the nearly impossible task of enforcing its provisions.

While terms of the settlement are considered highly favorable to Live Nation -- the company agreed to an extension of the consent decree for another five years and new rules being enforced by a $1 million fine for violations -- DOJ lawyer Meagan Bellshaw’s memorandum on the settlement reported that executives at the company allegedly “threatened” and “retaliated against venues that opted to use competing ticketing services,” creating a climate in which “venues are afraid to leave Ticketmaster lest they risk losing Live Nation concerts,” damaging competition in the ticket industry.

In total, Bellshaw identified evidence of six violations of the decree over a 10-year period, but sources tell Billboard that contradictions within the 2010 decree made a court challenge of Live Nation being in contempt of the agreement not a sure bet.

While the final judgment bars Live Nation from conditioning or threatening to condition Live Nation content if a venue owner goes with a competing ticketing service, Live Nation is not barred from “bundling their services and products in any combination or from exercising their own business judgment in whether and how to pursue, develop, expand, or compete for any ticketing, venue, promotions, artist management, or any other business,” the 2010 decree reads.

Telling a venue that their Live Nation show count could drop if a venue went with a competitor is not necessarily a threat, Live Nation’s attorneys argued to Delrahim’s team. Live Nation is also allowed to give preference to venues using Ticketmaster when Live Nation books tours, and can communicate the policy to venue managers in “a non-threatening way,” as well as explain that the choice of a ticketing system could affect the venue’s ability to attract content, company attorneys argued.

Bellshaw indicated in the settlement agreement that she disagreed with Live Nation’s interpretation, arguing the passage banning threats “were always clear and unambiguous,” but said the DOJ would be ultimately tightening the language “for the avoidance of doubt.”

One of the six examples Bellshaw cites of Live Nation allegedly violating the consent decree highlights the nuance of Live Nation’s argument. In 2017, the newly created Los Angeles Football Club was set to open the Banc of California Stadium and was required by Major League Soccer officials to use the AEG-owned AXS platform. 

AEG owner Phil Anschutz had played a significant role in helping create Major League Soccer and held the ticketing rights to the Los Angeles market through his ownership of the LA Galaxy, giving AXS first right of refusal for the LAFC ticketing contract, sources tell Billboard

AXS did not offer some of the capabilities that the club wanted, ultimately agreed to waive the exclusivity requirement with one condition: LAFC could not use Ticketmaster. LAFC eventually went with SeatGeek.

This decision angered Ticketmaster President Jared Smith, who had been negotiating a ticketing agreement with the team and a bundled content deal.

Team officials, however, wanted to go with Ticketmaster and had worked out an agreement with parent company Live Nation to bundle the team’s ticketing contract with an agreement to deliver shows to the stadium in Exposition Park near the University of Southern California. But AXS’ rights to the ticketing contract superseded the team’s concert pact and ultimately a compromise was reached with MLS officials ordering LAFC to use the league's preferred partner SeatGeek for ticketing. 

With Ticketmaster no longer in contention for the ticketing contract, officials with Live Nation allegedly threatened to pull the corresponding content deal, a move regulators later said violated the 2010 consent decree.

“Ticketmaster’s President warned the executive that if [Banc of California Stadium] went with a competing ticketer," Ticketmaster’s response “would be ‘nuclear’” and “though he would deny it if I repeated it, Live Nation would never do a show in our building,’” Bellshaw wrote. “Ticketmaster was ‘drawing a line in the sand’ and picking this as their ‘hill to die on,’” concluding that the stadium was now ‘on the blacklist.’”

Sources familiar with the matter say Smith’s remarks were taken out of context and noted that soon thereafter, Live Nation entered into a new content deal with the stadium that didn’t involve tickets. In 2019, for reasons that aren’t clear, the soccer team ended its relationship with SeatGeek and the soccer team switched over to Ticketmaster with AEG’s blessing. 

In order to prevent any confusion moving forward, the updated settlement includes that the language “has been modified so that in the future there can be no doubt that Defendants are prohibited from threatening to withhold one or more concerts from a venue if the venue does not use Ticketmaster for primary ticketing services,” Bellshaw wrote. In the settlement, Live Nation also agreed to the appointment of an independent monitor, to pay a $1 million fine for future violations and implement a series of reforms including a promise to provide a copy of the settlement to “every actual or potential venue customer at the beginning of any negotiation.”

Live Nation’s “violations have so permeated the industry that venues now fear retaliation and expect conditioning from Live Nation as a matter of course if they do not contract with Ticketmaster,” Bellshaw wrote. Efforts by the DOJ to increase competition “has already resulted in better pricing and terms for venues by forcing Ticketmaster to improve its offer in response to competition.”

Company officials at Live Nation released their own statement, saying, “Live Nation settled this matter to make clear that it has no interest in threatening or retaliating against venues that consider or choose other ticketing companies. We strongly disagree with the DOJ’s allegations in the filing and the conclusions they seek to draw from six isolated episodes among some 5,000 ticketing deals negotiated during the life of the consent decree. Nevertheless, in keeping with our decision to settle, our focus is now on bringing this matter to its conclusion and continuing to deliver the best live event experiences to fans everywhere.”


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