Touring

Why the DOJ Is Investigating Live Nation: The Potential Acquisition of a 'Rival'

Paul A. Hebert/Invision/AP

Michael Rapino, President and CEO of Live Nation Entertainment, during the announcement of  the Made in America Festival from the steps of City Hall on April 16, 2014 in Los Angeles.

The U.S. Department of Justice is examining whether concert promoter Live Nation -- owner of Ticketmaster -- should be allowed to buy a competing ticketing company called Rival and take over the startup’s contract with billionaire Stan Kroenke.

Attorneys for Live Nation CEO Michael Rapino notified the DOJ in November, multiple sources tell Billboard, that it was looking into buying Rival, a Los Angeles-based primary ticketing and technology company launched in 2018 by former Ticketmaster CEO Nathan Hubbard. The DOJ is now reviewing that potential deal as part of its larger probe into Live Nation's compliance with a consent decree governing its decade-old merger with Ticketmaster, these sources said.

Attorneys working with the assistant attorney general for the DOJ's antitrust division, Makan Delrahim, have warned Live Nation they might block it from buying Rival and gaining access to Rival's lucrative ticketing contract with Denver-based Kroenke Sports & Entertainment. Real estate mogul Kroenke owns English soccer team Arsenal and four professional teams in the U.S. including the Denver Nuggets and the Los Angeles Rams, who are set to open the $5 billion SoFi Stadium in Los Angeles later next year. 

Kroenke is also an investor in Rival and officials with the DOJ are closely scrutinizing the deal as part of a larger investigation into the world's largest concert promoter. Earlier this month, DOJ lawyers warned Live Nation they may sue the company for violating its 2010 consent decree, sources tell Billboard, amid increased complaints about Ticketmaster's efforts to exert greater control over the secondary ticket market.

Ticketmaster has been providing ticketing services for Kroenke's venues, including the Pepsi Center in Denver and SoFi Stadium in L.A., since late July, when Kroenke’s contract with AEG’s ticketing arm AXS expired. While Rival had negotiated the rights to take over the contract from AXS, the ticketing technology it was developing was not ready in time to meet an Aug. 1 deadline to take over the account. Ticketmaster stepped in to provide ticketing services on a temporary basis to cover the gap in service.

But the DOJ is now investigating accusations that Live Nation threatened to withhold concerts and tours from Kroenke’s venues unless Ticketmaster was given the ticketing contract, retaliatory behavior that’s specifically banned by the 2010 consent decree, sources tell Billboard.

Live Nation's potential acquisition of Rival is being opposed by SeatGeek, which has formally protested the transaction with the DOJ, Billboard has learned, and is also interested in buying Rival.

The DOJ is also looking into accusations by SeatGeek and StubHub that Ticketmaster is leveraging its position as primary ticketing's market share leader to prevent fans and professional resellers from selling tickets on sites like SeatGeek and StubHub. For nearly a decade, reps from both companies have complained that Ticketmaster has tried to steer the resale business to its own resale platform TM+ and argue that new technology like paperless tickets give Ticketmaster the power to control which tickets end up on the secondary market.

Technically, the 2010 agreement only covered competition in the primary ticketing space, but DOJ officials are considering taking a more expansive view of ticketing to include the secondary market amid increasing calls from Congress to investigate the company. Suing Live Nation would be the first step in extending the consent decree past its July 2020 expiration date and possibly amending and broadening the decree to also cover the growing resale market for tickets.

Ticketmaster officials have argued that technology like their own SafeTix gives artists greater control over their tickets and gives venues a clearer picture of who is in their building on any given night. But resale firms such as SeatGeek and StubHub have protested in recent months, arguing that SafeTix and other tactics that prevent resale on other sites make it harder for them to compete. 

Generally, Delrahim has not shied from criticizing consent decrees written during the Obama administration. During an Antitrust Enforcement Oversight hearing on Sept. 17, Delrahim told Sen. Richard Blumenthal "his department had been examining allegations of violations" of the 2010 settlement.

"Beyond that I can't comment about what we are finding or intend to do. But rest assured it's one [issue] that we heard you loud and clear," he said. "One of the challenges that I fixed when I arrived is that all of our consent decrees going forward since I've been confirmed include provisions that force the parties to agree to a lower standard for review."

The current standard requires decree violations to be "clearly unambiguous and you have to prove it in the court to clear and convincing standard," said Delrahim. "I don't have to tell you how difficult of a standard that is."

Blumenthal responded, "But I hope you would agree with me that the merger conditions have been largely ineffective and there's a need for scrutiny and review here."

"Absolutely," Delrahim replied.

Members of the House of Representatives are also probing complaints over Ticketmaster. On Dec. 6, four representatives with the U.S. House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law sent a letter to Delrahim asking for a briefing on the "anti-competitive nature of the online ticketing marketplace."

"We believe the DOJ's remedies have not achieved their intended goals," reads the Dec. 6 letter signed by reps Ken Buck, R-Colo.; Matt Gaetz, R-Fla.; Lucy McBath, D-Ga.; and ranking member Jim Sensenbrenner, R-Wis. "[Live Nation] has taken full advantage of loopholes, including bundling its products and services in a way that controls both the primary and secondary ticketing markets."

The letter notes that "our constituents are facing significantly increased live event prices and a lack of meaningful alternatives to purchase tickets to live events." It includes a request that Delrahim "take all necessary action to protect consumers and enhance competition."

Live Nation, Rival and SeatGeek representatives declined to comment. Kroenke did not respond to a request for comment.