[Federal Register Volume 75, Number 27 (Wednesday, February 10, 2010)]
[Notices]
[Pages 6709-6728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-2754]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States, et al. v. Ticketmaster Entertainment Inc. and Live
Nation Inc.; Proposed Final Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Stipulation and Competitive Impact Statement have been filed with the
United States District Court for the District of Columbia in United
States of America, et al. v. Ticketmaster Entertainment, Inc. and Live
Nation, Inc., Civil Action No. 1:10-cv-00139. On January 25, 2010, the
United States, along with 17 state attorneys general, filed a Complaint
alleging that the proposed merger of Ticketmaster Entertainment, Inc.
and Live Nation, Inc. would substantially lessen competition in primary
ticketing in the United States and violate Section 7 of the Clayton
Act, 15 U.S.C. 18. The proposed Final Judgment, filed the same time as
the Complaint, requires the merged firm to license a copy of the
Ticketmaster host platform software to Anschutz Entertainment Group,
Inc., to divest Paciolan, Inc. to Comcast-Spectacor, L.P. or another
acceptable buyer, and to abide by certain behavioral restrictions.
Copies of the Complaint, proposed Final Judgment and Competitive
Impact Statement are available for inspection at the Department of
Justice, Antitrust Division, Antitrust Documents Group, 450 Fifth
Street, NW., Suite 1010, Washington, DC 20530 (telephone: 202-514-
2481), on the Department of Justice's Web site at http://www.justice.gov/atr, and at the Office of the Clerk of the United
States District Court for the District of Columbia. Copies of these
materials may be obtained from the Antitrust Division upon request and
payment of the copying fee set by Department of Justice regulations.
Public comment is invited within 60 days of the date of this
notice. Such comments, and responses thereto, will be published in the
Federal Register and filed with the Court. Comments should be directed
to John Read, Chief, Litigation III, Antitrust Division, Department of
Justice, 450 Fifth Street, NW., Suite 4000, Washington, DC 20530,
(telephone: 202-514-7308).
J. Robert Kramer II,
Director of Operations.
United States District Court for the District of Columbia
United States of America, U.S. Department of Justice, Antitrust
Division, 450 Fifth Street, NW., Suite 4000, Washington, DC 20530;
State of Arizona, Office of the Attorney General, 1275 West
Washington, Phoenix, AZ 85007;
State of Arkansas, Office of the Attorney General, 323 Center
Street, Suite 200, Little Rock, AR 72201;
State of California, California Office of the Attorney General, 300
So. Spring Street, Suite 1702, Los Angeles, CA 90013;
State of Florida, Office of the Attorney General, Antitrust
Division, PL-01; The Capitol, Tallahassee, FL 32399-1050;
State of Illinois, Office of the Attorney General, 100 West Randolph
Street, Chicago, IL 60601;
State of Iowa, Iowa Department of Justice, Hoover Office Building-
Second Floor, 1305 East Walnut Street, Des Moines, IA 50319;
State of Louisiana, Public Protection Division, 1885 North Third
St., Baton Rouge, LA 70802;
Commonwealth of Massachusetts, Office of Attorney General Martha
Coakley, One Ashburton Place, Boston, MA 02108;
State of Nebraska, Nebraska Department of Justice, 2115 State
Capitol, Lincoln, NE 68509;
State of Nevada, Office of the Attorney General, Bureau of Consumer
Protection, 555 E. Washington Ave., Suite 3900, Las Vegas, NV 89101;
State of Ohio, Office of Ohio Attorney General Richard Cordray, 150
E. Gay St., 23rd Fl., Columbus, OH 43215;
State of Oregon, Oregon Department of Justice, 1162 Court Street
NE., Salem, OR 97301-4096;
Commonwealth of Pennsylvania, Office of Attorney General, Antitrust
Section, 14th Floor Strawberry Square, Harrisburg, PA 17120;
State of Rhode Island, Office of the Attorney General, 150 South
Main Street, Providence, RI 02903;
State of Tennessee, Office of the Attorney General and Reporter, 425
Fifth Avenue North, Nashville, TN 37243;
State of Texas, Office of the Attorney General, 300 W. 15th Street,
Austin, TX 78701; and
State of Wisconsin, Wisconsin Department of Justice, 17 West Main
Street, Madison, WI 53707, Plaintiffs, v.
Ticketmaster Entertainment, Inc., 8800 West Sunset Boulevard, West
Hollywood, CA 90069, and Live Nation, Inc., 9348 Civic Center Drive,
Beverly Hills, CA 90210, Defendants.
Case: 1:10-cv-00139.
Date Filed: January 25, 2010.
Complaint
The United States of America, acting under the direction of the
Attorney General of the United States, and the States of Arizona,
Arkansas, California, Florida, Illinois, Iowa, Louisiana, Nebraska,
Nevada, Ohio, Oregon, Rhode Island, Tennessee, Texas, and Wisconsin,
and the Commonwealths of Massachusetts and Pennsylvania, acting under
the direction of their respective Attorneys General or other authorized
officials (``Plaintiff States'') (collectively, ``Plaintiffs''), bring
this civil action pursuant to the antitrust laws of the United States
to enjoin the proposed merger of Ticketmaster Entertainment, Inc.
(``Ticketmaster'') and Live Nation, Inc. (``Live Nation'') and to
obtain such other equitable relief as the Court deems appropriate. The
United States and the Plaintiff States allege as follows:
I. Introduction
1. This lawsuit challenges a proposed merger between Ticketmaster
and Live Nation. If not enjoined, the merger will eliminate competition
between the companies in the line of commerce of the provision of
primary ticketing services (``primary ticketing'') to major concert
venues in the United States, in violation of Section 7 of the Clayton
Act, as amended, 15 U.S.C. 18.
2. For over two decades, Ticketmaster has been the dominant primary
ticketing service provider in the United States to, among others, major
concert venues. Primary ticketing, the initial distribution of tickets,
has been highly profitable for Ticketmaster. Ticketmaster charges a
variety of service
[[Page 6710]]
fees, which are added to the face value of the ticket. Ticketmaster
typically shares a percentage of the money from some of these fees with
venues. In 2008, Ticketmaster's share among major concert venues
exceeded eighty percent and its revenues from primary ticketing were
much greater than that of its nearest competitor. Ticketmaster's
contract renewal rate with venues typically exceeds eighty-five
percent.
3. Live Nation is the country's largest concert promoter. It also
controls over seventy-five concert venues in the United States,
including many major amphitheaters. Live Nation had been Ticketmaster's
largest primary ticketing client for a number of years. In 2007,
however, Live Nation announced that it would not renew its contract
with Ticketmaster. Instead, Live Nation would become Ticketmaster's
direct competitor in primary ticketing when its Ticketmaster contract
expired on December 31, 2008. After spending nearly two years
evaluating, licensing, and developing a ticketing platform, in late
December 2008, Live Nation launched its ticketing service for its own
venues and potential third-party major concert venue clients.
4. Live Nation presented a new and different source of competition
in primary ticketing. As a concert promoter, Live Nation could offer
venues access to concert tours as an inducement to use Live Nation's
ticketing service. Ticketmaster had no concert promotion business. In
contrast, as both a venue owner and a concert promoter, Live Nation had
economic incentives to reduce service fees on tickets in order to fill
more seats and earn the associated ancillary revenue from doing so.
5. Entrants face substantial hurdles in the form of Ticketmaster's
economies of scale, long-term contracts, and brand recognition as well
as the technological hurdles necessary to compete in primary ticketing.
Live Nation had overcome many of these by virtue of its position in
promotion and venue operation and the two years it had devoted to
building a ticketing platform.
6. On February 10, 2009, Ticketmaster and Live Nation announced
their plans to merge. The merger would eliminate head-to-head
competition between Ticketmaster and Live Nation in the provision of
primary ticketing services. Unless remedied, the merger between
Ticketmaster and Live Nation would substantially lessen competition for
the provision of primary ticketing services in the United States in
violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. 18.
7. Thus, the United States and the Plaintiff States ask this Court
to enjoin this proposed merger.
II. Jurisdiction and Venue
8. The United States brings this action under Section 15 of the
Clayton Act, as amended, 15 U.S.C. 25, to prevent and restrain
Ticketmaster and Live Nation from violating Section 7 of the Clayton
Act, 15 U.S.C. 18.
9. The Plaintiff States, by and through their respective Attorneys
General and other authorized officials, bring this action under Section
16 of the Clayton Act, 15 U.S.C. 26, to prevent and restrain
Ticketmaster and Live Nation from violating Section 7 of the Clayton
Act, 15 U.S.C. 18. The Plaintiff States bring this action in their
sovereign capacities and as parens patriae on behalf of the citizens,
general welfare, and economy of each of their States.
10. Ticketmaster and Live Nation provide and sell primary ticketing
services to major concert venues in the flow of interstate commerce.
Ticketmaster's and Live Nation's activities in providing and selling
primary ticketing services to major concert venues substantially affect
interstate commerce as well as commerce in each of the Plaintiff
States. This Court has subject matter jurisdiction over this action and
these defendants pursuant to Section 15 of the Clayton Act, as amended,
15 U.S.C. 25, and 28 U.S.C. 1331, 1337(a), and 1345.
11. Venue is proper in this District under Section 12 of the
Clayton Act, 15 U.S.C. 22, and 28 U.S.C. 1391(b)(1), (c). Defendants
Ticketmaster and Live Nation transact business and are found within
this District.
III. Parties and the Proposed Merger
12. Ticketmaster is a Delaware corporation headquartered in West
Hollywood, California. It is the largest provider of primary ticketing
to major concert venues and others in the United States and the world.
In 2008, Ticketmaster sold more than 141 million tickets valued at over
$8.9 billion on behalf of more than 10,000 clients worldwide and earned
approximately $1.4 billion in gross revenues. Ticketmaster also owns a
majority interest in Front Line Management Group, Inc., the largest
artist management group in the country.
13. Live Nation is a Delaware corporation headquartered in Beverly
Hills, California. It is the world's largest promoter of live concerts,
with 2008 worldwide gross revenues of over $4 billion. Live Nation's
North American Music business principally involves the promotion of
live music events at Live Nation owned and/or operated venues and in
rented third-party venues primarily in the United States and Canada.
Live Nation also owns or operates over seventy-five live entertainment
venues of various sizes in the United States. This includes eleven
House of Blues (``HOB'') venues around the country.
14. On February 10, 2009, Live Nation and Ticketmaster entered into
a definitive merger agreement providing for an all-stock ``merger of
equals'' transaction with a combined estimated enterprise value of $2.5
billion.
IV. Background
A. The Live Music Entertainment Industry
15. The components of the live music entertainment industry
pertinent to this case are:
[GRAPHIC] [TIFF OMITTED] TN10FE10.000
16. An artist manager serves as the ``CEO'' of a performer's
business activities, advising in some or all phases of the performer's
professional life (tours, appearances, recording deals, movies,
advertising, etc.). Managers often are compensated based on a share of
the performer's revenues or profits.
17. The artist manager often hires booking agents to assist in
arranging a concert event or tour. The manager or booking agent
contracts with promoters, such as Live Nation. Under such contracts,
the promoter typically receives the proceeds from gross ticket receipts
and then pays the performer, venue, and other expenses associated with
the event. For example, the
[[Page 6711]]
promoter generally contracts with the venue (or uses its own venues),
arranges for local production services, and advertises and markets the
concert. The promoter bears the downside risk of an event if tickets
sell poorly and reaps the upside benefit if tickets sell well.
18. Venue operators provide the facilities where the events will be
held and often many of the associated services, such as concessions,
parking, and security. Venues traditionally receive a fixed fee for
hosting an event as well as proceeds from concessions, parking, and a
share of merchandise sales (which may be controlled by the performer or
promoter).
19. Ticketing companies such as Ticketmaster arrange with venues--
and at times promoters--to provide primary ticketing services. They are
responsible for distributing primary ticket inventory through channels
such as the Internet, call centers, and retail outlets and for enabling
the venue to sell tickets at its box office. The ticketing company
provides the technology infrastructure for distribution. Primary
ticketing firms also may provide technology and hardware that allow
venues to manage fan entry at the event, including everything from
handheld scanners that ushers use to check fans' tickets to the bar
codes on the tickets themselves. In some cases, primary ticketing
services are provided by the venue itself.
20. The overall price a consumer pays for a ticket generally
includes the face value of the ticket and a variety of service fees
above the face value of the ticket. Such fees are most often charged by
the provider of primary ticketing services. Venues generally receive a
split of the money from ticket service fees. Often described as
``convenience,'' ``processing,'' and ``delivery'' fees, these service
fees can constitute a substantial portion of the overall cost of the
ticket to the consumer.
B. Ticketmaster Dominates Primary Ticketing
21. Ticketmaster has dominated primary ticketing, including primary
ticketing for major concert venues, for over two decades. It derives
substantial revenues from ticketing for venues that host major
concerts. Other companies seek to compete against Ticketmaster for
primary ticketing to major concert venues, but none has been
particularly successful. In fact, no other competitor (other than Live
Nation) has more than a four percent share, while in 2008
Ticketmaster's share exceeded eighty percent among major concert
venues. Plaintiffs have focused on the top 500 revenue generating
venues in the United States as reported by Pollstar (referred to in
this Complaint as ``major concert venues''). Pollstar is a widely used
third-party service that collects information on ticket sales. The pie
chart below shows primary ticketers' shares of major concert venues,
based on seating capacity:
[GRAPHIC] [TIFF OMITTED] TN10FE10.001
22. High shares are not the only indicators of Ticketmaster's
dominance. Ticketmaster's revenues are much greater than those of the
next several largest primary ticketing service competitors (other than
Live Nation). Moreover, while other primary ticketing competitors do
compete against Ticketmaster for primary ticketing rights at venues,
Ticketmaster has had very high renewal rates.
23. Ticketmaster's costs for distributing a ticket have been
decreasing as consumers increasingly purchase tickets through the
Internet. The cost-per-ticket to Ticketmaster for tickets sold through
its Web site is significantly lower than the cost-per-ticket to
Ticketmaster for tickets sold over the telephone or at a retail outlet.
However, ticketing fees retained by Ticketmaster have not fallen as its
distribution costs have declined.
C. Live Nation Decides To Enter Primary Ticketing
24. Prior to entering into primary ticketing, Live Nation had been
using Ticketmaster as its primary ticketing provider for its venues and
was Ticketmaster's largest customer. In late 2006, Live Nation
concluded that it was unlikely to renew the Ticketmaster contract. Live
Nation began considering other options for its primary ticketing needs,
including operating its own
[[Page 6712]]
primary ticketing business to ticket its own venues and to expand the
service to third-party venues.
25. On Dec. 20, 2007, Live Nation announced an agreement with CTS
Eventim (``CTS''), the leading German primary ticketing provider. Under
the agreement, Live Nation would use CTS technology to provide primary
ticketing services to Live Nation's venues as well as third-party
venues in the United States.
D. Live Nation Was a Competitive Threat to Ticketmaster
26. As a promoter, Live Nation's relationships with many third-
party venues gave it the ability to offer third-party venues access to
content. Live Nation believed that its prominence in promotions would
give it immediate credibility in primary ticketing.
27. Live Nation was in a position to challenge Ticketmaster's
dominance in primary ticketing due to its control of venues. Live
Nation selects the primary ticketing provider for over seventy-five
live entertainment venues in the United States and had been
Ticketmaster's largest customer.
28. Live Nation also expected to compete on price with
Ticketmaster. According to Live Nation, its concert promotion business
operated on small margins, while Ticketmaster's margins from ticketing
were substantially higher. Thus, entry into primary ticketing created
an opportunity for Live Nation to increase its overall profit margin
and disrupt Ticketmaster's business model by lowering service fees.
E. Live Nation Enters Primary Ticketing
29. Live Nation's strategy was to launch Live Nation ticketing for
its own venues in 2008, and then in late 2009 and early 2010 seek to
compete for third-party ticketing contracts.
30. Even before launching its ticketing platform, however, Live
Nation began competing with Ticketmaster to win primary ticketing
contracts for third-party venues. In September 2008, Live Nation signed
a multi-year ticketing agreement with SMG, the world's largest venue
management company, whereby it would have certain rights to ticket SMG-
managed venues as each venue's Ticketmaster contract ended.
31. Using its promotion business as a stepping stone, Live Nation
also began competing with Ticketmaster for the primary ticketing
contracts for other venues. This was met with some early successes. For
example, in October 2008, Live Nation won the ticketing contract at the
Roseland Ballroom in New York City.
32. Live Nation began selling tickets for its own and third-party
venues on December 22, 2008. Almost overnight, Live Nation became the
second-largest provider of primary ticketing in the United States.
33. On February 10, 2009, Live Nation and Ticketmaster entered into
a definitive merger agreement.
34. Live Nation has sold millions of tickets using the CTS system.
The pie chart below shows primary ticketers' shares of major concert
venues, based on seating capacity, following Live Nation's entry into
primary ticketing.
[GRAPHIC] [TIFF OMITTED] TN10FE10.002
V. Relevant Market
35. Primary ticketing services are sold pursuant to terms
individually negotiated with customers. The customers most directly and
adversely affected by the merger are major concert venues, which
generate substantial income from live music events. Major concert
venues that generate substantial income from live music events can be
readily identified, and market power can be selectively exercised
against them, because there is no reasonable substitute service to
which the customers could turn. Nor can these customers engage in
arbitrage. The provision of primary ticketing services to major concert
venues is a relevant price discrimination market and ``line of
commerce'' within the meaning of Section 7 of the Clayton Act. See U.S.
Dep't of Justice, Horizontal Merger Guidelines Sec. 1.12 (1997).
36. The United States is the relevant geographic scope of the
market. Major concert venues purchasing primary ticketing services are
located throughout the United States.
VI. Anticompetitive Effects
37. A combination of Ticketmaster and Live Nation would lead to a
high share among providers of primary ticketing for major concert
venues. The set of customers most likely to be affected by the merger
of Ticketmaster and Live Nation are major concert venues. Ticketmaster
has the vast share
[[Page 6713]]
of this primary ticketing business. As described in the pie chart in ]
21, before Live Nation entered primary ticketing, Ticketmaster had an
eighty-two percent share. The next largest share was Tickets.com at
less than four percent. As depicted in the pie chart in ] 34, with Live
Nation ticketing its own venues and some third-party venues,
Ticketmaster's share in this same group is reduced to sixty-six percent
and Live Nation becomes the second largest ticketer with a sixteen
percent share more than four times larger than Tickets.com.
38. The market for primary ticketing for major concert venues is
highly concentrated. The proposed merger will further increase the
degree of concentration to levels raising serious antitrust concerns as
described in the Horizontal Merger Guidelines issued by the Department
of Justice and the Federal Trade Commission. Id. Sec. 1.51.
39. Using a measure of market concentration called the Herfindahl-
Hirschman Index (``HHI''), defined and explained in Appendix A, the
post-acquisition HHIs increase by over 2,190 points, resulting in a
post-acquisition HHI of over 6,900.
40. The merger of Ticketmaster and Live Nation would eliminate Live
Nation's competitive presence in the market for the provision of
primary ticketing services for major concert venues, resulting in less
aggressive competition, less pressure on the fees earned by
Ticketmaster, and less innovation for venues and fans than would exist
absent the merger. The proposed merger came at a time when Live Nation
was just starting to make a competitive impact. Live Nation's ability
to begin to attract third-party venues and stated intentions to compete
on price likely would have resulted in increasingly competitive pricing
and better services to major concert venues and consumers in the
future. The proposed merger is likely to lessen competition for primary
ticketing services for major concert venues.
41. The proposed merger will also reduce the merged firm's
incentive to innovate and improve their respective primary ticketing
services. Ticketing innovations are less likely to occur in a post-
merger world in which Ticketmaster's dominance will continue and Live
Nation's ticketing service has been shuttered. Notably, the benefits of
quality enhancements and product variety that flow from experimentation
would be far less likely to take place.
VII. Absence of Countervailing Factors
42. Supply responses from competitors or potential competitors will
not prevent likely anticompetitive effects of the proposed merger. The
merged firm would possess significant advantages that any new or
existing competitor would have to overcome to successfully compete with
the merged firm.
43. Ticketmaster has historically possessed competitive advantages.
As a result, small ticketing firms have been limited in their ability
to compete. With the merger, additional entry barriers are emerging.
The merged firm's promotion and artist management businesses provide an
additional challenge that small ticketing companies will now have to
overcome. The ability to use its content as an inducement was the point
that Live Nation touted as the basis on which Live Nation could
challenge Ticketmaster in ticketing.
44. No existing ticketing company or likely entrant possesses the
combination of attributes to prevent the selective exercise of market
power over the major concert venues by the merged firm. New entry into
the provision and sale of primary ticketing services is costly and
time-consuming. Major concert venues require primary ticketing services
to be provided in the United States by service personnel located in the
United States. It would take a new entrant a substantial investment of
money and over two years to develop the combination of comparable
characteristics necessary to compete with the merged firm in primary
ticketing. New entry is not likely to occur in a timely or sufficient
basis to prevent the anticompetitive effects that would otherwise
result from the merger of Ticketmaster and Live Nation.
VIII. Violation Alleged
(Violation of Section 7 of the Clayton Act)
45. The United States and the Plaintiff States incorporate the
allegations of paragraphs 1 through 44 above.
46. The proposed merger of Ticketmaster and Live Nation would
likely substantially lessen competition in interstate trade and
commerce in violation of Section 7 of the Clayton Act in the provision
and sale of primary ticketing services for major concert venues. 15
U.S.C. 18.
47. The proposed merger threatens to reduce competition in a number
of ways, including, among others:
a. Eliminating the head-to-head competition between the merging
parties;
b. reducing the incentives of the merging parties to innovate and
improve their primary ticketing services, including the loss of the
increased opportunity for innovation from a firm engaged in
experimentation in primary ticketing;
c. impairing the ability of venue customers to benefit from
competition between these firms, including competition based on price,
terms, quality, service, and innovation; and
d. impairing the ability of consumers to benefit from competition
between these firms, including competition based on price, terms,
quality, service, and innovation.
48. The proposed merger of Ticketmaster and Live Nation likely will
have the following effects:
a. actual and potential competition between Ticketmaster and Live
Nation in the provision and sale of primary ticketing services for
major concert venues will be eliminated; and
b. competition generally in the market for primary ticketing for
major concert venues would be substantially lessened.
Requested Relief
49. The United States and the Plaintiff States request that:
a. The proposed merger of Ticketmaster and Live Nation be adjudged
to violate Section 7 of the Clayton Act, 15 U.S.C. 18;
b. Ticketmaster and Live Nation be enjoined from carrying out the
proposed merger or carrying out any other agreement, understanding, or
plan by which Ticketmaster and Live Nation would acquire, be acquired
by, or merge with each other;
c. the United States and Plaintiff States be awarded their costs of
this action;
d. the Plaintiff States be awarded their reasonable attorneys'
fees; and
e. the United States and Plaintiff States receive such other and
further relief as the case requires and the Court deems just and
proper.
Dated: January 25, 2010.
Respectfully submitted,
For Plaintiff United States:
Christine A. Varney (DC 411654),
Assistant Attorney General.
William F. Cavanaugh, Jr.,
Deputy Assistant Attorney General.
J. Robert Kramer II,
Director of Operations.
John R. Read (DC 419373),
Chief.
David C. Kully (DC 448763),
Assistant Chief.
Aaron D. Hoag,
Attorney.
U.S. Department of Justice, Antitrust Division, 450 Fifth Street,
NW., Suite 4000, Washington, DC 20530, Telephone: (202) 514-5038,
Fax: (202) 514-7308, e-mail: [email protected].
Ann Marie Blaylock (DC 967825),
[[Page 6714]]
Pam Cole,
Andrew J. Ewalt (DC 493433),
Timothy T. Finley (DC 471841),
Kerrie J. Freeborn (DC 503143),
Ethan C. Glass,
Christopher Hardee (DC 458168),
William H. Jones II,
Jacklin Chou Lem,
Creighton J. Macy,
Mary Beth Mcgee (DC 358694),
Lisa Scanlon,
Claude F. Scott, Jr. (DC 414906),
John M. Snyder (DC 456921),
Lauren Sun (DC 991508),
Jennifer A. Wamsley (DC 486540),
Weeun Wang,
Christina M. Wheeler,
Attorneys for the United States.
For Plaintiff State of Arizona
Terry Goddard,
Attorney General, State of Arizona.
Nancy M. Bonnell, AZ Bar 016382,
Antitrust Unit Chief.
Consumer Protection & Advocacy Section, 1275 West Washington,
Phoenix, AZ 85007, Tel: (602) 542-7728, Fax: (602) 542-9088, e-mail:
[email protected].
For Plaintiff State of Arizona
Terry Goddard,
Attorney General, State of Arizona.
Nancy M. Bonnell, AZ Bar 016382,
Antitrust Unit Chief.
Consumer Protection & Advocacy Section, 1275 West Washington,
Phoenix, AZ 85007, Tel: (602) 542-7728, Fax: (602) 542-9088, e-mail:
[email protected].
For Plaintiff State of Arkansas
Dustin McDaniel,
Attorney General, State of Arkansas.
David A. Curran, Arkansas Bar No. 2003031,
Assistant Attorney General.
323 Center St., Suite 200, Little Rock, AR 72201, Tel: (501) 682-
3561, Fax: (501) 682-8118, e-mail: [email protected].
For Plaintiff State of California
Edmund G. Brown Jr.,
Attorney General of the State of California.
Kathleen Foote, Sr. Assistant Attorney General.
Paula Lauren Gibson, State Bar No. 100780,
Deputy Attorney General, California Office of the Attorney General.
300 So. Spring Street, Suite 1702, Los Angeles, CA 90013, Tel: (213)
897-0014, Fax: (213) 897-2801, e-mail: [email protected].
For Plaintiff State of Florida
Bill McCollum,
Attorney General, State of Florida.
Patricia A. Conners,
Associate Deputy Attorney General.
Lizabeth A. Brady,
Chief, Multistate Antitrust Enforcement.
Lisa Ann McGlynn,
Assistant Attorney General. Antitrust Division, PL-01; The Capitol,
Tallahassee, FL 32399-1050, Tel: (850) 414-3300, Fax: (850) 488-
9134, e-mail: [email protected].
For Plaintiff State of Illinois
Lisa Madigan,
Attorney General.
By: Robert W. Pratt,
Chief, Antitrust Bureau, Office of the Attorney General, State of
Illinois, 100 West Randolph Street, Chicago, Illinois 60601, Tel:
(312) 814-3722, Fax: (312) 814-4209, e-mail: [email protected].
For Plaintiff State of Iowa
Thomas J. Miller,
Attorney General of Iowa.
Layne M. Lindebak,
Assistant Attorney General, Special Litigation Division, Iowa
Department of Justice, Hoover Office Building-Second Floor, 1305
East Walnut Street, Des Moines, Iowa 50319, Tel: (515) 281-7054,
Fax: (515) 281-4902, e-mail: [email protected].
For Plaintiff State of Louisiana
James D. ``Buddy'' Caldwell,
Attorney General, State of Louisiana.
Stacie L. Deblieux, LA Bar 92142,
Assistant Attorney General, Public Protection Division, 1885 North
Third St., Baton Roughe, LA 70802, Tel: (225) 326-6400, Fax: (225)
326-6499, e-mail: [email protected].
For Plaintiff Commonwealth of Massachusetts
Martha Coakley,
Attorney General.
William T. Matlack, BBO 552109,
Chief, Antitrust Division.
Matthew M. Lyons, BBO 657685,
Assistant Attorneys General, Office of Attorney General Martha
Coakley, One Ashburton Place, Boston, MA 02108, Tel: (617) 727-2200,
Fax: (617) 727-5765, e-mail: [email protected], e-mail:
[email protected].
For Plaintiff State of Nebraska
Jon Bruning,
Attorney General, State of Nebraska.
Leslie Campbell-Levy,
Assistant Attorney General, Chief, Consumer Protection & Antitrust,
Nebraska Department of Justice, 2115 State Capitol, Lincoln, NE
68509, Tel: (402) 471-2811, Fax: (402) 471-2957, e-mail:
[email protected].
For Plaintiff State of Nevada
Catherine Cortez Masto,
Attorney General.
Eric Witkoski,
Consumer Advocate and Chief Deputy Attorney General.
By: Brian Armstrong,
Senior Deputy Attorney General, State of Nevada, Office of the
Attorney General, Bureau of Consumer Protection, 555 E. Washington
Ave., Suite 3900, Las Vegas, Nevada 89101, Tel: (702) 486-3420, Fax:
(702) 486-3283, e-mail: [email protected].
For Plaintiff State of Ohio
Richard Cordray,
Attorney General.
Jennifer L. Pratt,
Chief, Antitrust Department,
Patrick E. O'Shaughnessy (D.C. Bar 494394),
Senior Assistant Attorney General, 150 E. Gay St., 23rd Floor,
Columbus, OH 43215, Tel: (614) 466-4328, Fax: (614) 995-0266, e-
mail: [email protected].,
patrick.o'[email protected].
For Plaintiff State of Oregon
John R. Kroger,
Attorney General of Oregon.
By: Caren Rovics,
Senior Assistant Attorney General, Financial Fraud/Consumer
Protection Section, Civil Enforcement Division, 1162 Court Street
NE., Salem, OR 97301-4096, Tel: (503) 934-4400, Fax: (503) 378-5017,
e-mail: [email protected].
For Plaintiff Commonwealth of Pennsylvania
Tom Corbett,
Attorney General.
By: James A. Donahue, III,
Chief Deputy Attorney General, PA Bar No. 42624.
Jennifer A. Thomson, PA Bar No. 89360.
Norman W. Marden, PA Bar No. 203423.
Joseph S. Betsko, PA Bar No. 82620,
Deputy Attorneys General.
Office of Attorney General, Antitrust Section, 14th Floor Strawberry
Square, Harrisburg, PA 17120, Tel: (717) 787-4530, Fax: (717) 705-
7110, e-mail: [email protected], e-mail:
[email protected], e-mail: [email protected],
e-mail: [email protected].
For Plaintiff State of Rhode Island
Patrick C. Lynch,
Attorney General, State of Rhode Island, 150 South Main Street,
Providence, Rhode Island 02903, Tel: (401) 274-4400 ext. 2401, Fax:
(401) 222-2295, e-mail: [email protected].
For Plaintiff State of Tennessee
Robert E. Cooper, Jr.,
Attorney General and Reporter,
Victor J. Domen, Jr.,
Senior Counsel, State of Tennessee, 425 Fifth Avenue North,
Nashville, TN 37243, Tel: (615) 532-5732, Fax: (615) 532-2910, e-
mail: [email protected].
For Plaintiff State of Texas
Greg Abbott,
Attorney General of Texas.
C. Andrew Weber,
First Assistant Attorney General.
David S. Morales,
Deputy Attorney General for Civil Litigation.
John T. Prud'homme,
Assistant Attorney General, Acting Chief, Antitrust Division.
David M. Ashton,
Assistant Attorney General, State Bar No. 24031828, Office of the
Attorney General, 300 W. 15th Street, Austin, Texas 78701, Tel:
(512) 936-1781, Fax: (512) 320-0975, e-mail:
[email protected].
For Plaintiff State of Wisconsin
J.B. Van Hollen,
Attorney General, State of Wisconsin.
By: Gwendolyn J. Cooley, WI Bar 1053856,
17 West Main Street, Madison, WI 53703, Telephone: (608) 261-5810,
Fax: (608) 267-2778, e-mail: [email protected].
[[Page 6715]]
Appendix A
Definition of HHI
The term ``HHI'' means the Herfindahl-Hirschman Index, a commonly
accepted measure of market concentration. The HHI is calculated by
squaring the market share of each firm competing in the market and then
summing the resulting numbers. For example, for a market consisting of
four firms with shares of 30, 30, 20, and 20 percent, the HHI is 2,600
(30\2\ + 30\2\ + 20\2\ + 20\2\ = 2,600). The HHI takes into account the
relative size and distribution of the firms in a market. It approaches
zero when a market is occupied by a large number of firms of relatively
equal size and reaches its maximum of 10,000 when a market is
controlled by a single firm. The HHI increases both as the number of
firms in the market decreases and as the disparity in size between
those firms increases.
Markets in which the HHI is between 1000 and 1800 are considered to
be moderately concentrated, and markets in which the HHI is in excess
of 1800 points are considered to be highly concentrated. Transactions
that increase the HHI by more than 100 points in highly concentrated
markets presumptively raise significant antitrust concerns under the
Department of Justice and Federal Trade Commission 1992 Horizontal
Merger Guidelines.
Certificate of Service
I, Aaron Hoag, hereby certify that on January 25, 2010, I caused a
copy of the Complaint and attached Exhibits to be served on defendants
Ticketmaster Entertainment, Inc., and Live Nation, Inc., by mailing the
documents via E-mail to the duly authorized legal representatives of
the defendants, as follows:
For Ticketmaster Entertainment, Inc. M., Sean Royall, Esq., Gibson,
Dunn & Crutcher LLP, 1050 Connecticut Avenue, NW., Washington, DC
20036, Tel: (202) 955-8546, Fax: (202) 467-0539, E-mail:
[email protected].
For Live Nation, Inc., Michael Egge, Esq., Latham & Watkins LLP 555
Eleventh Street, NW., Washington, DC 20004, Tel: (202) 637-2200, Fax:
(202) 637-2201 E-Mail: [email protected].
Aaron D. Hoag, Esq.,
Attorney, U.S. Department of Justice, Antitrust Division, 450 Fifth
Street, NW., Suite 4000, Washington, DC 20530, Telephone: (202) 514-
5038, Fax: (202) 514-7308, E-Mail: [email protected].
United States District Court for the District of Columbia
United States of America, et al., Plaintiffs, v. Ticketmaster
Entertainment, Inc. and Live Nation, Inc., Defendants.
Case: 1-10-cv-00139.
Date Filed: January 25, 2010.
[Proposed] Final Judgment
Whereas, plaintiffs, United States of America, and the States of
Arizona, Arkansas, California, Florida, Illinois, Iowa, Louisiana,
Nebraska, Nevada, Ohio, Oregon, Rhode Island, Tennessee, Texas, and
Wisconsin, and the Commonwealths of Massachusetts and Pennsylvania
(``Plaintiff States'') filed their Complaint on January 25, 2010, the
United States, Plaintiff States, and defendants, Ticketmaster
Entertainment, Inc. and Live Nation, Inc., by their respective
attorneys, have consented to the entry of this Final Judgment without
trial or adjudication of any issue of fact or law, and without this
Final Judgment constituting any evidence against or admission by any
party regarding any issue of fact or law;
And whereas, defendants agree to be bound by the provisions of this
Final Judgment pending its approval by the Court;
And whereas, the essence of this Final Judgment is the prompt and
certain divestiture of certain rights or assets by the defendants and
the imposition of certain conduct restrictions on defendants, to assure
that competition is not substantially lessened;
And whereas, the United States requires defendants to make certain
divestitures for the purpose of remedying the loss of competition
alleged in the Complaint;
And whereas, defendants have represented to the United States that
the divestitures required below can and will be made and that
defendants will later raise no claim of hardship or difficulty as
grounds for asking the Court to modify any of the divestiture
provisions contained below;
Now therefore, before any testimony is taken, without trial or
adjudication of any issue of fact or law, and upon consent of the
parties, it is ordered, adjudged and decreed:
I. Jurisdiction
This Court has jurisdiction over the subject matter of and each of
the parties to this action. The Complaint states a claim upon which
relief may be granted against defendants under Section 7 of the Clayton
Act, as amended (15 U.S.C. 18).
II. Definitions
As used in this Final Judgment:
A. ``AEG'' means Anschutz Entertainment Group, Inc., a company with
its headquarters in Los Angeles, California, its successors and
assigns, and its subsidiaries, divisions, groups, affiliates,
partnerships, and joint ventures, and their directors, officers,
managers, agents, and employees.
B. ``Acquirer'' or ``Acquirers'' means the entity or entities to
whom defendants divest the Divestiture Assets.
C. ``Client Ticketing Data'' means financial data relating to a
ticketing client's events including on-sale dates for a client's
events, the number of tickets sold for the specific event, the proceeds
from those sales for a specific event, ticket inventory that is made
available on the Ticketmaster system, the number and location of
tickets that are sold, the amount for which the tickets are sold,
pricing, marketing and promotions run for the event, the sales as a
result of the marketing or promotions, and the status of the ticket
inventory. ``Client ticketing data'' does not include data that
Defendants collect through other means (e.g., Web site tracking, user
group surveys, public sources). Client Ticketing Data does not include
data that is made public by a client or third party.
D. ``Comcast-Spectacor'' means Comcast-Spectacor, L.P., a company
with its headquarters in Philadelphia, Pennsylvania, its successors and
assigns, and its subsidiaries, divisions, groups, affiliates,
partnerships, and joint ventures, and their directors, officers,
managers, agents, and employees.
E. ``Condition'' means to explicitly or practically require buyers
to take one product or set of services if they want to obtain a second
product or set of services. In the absence of explicit conditioning,
providing the buyer with an opportunity to buy the two products or sets
of services separately is only conditioning if no reasonable buyer
would be expected to accept the terms of the separate offers.
F. ``Covered Employee'' means any employee of Defendants whose
principal job responsibility involves the operation or day-to-day
management of Defendants' venues, concert promotions, or artist
management services.
G. ``Defendants'' means either defendant acting individually or
both defendants acting collectively, as appropriate. Where the Final
Judgment imposes an obligation to engage in or refrain from engaging in
certain conduct, that obligation shall apply as broadly as reasonable
to each defendant
[[Page 6716]]
individually, both defendants acting together, and the merged firm.
H. ``Divestiture Assets'' means the Ticketmaster Host Platform (via
the binding agreement to license and to provide private label ticketing
services to the Ticketmaster Host Platform Acquirer as required in
Section IV.A) and Paciolan.
I. ``Exempted Employee'' means any employee of Defendants who is
not a Covered Employee, including: (a) Any senior corporate officer,
director or manager with responsibilities that include oversight of
Defendants' provision of Primary Ticketing Services; and (b) any
employee whose primary responsibilities solely include accounting,
human resources, legal, information systems, and/or finance.
J. ``Live Entertainment Event'' means a live music concert for
which tickets are sold to the public.
K. ``Live Nation'' means defendant Live Nation, Inc., a Delaware
corporation with its headquarters in Beverly Hills, California, its
successors and assigns, and its subsidiaries (whether partially or
wholly owned), divisions, groups, affiliates, partnerships, and joint
ventures, and their directors, officers, managers, agents, and
employees.
L. ``Merger'' means the merger of Ticketmaster and Live Nation.
M. ``Paciolan'' means Paciolan, Inc., a Delaware corporation which
is engaged in the provision of ticketing services to venues or other
organizations under the Paciolan or Ticketmaster Irvine names, and
which includes:
1. All tangible assets that comprise the Paciolan line of business,
including servers and other computer hardware; research and development
activities; all fixed assets, personal property, inventory, office
furniture, materials, supplies, and other tangible property and all
assets used exclusively in connection with Paciolan; all licenses,
permits and authorizations issued by any governmental organization
relating to Paciolan; all contracts, teaming arrangements, agreements,
leases (including the lease to the Paciolan headquarters in Irvine,
California), commitments, certifications, and understandings, relating
to Paciolan, including supply agreements; all customer lists,
contracts, accounts, and credit records; all repair and performance
records and all other records relating to Paciolan;
2. All intangible assets used in the development, distribution,
production, servicing and sale of Paciolan, including, but not limited
to, all patents, contractual rights (including contractual rights to
provide ticketing services and employment contracts), licenses and
sublicenses, intellectual property, copyrights, trademarks, trade
names, service marks, service names, technical information, computer
software and related documentation, know-how, trade secrets, drawings,
blueprints, designs, design protocols, specifications for materials,
specifications for parts and devices, safety procedures for the
handling of materials and substances, all research data concerning
historic and current research and development relating to Paciolan,
quality assurance and control procedures, design tools and simulation
capability, all manuals and technical information defendants provide to
their own employees, customers, suppliers, agents or licensees, and all
research data concerning historic and current research and development
efforts relating to Paciolan, including, but not limited to, designs of
experiments, and the results of successful and unsuccessful designs and
experiments. Preexisting commitments to transfer contractual rights
from Paciolan to another entity that are specifically identified in the
Paciolan sales agreement are excluded from this definition.
N. ``Paciolan Acquirer'' means the entity to whom defendants divest
Paciolan.
O. ``Primary Ticketing Services'' means a collection of services
provided to venues or other customers to enable the initial sale of
tickets for live entertainment events directly to customers and enable
the validation of tickets at the venue to control access to the event.
P. ``Provide Live Entertainment Events'' and ``Provision of Live
Entertainment Events'' mean services reasonably necessary to plan,
promote, market and settle a Live Entertainment Event, including but
not limited to concert promotion services provided by firms such as
Live Nation and the provision of artists managed by firms such as Front
Line. The Promotion of Live Entertainment Events specifically does not
include the provision of primary ticketing services, venue management
services and/or tour design and construction services.
Q. ``Retaliate'' means refusing to Provide Live Entertainment
Events to a Venue Owner, or Providing Live Entertainment Events to a
Venue Owner on less favorable terms, for the purpose of punishing or
disciplining a Venue Owner because the Venue Owner has contracted or is
contemplating contracting with a company other than Defendants for
Primary Ticketing Services. The term ``Retaliate'' does not mean
pursuing a more advantageous deal with a competing Venue Owner.
R. ``Ticket Buyer Data'' means non-public identifying information
for ticket buyers for a specific event (including, if provided, the
buyer's name, phone number, e-mail address, and mailing address) that
Defendants collect in the course of providing a ticketing client's
Primary Ticketing Services. Ticket Buyer Data does not include data
that Defendants collect solely through other means (e.g., Web site
tracking, user group surveys, public sources).
S. ``Ticketmaster'' means defendant Ticketmaster Entertainment,
Inc., a Delaware corporation with its headquarters in West Hollywood,
California, its successors and assigns, and its subsidiaries (whether
partially or wholly owned), divisions, groups, affiliates,
partnerships, and joint ventures, and their directors, officers,
managers, agents, and employees.
T. ``Ticketmaster Host Platform'' means the primary Ticketmaster
software used by Ticketmaster to sell primary tickets in the United
States. The Ticketmaster Host Platform includes the following software:
Ticketmaster Classic Ticketing System (also called Ticketmaster Host);
Ticketmaster.com full Web site package; Access Management; payment
processing and settlements; and PCI point of sale system (for phone and
outlets).
U. ``Ticketmaster Host Platform Acquirer'' means AEG, the entity
with whom defendants will enter into a binding agreement to license the
Ticketmaster Host Platform.
V. ``Venue Owner'' means a person or company that owns, operates,
or manages one or more venues that host Live Entertainment Events.
III. Applicability
A. This Final Judgment applies to Ticketmaster and Live Nation, as
defined above, and all other persons in active concert or participation
with any of them who receive actual notice of this Final Judgment by
personal service or otherwise.
B. If, prior to complying with Sections IV and V of this Final
Judgment, Defendants sell or otherwise dispose of all or substantially
all of their assets or of lesser business units that include the
Divestiture Assets, they shall require the purchaser to be bound by the
provisions of this Final Judgment. Defendants need not obtain such an
agreement from the Acquirers of the assets divested pursuant to this
Final Judgment.
IV. Divestiture
A. Defendants are ordered and directed not to consummate the Merger
[[Page 6717]]
until they have entered into a binding agreement to license the
Ticketmaster Host Platform to the Ticketmaster Host Platform Acquirer
and to provide private label ticketing services to the Ticketmaster
Host Platform Acquirer in a manner consistent with this Final Judgment
and with the following terms and conditions:
1. The agreement shall include the option, exercisable at the
discretion of the Ticketmaster Host Platform Acquirer, to acquire a
non-exclusive, perpetual, fully paid-up license to the Ticketmaster
Host Platform. The license shall include a copy of the source code of
the Ticketmaster Host Platform and shall permit the Ticketmaster Host
Platform Acquirer to modify the software in any manner without
limitation and without any requirement to license back any improvements
to Defendants. If the option is exercised, Defendants shall promptly
begin the installation of a fully functional ticketing system and Web
site in the facilities of the Ticketmaster Host Platform Acquirer and
shall complete the installation within a reasonable time pursuant to a
schedule subject to approval by the United States, after consultation
with Plaintiff States. Defendants shall warrant that the system is
current as of the time of installation and operational for use in
providing Primary Ticketing Services. Defendants shall provide
reasonable training and support to enable the Ticketmaster Host
Platform Acquirer to operate the software and to understand the source
code so that it can make independent changes to the code. The license
shall permit the Ticketmaster Host Platform Acquirer to transfer the
license following the complete installation of the Ticketmaster Host
Platform. The scope of use of the license shall be at least the United
States.
2. The agreement shall include a private label ticketing agreement
pursuant to which Ticketmaster shall provide private label ticketing
services to the Ticketmaster Host Platform Acquirer for a period of no
more than five years from the date of execution of the license. The
private label ticketing agreement shall be on such reasonable terms and
conditions that will enable the Ticketmaster Host Platform Acquirer to
compete effectively against Ticketmaster to secure contracts for the
provision of Primary Ticketing Services. The private label ticketing
agreement shall give the Ticketmaster Host Platform Acquirer all
control over the ticketing fees charged individual consumers or clients
of the Ticketmaster Host Platform Acquirer for tickets sold pursuant to
the agreement and Defendants shall have no right or ability to set
these ticketing fees. Ticketmaster shall, at the request of the
Ticketmaster Host Platform Acquirer, post on the main Ticketmaster
public Web site links to events sold under the private label ticketing
agreement, subject to reasonable, non-discriminatory, and customary
terms and conditions. Ticketmaster shall customize a separate Web site
for the Ticketmaster Host Platform Acquirer with branding, look, and
feel to be determined by the Ticketmaster Host Platform Acquirer. The
private label ticketing services as described in this Section shall be
operational within six months from the date that the binding agreement
to license Ticketmaster Host Platform becomes effective.
B. Defendants shall implement the Ticketmaster Host Platform
binding agreement required by Section IV.A and any resulting
Ticketmaster Host Platform license in a manner consistent with the
terms of Section IV.A. Defendants shall comply with the terms of the
Ticketmaster Host Platform binding agreement required by Section IV.A
and any resulting Ticketmaster Host Platform license, provided that
nothing in the Ticketmaster Host Platform binding agreement or
resulting Ticketmaster Host Platform license can relieve Defendants of
any obligations imposed by this Final Judgment.
C. Defendants shall, as soon as possible, but within one business
day after completion of the relevant event, notify the United States
and Plaintiff States of: (1) The effective date of the Merger and (2)
the effective date of the binding agreement to license to the
Ticketmaster Host Platform Acquirer.
D. If the Ticketmaster Host Platform Acquirer exercises its option
to license the Ticketmaster Host Platform, Defendants shall waive any
non-compete agreements that would prevent any employee of Defendants
whose primary responsibility is the development or operation of the
Ticketmaster Host Platform from joining the Ticketmaster Host Platform
Acquirer.
E. Defendants are ordered and directed, concurrently with the
closing of the Merger, to enter into a Letter of Intent to divest
Paciolan to Comcast-Spectacor in a manner consistent with this Final
Judgment. Within sixty (60) calendar days of closing the Merger,
Defendants shall complete the divestiture of Paciolan in a manner
consistent with this Final Judgment to Comcast-Spectacor or an
alternative Acquirer acceptable to the United States, in its sole
discretion, after consultation with Plaintiff States. Defendants agree
to use their best efforts to divest the Divestiture Assets as
expeditiously as possible.
F. Defendants shall provide the United States and the Paciolan
Acquirer information relating to the personnel involved in the
production, operation, development and sale of Paciolan at any time
since Ticketmaster acquired Paciolan to enable the Paciolan Acquirer to
make offers of employment. Defendants will not interfere with any
negotiations by the Paciolan Acquirer to employ any defendant employee
whose primary responsibility is the production, operation, development,
and sale of Paciolan, and shall waive any non-compete agreements that
would prevent any such employee from joining the Paciolan Acquirer.
Nothing in this Section shall prohibit defendants from making offers of
continued employment to, continuing to employ, or continuing to use the
services of any of their employees, including personnel involved in the
production, operation, development and marketing of Paciolan and its
ticketing system, subject to the overarching limitation that the
agreement to sell Paciolan to the Paciolan Acquirer must ensure that
the Paciolan Acquirer will be able to adequately staff Paciolan in a
manner that enables the Paciolan Acquirer to successfully compete as a
provider of Primary Ticketing Services, as determined by United States
in its sole discretion. In addition, nothing in this Section shall
prohibit defendants from maintaining any reasonable restrictions on the
disclosure by an employee who accepts an offer of employment with the
Paciolan Acquirer of the defendants' proprietary non-public information
that is (1) not otherwise required to be disclosed by this Final
Judgment, (2) related solely to the defendants' businesses and clients,
and (3) not related to the production, operation, development, and
marketing of Paciolan and its ticketing system.
G. Defendants shall permit the Paciolan Acquirer to have reasonable
access to personnel and to make inspections of the physical facilities
of Paciolan; access to any and all environmental, zoning, and other
permit documents and information; access to any and all financial,
operational, or other documents and information customarily provided as
part of a due diligence process.
H. Defendants shall warrant to the Paciolan Acquirer that each
asset it acquires will be operational on the date of sale.
I. Defendants shall warrant to the Paciolan Acquirer that there are
no material defects in the environmental,
[[Page 6718]]
zoning, or other permits pertaining to the operation of Paciolan, and
that following the sale of Paciolan, defendants will not undertake,
directly or indirectly, any challenges to the environmental, zoning, or
other permits relating to the operation of Paciolan.
J. Defendants shall not take any action that will impede in any way
the permitting, operation, use, or divestiture of the Divestiture
Assets.
K. Unless the United States otherwise consents in writing, after
consultation with Plaintiff States, the divestitures pursuant to
Section IV of this Final Judgment shall include the entire Divestiture
Assets, and shall be accomplished in such a way as to satisfy the
United States, in its sole discretion, after consultation with
Plaintiff States, that the Divestiture Assets can and will be used by
the Acquirer(s) as part of a viable, ongoing business, engaged in
providing Primary Ticketing Services. Divestiture of the Divestiture
Assets may be made to one or more Acquirers, provided that in each
instance it is demonstrated to the sole satisfaction of the United
States, after consultation with Plaintiff States, that the Divestiture
Assets will remain viable and the divestiture of such assets will
remedy the competitive harm alleged in the Complaint. The divestitures,
whether pursuant to Section IV or Section V of this Final Judgment,
1. shall be made to an Acquirer(s) that, in the United States's
sole judgment, after consultation with Plaintiff States, has the intent
and capability (including the necessary managerial, operational,
technical and financial capability) of competing effectively in the
business of providing Primary Ticketing Services; and
2. shall be accomplished so as to satisfy the United States, in its
sole discretion, after consultation with Plaintiff States, that none of
the terms of any agreement between an Acquirer(s) and Defendants give
Defendants the ability unreasonably to raise the Acquirer's costs, to
lower the Acquirer's efficiency, or otherwise to interfere in the
ability of the Acquirer to compete effectively.
V. Appointment of Trustee To Effect Divestiture
A. If Defendants have not divested Paciolan as specified in Section
IV.E, defendants shall notify the United States of that fact in
writing. Upon application of the United States, the Court shall appoint
a trustee selected by the United States and approved by the Court to
divest Paciolan in a manner consistent with this Final Judgment.
Defendants consent to appointment of a trustee prior to entry of this
Final Judgment if Paciolan has not been divested within the time
periods provided in Section IV.E.
B. After the appointment of a trustee becomes effective, only the
trustee shall have the right to sell Paciolan. The trustee shall have
the power and authority to accomplish the divestiture to an Acquirer
acceptable to the United States, after consultation with Plaintiff
States, at such cash price and on such terms as are then obtainable
upon reasonable effort by the trustee, subject to the provisions of
Sections IV, V, and VI of this Final Judgment, and shall have such
other powers as this Court deems appropriate.
C. Subject to Section V.E of this Final Judgment, the trustee may
hire at the cost and expense of defendants any investment bankers,
attorneys, or other agents, who shall be solely accountable to the
trustee, reasonably necessary in the trustee's judgment to assist in
the divestiture.
D. Defendants shall not object to a sale by the trustee on any
ground other than the trustee's malfeasance. Any such objections by
defendants must be conveyed in writing to the United States and the
trustee within ten (10) calendar days after the trustee has provided
the notice required under Section VI.
E. The trustee shall serve at the cost and expense of defendants,
on such terms and conditions as the United States approves, and shall
account for all monies derived from the sale of the assets sold by the
trustee and all costs and expenses so incurred. After approval by the
Court of the trustee's accounting, including fees for its services and
those of any professionals and agents retained by the trustee, all
remaining money shall be paid to defendants and the trust shall then be
terminated. The compensation of the trustee and any professionals and
agents retained by the trustee shall be reasonable in light of the
value of Paciolan and based on a fee arrangement providing the trustee
with an incentive based on the price and terms of the divestiture and
the speed with which it is accomplished, but timeliness is paramount.
F. Defendants shall use their best efforts to assist the trustee in
accomplishing the required divestiture. The trustee and any
consultants, accountants, attorneys, and other persons retained by the
trustee shall have full and complete access to the personnel, books,
records, and facilities of the business to be divested, including any
information provided to the United States during its investigation of
the merger related to the business to be divested, and defendants shall
develop financial and other information relevant to such business as
the trustee may reasonably request, subject to reasonable protection
for trade secret or other confidential research, development, or
commercial information. Defendants shall take no action to interfere
with or to impede the trustee's accomplishment of the divestiture.
G. After its appointment, the trustee shall file monthly reports
with the United States, Plaintiff States, and the Court setting forth
the trustee's efforts to accomplish the divestiture ordered under this
Final Judgment. To the extent such reports contain information that the
trustee deems confidential, such reports shall not be filed in the
public docket of the Court. Such reports shall include the name,
address, and telephone number of each person who, during the preceding
month, made an offer to acquire, expressed an interest in acquiring,
entered into negotiations to acquire, or was contacted or made an
inquiry about acquiring, any interest in Paciolan, and shall describe
in detail each contact with any such person. The trustee shall maintain
full records of all efforts made to divest Paciolan.
H. If the trustee has not accomplished the divestiture ordered
under this Final Judgment within six (6) months after its appointment,
the trustee shall promptly file with the Court a report setting forth
(1) the trustee's efforts to accomplish the required divestiture, (2)
the reasons, in the trustee's judgment, why the required divestiture
has not been accomplished, and (3) the trustee's recommendations. To
the extent such reports contain information that the trustee deems
confidential, such reports shall not be filed in the public docket of
the Court. The trustee shall at the same time furnish such report to
the United States which shall have the right to make additional
recommendations consistent with the purpose of the trust. The Court
thereafter shall enter such orders as it shall deem appropriate to
carry out the purpose of the Final Judgment, which may, if necessary,
include extending the trust and the term of the trustee's appointment
by a period requested by the United States.
VI. Notice of Proposed Divestiture
A. Within two (2) business days following execution of a definitive
divestiture agreement, defendants shall notify the United States and
Plaintiff States of any proposed divestiture required by Section IV of
this Final Judgment. Within two (2) business days following execution
of a definitive divestiture agreement, the trustee shall notify the
United States and Plaintiff
[[Page 6719]]
States of any proposed divestiture required by Section V of this Final
Judgment. The notice shall set forth the details of the proposed
divestiture and list the name, address, and telephone number of each
person not previously identified who offered or expressed an interest
in or desire to acquire any ownership interest in Paciolan, together
with full details of the same.
B. Within fifteen (15) calendar days of receipt by the United
States and Plaintiff States of such notice, the United States may
request from defendants, the proposed Acquirer(s), any other third
party, or the trustee if applicable, additional information concerning
the proposed divestiture, the proposed Acquirer(s), and any other
potential Acquirer. Defendants and the trustee shall furnish any
additional information requested within fifteen (15) calendar days of
the receipt of the request, unless the parties shall otherwise agree.
C. Within thirty (30) calendar days after receipt of the notice or
within twenty (20) calendar days after the United States and Plaintiff
States has been provided the additional information requested from
defendants, the proposed Acquirer(s), any third party, and the trustee,
whichever is later, the United States shall provide written notice to
defendants and the trustee, if there is one, stating whether or not it
objects to the proposed divestiture. If the United States, after
consultation with Plaintiff States, provides written notice that it
does not object, the divestiture may be consummated, subject only to
defendants' limited right to object to the sale under Section V.C of
this Final Judgment. Absent written notice that the United States does
not object to the proposed Acquirer(s) or upon objection by the United
States, a divestiture proposed under Section IV or Section V shall not
be consummated. Upon objection by defendants under Section V.D, a
divestiture proposed under Section V shall not be consummated unless
approved by the Court.
VII. Financing
Defendants shall not finance all or any part of any purchase made
pursuant to Section IV or V of this Final Judgment.
VIII. Hold Separate
Until the divestiture required by this Final Judgment has been
accomplished, defendants shall take all steps necessary to comply with
the Hold Separate Stipulation and Order entered by this Court.
Defendants shall take no action that would jeopardize the divestiture
ordered by this Court.
IX. Anti-Retaliation Provision and Other Provisions Designed To Promote
Competition
A. Defendants shall not:
1. Retaliate against a Venue Owner because it is known to
Defendants that the Venue Owner is or is contemplating contracting with
a company other than Defendants for Primary Ticketing Services;
2. 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; or
3. Condition or threaten to Condition the provision of Primary
Ticketing Services to a Venue Owner based on that Venue Owner
refraining from contracting with a company other than Defendants for
the Provision of Live Entertainment Events.
Nothing in this Section prevents Defendants 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, so long as Defendants do so in a manner that is not
inconsistent with the provisions of this Section.
Evidence that Defendants do or do not (a) bid for, contract with,
win, or retain a venue, artist, or promoter as a client, and/or (b)
promote a show or shows in particular buildings or group of buildings
(even where similar shows historically have been promoted in those
buildings) is not alone sufficient to establish, or create a
presumption of, a violation of this Section.
B. Defendants shall not disclose to any Covered Employee any Client
Ticketing Data. Defendants however: (1) May disclose Client Ticketing
Data concerning a specific event to any Covered Employee involved in
the promotion of that event or the management of the artist who
performed at that event, if it does so on the same terms it generally
provides such information to other promoters or artist managers not
affiliated with Defendants; (2) may disclose Client Ticketing Data to
an Exempted Employee who requires the information in order to perform
his or her job function(s); provided however, that such Exempted
Employee may not use Client Ticketing Data to perform any job
function(s) that primarily involve(s) the day-to-day operation or
management of Defendants' venues, concert promotions, or artist
management services; and (3) may disclose Client Ticketing Data to any
Defendant employee where so required by law, government regulation,
legal process, or court order, so long as such disclosure is limited to
fulfillment of that purpose.
C. If any client of Defendants' primary ticketing services chooses
not to renew a contract for Primary Ticketing Services with Defendants
for some or all of its venues, upon the expiration of that contract and
the written request of the client, Defendants shall within forty-five
(45) days provide the client with a complete copy of all Client
Ticketing Data and all Ticket Buyer Data historically maintained by
Defendants for such venue(s) in the ordinary course of business, in a
form that is reasonably usable by the client. Nothing in this provision
shall be read to: (1) Alter any rights Defendants would otherwise have
to Client Ticketing Data or Ticket Buyer Data pursuant to the Primary
Ticketing Services contract with the client, and/or its historical
custom, practice, and course of dealing with the client; or (2) limit
any rights the client would otherwise have to its Client Ticketing Data
or Ticket Buyer Data pursuant to the Primary Ticketing Services
contract with Defendants and/or its historical custom, practice, and
course of dealing with Defendants. Defendants shall maintain Client
Ticketing Data and Ticket Buyer Data on behalf of its clients for no
less than three (3) years. This provision only applies to contracts for
Primary Ticketing Services in effect prior to the entry of this Final
Judgment.
X. Affidavits
A. Within twenty (20) calendar days of the filing of the Complaint
in this matter, and every thirty (30) calendar days thereafter until
the divestitures have been completed under Section IV or Section V,
defendants shall deliver to the United States and Plaintiff States an
affidavit as to the fact and manner of its compliance with Section IV
or Section V of this Final Judgment. Each such affidavit shall include
the name, address, and telephone number of each person who, during the
preceding thirty (30) calendar days, made an offer to acquire,
expressed an interest in acquiring, entered into negotiations to
acquire, or was contacted or made an inquiry about acquiring, any
interest in the Divestiture Assets, and shall describe in detail each
contact with any such person during that period. Each such affidavit
shall also include a description of the efforts defendants have taken
to solicit buyers for the Divestiture Assets, and to provide
[[Page 6720]]
required information to prospective Acquirers, including the
limitations, if any, on such information. Assuming the information set
forth in the affidavit is true and complete, any objection by the
United States, after consultation with Plaintiff States, to information
provided by defendants, including limitation on information, shall be
made within fourteen (14) calendar days of receipt of such affidavit.
B. Every two (2) months prior to the private label ticketing
agreement described in Section IV.A.2 becoming operational, and every
six (6) months thereafter, defendants shall deliver to the United
States and Plaintiff States an affidavit that describes in reasonable
detail all actions defendants have taken and all steps defendants have
implemented on an ongoing basis to comply with Section IV.A and the
terms of Ticketmaster Host Platform binding agreement.
C. Defendants shall, in addition, deliver to the United States and
Plaintiff States an affidavit describing any revised or amended
agreements with the Ticketmaster Host Platform Acquirer relating to the
agreement required by Section IV.A. Such notice shall be delivered to
the United States and Plaintiff States at least fifteen (15) calendar
days prior to the effective date of the revised or amended agreement
and Defendants shall not implement any amended agreement if the United
States, after consultation with Plaintiff States, objects during the
fifteen (15) day notice period.
D. Within twenty (20) calendar days of the filing of the Complaint
in this matter, defendants shall deliver to the United States and
Plaintiff States an affidavit that describes in reasonable detail all
actions defendants have taken and all steps defendants have implemented
on an ongoing basis to comply with Section VIII of this Final Judgment.
Defendants shall deliver to the United States and Plaintiff States an
affidavit describing any changes to the efforts and actions outlined in
defendants' earlier affidavits filed pursuant to this section within
fifteen (15) calendar days after the change if implemented.
E. Defendants shall keep all records of all efforts made to
preserve and divest the Divestiture Assets until one year after such
divestiture has been completed.
XI. Compliance Inspection
A. For purposes of determining or securing compliance with this
Final Judgment, or of determining whether the Final Judgment should be
modified or vacated, and subject to any legally recognized privilege,
from time to time duly authorized representatives of the United States
Department of Justice, including consultants and other persons retained
by the United States, shall, upon written request of an authorized
representative of the Assistant Attorney General in charge of the
Antitrust Division, and on reasonable notice to defendants, be
permitted:
1. access during defendants' office hours to inspect and copy, or
at the option of the United States, to require defendants to provide
hard copy or electronic copies of, all books, ledgers, accounts,
records, data, and documents in the possession, custody, or control of
defendants, relating to any matters contained in this Final Judgment;
and
2. to interview, either informally or on the record, defendants'
officers, employees, or agents, who may have their individual counsel
present, regarding such matters. The interviews shall be subject to the
reasonable convenience of the interviewee and without restraint or
interference by defendants.
B. Upon the written request of an authorized representative of the
Assistant Attorney General in charge of the Antitrust Division,
defendants shall submit written reports, under oath if requested,
relating to any of the matters contained in this Final Judgment as may
be requested. Written reports authorized under this paragraph may, at
the sole discretion of the United States, require Defendants to
conduct, at Defendants' cost, an independent audit or analysis relating
to any of the matters contained in this Final Judgment.
C. No information or documents obtained by the means provided in
this section shall be divulged by the United States to any person other
than an authorized representative of the executive branch of the United
States, or the Attorney General's Office of any other plaintiff, except
in the course of legal proceedings to which the United States is a
party (including grand jury proceedings), or for the purpose of
securing compliance with this Final Judgment, or as otherwise required
by law.
D. If at the time information or documents are furnished by
defendants to the United States, defendants represent and identify in
writing the material in any such information or documents to which a
claim of protection may be asserted under Rule 26(c)(1)(G) of the
Federal Rules of Civil Procedure, and defendants mark each pertinent
page of such material, ``Subject to claim of protection under Rule
26(c)(1)(G) of the Federal Rules of Civil Procedure,'' then the United
States shall give defendants ten (10) calendar days notice prior to
divulging such material in any legal proceeding (other than a grand
jury proceeding).
XII. Notification
Unless such transaction is otherwise subject to the reporting and
waiting period requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, 15 U.S.C. 18a (the ``HSR Act''),
defendants, without providing advance notification to the United States
and Plaintiff States, shall not directly or indirectly acquire any
assets of or any interest, including any financial, security, loan,
equity or management interest, in any person that, at any time during
the twelve (12) months immediately preceding such acquisition, was
engaged in the United States in providing Primary Ticketing Services
during the term of this Final Judgment.
Such notification shall be provided to the United States and
Plaintiff States in the same format as, and per the instructions
relating to the Notification and Report Form set forth in the Appendix
to Part 803 of Title 16 of the Code of Federal Regulations as amended.
Notification shall be provided at least thirty (30) calendar days prior
to acquiring any such interest, and shall include, beyond what may be
required by the applicable instructions, the names of the principal
representatives of the parties to the agreement who negotiated the
agreement, and any management or strategic plans discussing the
proposed transaction. If within the 30-day period after notification,
representatives of the United States make a written request for
additional information, defendants shall not consummate the proposed
transaction or agreement until twenty (20) calendar days after
submitting all such additional information. Early termination of the
waiting periods in this paragraph may be requested and, where
appropriate, granted in the same manner as is applicable under the
requirements and provisions of the HSR Act and rules promulgated
thereunder. This Section shall be broadly construed and any ambiguity
or uncertainty regarding the filing of notice under this Section shall
be resolved in favor of filing notice.
XIII. No Reacquisition
A. Defendants may not reacquire any part of the Divestiture Assets
during the term of this Final Judgment.
B. Following the expiration of the private label ticketing
agreement with the Ticketmaster Host Platform Acquirer required by
Section IV.A.2: (1)
[[Page 6721]]
Defendants shall not provide Primary Ticketing Services to any venues
in North America for which, by virtue of an ownership interest, the
Ticketmaster Host Platform Acquirer controls the rights to select the
Primary Ticketing Services provider; and (2) for all other venues in
North America, Defendants shall not provide Primary Ticketing Services
on behalf of or pursuant to a ticketing contract with the Ticketmaster
Host Platform Acquirer. Nothing in this Section shall prevent
Defendants from: (1) Competing to provide Primary Ticketing Services to
venues (including such venues managed by the Ticketmaster Host Platform
Acquirer) other than those for which, by virtue of an ownership
interest, the Ticketmaster Host Platform Acquirer controls the rights
to select the Primary Ticketing Services provider; and (2) providing
Primary Ticketing Services to artist fan clubs in venues owned,
operated, or managed by the Ticketmaster Host Platform Acquirer.
XIV. Retention of Jurisdiction
This Court retains jurisdiction to enable any party to this Final
Judgment to apply to this Court at any time for further orders and
directions as may be necessary or appropriate to carry out or construe
this Final Judgment, to modify any of its provisions, to enforce
compliance, and to punish violations of its provisions.
XV. Expiration of Final Judgment
Unless this Court grants an extension, this Final Judgment shall
expire ten years from the date of its entry.
XVI. Public Interest Determination
Entry of this Final Judgment is in the public interest. The parties
have complied with the requirements of the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16, including making copies available to the
public of this Final Judgment, the Competitive Impact Statement, and
any comments thereon and the United States' responses to comments.
Based upon the record before the Court, which includes the Competitive
Impact Statement and any comments and response to comments filed with
the Court, entry of this Final Judgment is in the public interest.
Date: Court approval subject to procedures of the Antitrust
Procedures and Penalties Act, 15 U.S.C. 16:
United States District Judge
United States District Court for the District of Columbia
United States of America, et al., Plaintiffs, v. Ticketmaster
Entertainment, Inc. and Live Nation, Inc., Defendants.
Case: 1:10-cv-00139
Assigned to: Collyer, Rosemary M.
Assign. Date: 1/25/2010
Description: Antitrust
Competitive Impact Statement
Plaintiff United States of America (``United States''), pursuant to
Section 2(b) of the Antitrust Procedures and Penalties Act (``APPA'' or
``Tunney Act''), 15 U.S.C. 16(b)-(h), files this Competitive Impact
Statement relating to the proposed Final Judgment submitted for entry
in this civil antitrust proceeding.
I. Nature and Purpose of the Proceeding
Defendant Ticketmaster Entertainment, Inc. (``Ticketmaster'') and
Defendant Live Nation, Inc. (``Live Nation'') entered into an
agreement, dated February 10, 2009, pursuant to which they would merge
into a new entity to be known as Live Nation Entertainment. The United
States, and the States of Arizona, Arkansas, California, Florida,
Illinois, Iowa, Louisiana, Nebraska, Nevada, Ohio, Oregon, Rhode
Island, Tennessee, Texas, and Wisconsin, and the Commonwealths of
Massachusetts and Pennsylvania filed a civil antitrust Complaint on
January 25, 2010, seeking to enjoin the proposed transaction because
its likely effect would be to lessen competition substantially for
primary ticketing services to major concert venues located in the
United States in violation of Section 7 of the Clayton Act, 15 U.S.C.
18. This loss of competition likely would result in higher prices for
and less innovation in primary ticketing services. At the same time the
Complaint was filed, the United States also filed a Hold Separate
Stipulation and Order (``Hold Separate'') and proposed Final Judgment,
which are designed to eliminate the anticompetitive effects of the
acquisition. Under the proposed Final Judgment, which is explained more
fully below, Defendants are required to grant a perpetual license to
their Host platform and to divest their entire Paciolan business in
order to establish two independent ticketing companies capable of
competing effectively with the merged entity. The Final Judgment also
prohibits Defendants from engaging in certain conduct that would
prevent equally efficient firms from competing effectively. Under the
terms of the Hold Separate, Ticketmaster will take certain steps to
ensure that the Paciolan business is operated as a competitively
independent, economically viable and ongoing business concern that will
remain independent and uninfluenced by the consummation of the
transaction and to ensure that competition is maintained during the
pendency of the ordered divestiture.
The United States and Defendants have stipulated that the proposed
Final Judgment may be entered after compliance with the APPA. Entry of
the proposed Final Judgment would terminate this action, except that
the Court would retain jurisdiction to construe, modify, or enforce the
provisions of the proposed Final Judgment and to punish and remedy
violations thereof.
II. Description of the Events Giving Rise to the Alleged Violation
A. The Concert Industry
Staging concerts traditionally has required the participation of
several parties. Artists provide the entertainment that makes the
concert possible. Managers and/or agents represent artists in
negotiations to establish the commercial terms on which artists will
perform. Promoters contract with artists to perform at particular
concerts, assume the financial risk of staging the concerts, make the
arrangements for the concerts to occur at certain times and places, and
market the concerts. Venues are the physical locations where concerts
occur, and venues' owners, operators, or managers usually arrange for
the sale of tickets to concerts at their venues. Primary ticketing
companies provide services such as Web sites, call centers, and retail
networks from which tickets may be purchased that facilitate the
initial sale of tickets to concertgoers.1 Contracts between
venues and primary ticketing companies are individually negotiated. In
a typical contract, a venue agrees to use one primary ticketing company
as its exclusive service provider for several years. In exchange, the
primary ticketing company often agrees to pay to the venue a portion of
the fees that the primary ticketing company charges to concertgoers who
purchase tickets to events at the venue. The primary ticketing company
also may agree to pay an up-front bonus or advance upon execution of
the contract. Primary ticketing contracts typically prohibit venues
from reselling the primary ticketing services they receive.
B. The Defendants and the Proposed Transaction
Ticketmaster is the largest primary ticketing company in the United
States. In 2008, Ticketmaster earned gross
[[Page 6722]]
revenues of about $800 million from its U.S. primary ticketing
business. Ticketmaster offers two principal primary ticketing products
to venues: (1) Host, a Ticketmaster-managed platform for selling
tickets through Ticketmaster's Web site and other sales channels; and
(2) Paciolan, a venue-managed platform for selling tickets through the
venue's own Web site and other sales channels. In 2008, Ticketmaster
provided primary ticketing services to venues representing more than
80% of major concert venues.2 In addition to its primary
ticketing operations, Ticketmaster expanded into the artist management
business in 2008 by acquiring a controlling interest in Front Line
Management Group Inc. (``Front Line''), an important artist management
firm with clients such as the Eagles, Neil Diamond, Jimmy Buffett,
Christina Aguilera and John Mayer.
Live Nation is the largest concert promoter in the United States,
earning more than $1.3 billion in revenue from its U.S. promotions
business in 2008 and promoting shows representing 33% of the concert
revenues at major concert venues in 2008. Live Nation has entered long-
term partnerships with several popular artists including Madonna and
Jay-Z to exclusively promote their concerts, sell recordings of their
music, and market artist-branded merchandise such as T-shirts. Live
Nation also owns or operates about 70 major concert venues throughout
the United States. And as explained further below, Live Nation entered
the market for primary ticketing services in late December 2008.
On February 10, 2009, less than two months after its entry into
primary ticketing, Live Nation agreed to merge with Ticketmaster. That
proposed transaction would substantially lessen competition and is the
subject of the Complaint and proposed Final Judgment filed by the
United States in this matter.
C. The Market for Primary Ticketing Services to Major Concert Venues in
the United States
Antitrust law, including Section 7 of the Clayton Act, protects
consumers from anticompetitive conduct, such as firms' acquisition of
the ability to raise prices above levels that would prevail in a
competitive market. Market definition assists antitrust analysis by
focusing attention on the relevant portions of the economy where
competitive effects are likely to be felt. Well-defined markets
encompass the economic actors including both sellers and buyers whose
conduct most strongly influences the nature and magnitude of
competitive effects. To ensure that antitrust analysis takes account of
a broad enough set of products to evaluate whether a transaction is
likely to lead to a substantial lessening of competition, defining
relevant markets in horizontal merger cases frequently begins by
identifying a collection of products or set of services over which a
hypothetical monopolist profitably could impose a small but significant
and non-transitory increase in price. Here, the United States
investigation revealed that major concert venues would have no
alternatives to primary ticketing services if prices were to rise
significantly above the levels that would have prevailed but for the
proposed transaction, so the hypothetical-monopolist test would exclude
all other products or services from the relevant market. But that is
not the end of the market-definition exercise.
When sellers are unable to set different terms of sale for
different buyers, all buyers will face similar competitive effects, and
a relevant product market properly (if implicitly) encompasses not only
all sellers of the relevant product, but all buyers as well. But when
different buyers may experience different competitive effects, a well-
defined product market encompassing fewer than all buyers can focus
antitrust analysis appropriately on those buyers most vulnerable to
suffering probable and significant competitive harm. It also avoids
conflating in that analysis those buyers whose prices are likely to be
significantly affected with others who are unlikely to be harmed
substantially.
One situation in which different buyers experience different
effects involves price discrimination, such as when sellers are able to
charge different prices to different buyers for equivalent products.
Sellers can price discriminate when they are able to identify and
target vulnerable buyers for price increases and when buyers facing low
prices cannot resell to those facing higher prices. Both conditions are
present here. Venues and primary ticketing companies individually
negotiate their contracts, and the terms of those contracts typically
make it impossible for venues to resell (arbitrage) primary ticketing
services.
Because primary ticketing companies can price discriminate among
different venues, the proposed transaction could affect different
classes of venues differently, and antitrust analysis requires
attention to those venues with few alternative primary ticketing
providers to Ticketmaster and Live Nation because, if the proposed
transaction were consummated, their real-world choices would be reduced
differently than would be other venues' options. Major concert venues
require more sophisticated primary ticketing services than other
venues, so each tends to select a primary ticketing company with an
established reputation for providing good service to similar venues.
Ticketmaster has shown that its primary ticketing platform is able to
withstand the heavy transaction volume associated with the first hours
when tickets to popular concerts become available to concertgoers
(``high-volume on-sales''), offers integrated marketing capabilities,
and otherwise provides proven, high-quality service to venues. When the
proposed transaction was announced, Live Nation was building experience
selling tickets to concerts at its own venues as a way to demonstrate
to other venues that its primary ticketing platform also performed
well. No primary ticketing company other than Ticketmaster and Live
Nation has amassed or likely could have amassed in the near term
sufficient scale to develop a reputation for successfully delivering
similarly sophisticated primary ticketing services. Additionally, Live
Nation planned to compete for primary ticketing contracts with major
concert venues, but had less interest in serving non-concert venues
outside its historically core concert expertise. Because they would
have no equally attractive alternative primary ticketing provider to
the merged firm, and because they would have benefited more from
competition between Ticketmaster and Live Nation, major concert venues
are more vulnerable than smaller venues to anticompetitive harms caused
by the proposed transaction, and a well-defined relevant market should
not encompass customers other than major concert venues. For example, a
high school that hires a student to sell tickets to one of its musical
productions could be said to be buying ``primary ticketing services,''
but the relevant market can exclude such other venues because there is
no significant risk that sales to them would affect Defendants' ability
to exercise market power over major concert venues.
Antitrust analysis also must consider the geographic dimensions of
competition. Section 7 protects against harm to competition ``in any
section of the country.'' 15 U.S.C. 18. Here, domestic anticompetitive
harms would be experienced by major concert venues located throughout
the United States. Because the merged firm could price discriminate,
any effects of the proposed transaction on foreign venues would be
[[Page 6723]]
distinct from any effects on domestic venues. Thus, including only
major concert venues located in the United States within the relevant
market poses no risk of omitting buyers whose inclusion would
significantly alter the antitrust analysis.3
In short, the sale of primary ticketing services to major concert
venues in the United States is a well-defined relevant market for the
purpose of analyzing the effects of the proposed transaction.
D. The Competitive Effects of the Proposed Transaction
Until 2009, Ticketmaster dominated the market for primary ticketing
services to major concert venues in the United States with greater than
80% market share. The only other primary ticketing companies with
greater than a 1% share in 2008 were Tickets.com (4%), Front Gate
Tickets (3%), New Era Tickets (2%), Live Nation (2%),4 and
Tessitura (1%). Ticketmaster's largest customer for primary ticketing
services was Live Nation, the owner or operator of venues representing
about 15% of capacity at all major concert venues in the United States
in 2008. Ticketmaster renews its primary ticketing contracts at a very
high rate. Even though Ticketmaster's distribution costs have declined
dramatically as concertgoers have shifted their purchases toward the
Internet and away from traditional sales channels, the ticketing fees
retained by Ticketmaster have not fallen, and Ticketmaster has
continued to enjoy large profit margins on its primary ticketing
business for many years.
These margins have persisted because they are protected by high
barriers to other companies successfully, substantially, and profitably
entering or attempting to expand in the market for primary ticketing
services to major concert venues. First, the platforms required to
provide primary ticketing services to major concert venues are
technologically complicated and expensive to develop and deploy.
Second, major concert venues are reluctant to enter long-term exclusive
contracts with new primary ticketing companies because they lack
Ticketmaster's established reputation for capably handling high-volume
on-sales and providing high-quality service to venues. Third, the costs
of installing and training employees to use new equipment make it
expensive for venues to switch between primary ticketing companies.
Fourth, because there are high fixed costs to develop and maintain a
primary ticketing platform, entrants struggle to obtain sufficient
scale to compete successfully with Ticketmaster on price. Fifth,
Ticketmaster's scale provides another important incumbent advantage
over other firms extensive data about individual concertgoers collected
over many years. Ticketmaster can use that data as a powerful marketing
tool to secure venue contracts for primary ticketing services. Sixth,
Ticketmaster's practice of signing long-term exclusive contracts with
venues limits how quickly other firms can amass sufficient scale to
compete effectively with Ticketmaster on any of these dimensions.
By 2008, Ticketmaster's longstanding dominance faced a major
threat. Live Nation was better positioned to overcome the entry
barriers discussed above than any other existing or potential
competitor because it could achieve sufficient scale to compete
effectively with Ticketmaster simply by ticketing its own venues. Live
Nation also possessed a unique competitive advantage in that it could
bundle access to important concerts with its ticketing service.
Recognizing Live Nation's potential to disrupt its dominant position in
the market for primary ticketing services, Ticketmaster attempted to
renew Live Nation's primary ticketing contract before its December 31,
2008 expiration. But Live Nation instead chose to license technology
from CTS Eventim AG (``CTS'') that would enable it to sell concert
tickets to its own venues beginning in 2009 and to compete with
Ticketmaster for other venues' primary ticketing contracts in the
future.
This competition began even before Live Nation's contract with
Ticketmaster expired. On September 11, 2008, Live Nation announced that
SMG the largest venue management company in the United States, with the
ability to control or influence the selection of primary ticketing
companies at more than 40 major concert venues had agreed to use Live
Nation's primary ticketing services, if Live Nation could provide a
primary ticketing platform comparable to other leading primary
ticketing companies. SMG was Ticketmaster's third largest customer
(behind only Live Nation and Anschutz Entertainment Group, Inc.), but
it switched to Live Nation because SMG expected that, if it used Live
Nation's primary ticketing services, Live Nation would use its strength
in promotions to bring more concerts to SMG-managed venues. On October
14, 2008, Live Nation announced that it would provide primary ticketing
services to New York City's Roseland Ballroom, another former
Ticketmaster client. By 2009, Live Nation provided primary ticketing
services to more than 15% of the capacity at major concert venues in
the United States.
Ticketmaster responded to competition from Live Nation in several
ways. First, it offered more attractive renewal terms to customers with
expiring contracts than it had customarily offered in order to lock
customers into long-term deals before Live Nation could sign them.
Second, Ticketmaster acquired a controlling interest in Front Line on
October 23, 2008. Front Line's strength in artist management enabled
Ticketmaster for the first time to offer venues a package of primary
ticketing services and concert content that could rival Live Nation's
ticketing-and-content package. Finally, Ticketmaster moved to eliminate
Live Nation entirely as a competitor by agreeing to the proposed
transaction less than two months after Live Nation began ticketing with
the CTS platform.
The proposed transaction would extinguish competition between
Ticketmaster and Live Nation and thereby eliminate the financial
benefits that venues enjoyed during the brief period when Live Nation
was poised to challenge Ticketmaster's dominance. The proposed
transaction would also diminish innovation in primary ticketing
services because the merged firm would have reduced incentives to
develop new features. Further, the proposed transaction would result in
even higher barriers to entry and expansion in the market for primary
ticketing services. In addition to the long-standing entry barriers
discussed above, the merged firm's ability to bundle primary ticketing
services (implicitly or explicitly) with access to artists managed by
Front Line and/or promoted by Live Nation would require competitors to
offer venues both primary ticketing services and access to content in
order to compete most effectively.
Defendants have asserted that the proposed transaction will
generate efficiencies sufficient to counteract any anticompetitive
effects. More specifically, they have contended that the vertical
integration of Ticketmaster and Live Nation's complementary businesses
will reduce the number of industry participants who currently must be
compensated for a concert to be produced and, thus, will allow the
merged entity to reduce the prices paid by venues for primary ticketing
services and by concertgoers for tickets. While appreciating that
vertical integration may benefit consumers in some situations, the
United States does not fully credit Defendants' efficiency claims
because they each could realize
[[Page 6724]]
many of the asserted efficiencies without consummating the proposed
transaction. Ticketmaster and Live Nation each already had expanded
vertically before they agreed to the proposed transaction, and but for
the proposed transaction, venues and concertgoers would have continued
to enjoy the benefits of competition between two vertically integrated
competitors. A vertically integrated monopoly is less likely to spur
innovation and efficiency than competition between vertically
integrated firms, and a vertically integrated monopoly is unlikely to
pass the benefits of innovation and efficiency onto consumers.
Defendants also contended that Live Nation's impact on ticketing
would be minimal because of shortcomings in Live Nation's ticketing
platform, including the absence of a season ticketing component, which
is important for a number of venues. Though the CTS platform was
originally designed for use in Europe, Live Nation and CTS have
invested heavily to adapt it for use in the United States. In the first
six months of 2009, Live Nation used the CTS platform to sell more than
6 million tickets to concerts at its U.S. venues. Before entering the
proposed transaction, Live Nation had planned to continue improving the
CTS platform, including developing a season ticketing component, to
make it more attractive to potential third-party venue clients in the
United States.
III. Explanation of the Proposed Final Judgment
The proposed Final Judgment will eliminate the anticompetitive
effects of the proposed transaction in the market for primary ticketing
services to major concert venues in four principal ways.
First, the Final Judgment will enable Anschutz Entertainment Group,
Inc. (``AEG'') to become a new, independent, economically viable, and
vertically integrated competitor in the market for primary ticketing
services to major concert venues. AEG is the second largest promoter in
the United States (behind Live Nation), promoting shows representing
about 14% of concert revenues at major concert venues in 2008. No
company other than AEG or Live Nation promotes concerts representing
more than 4% of the concert revenues from major concert venues. AEG
also owns, operates, or manages more than 30 major concert venues,
representing about 8% of the capacity at major U.S. concert venues, and
it can select (or influence the selection of) the primary ticketing
company for those venues. In addition, AEG owns one-half of an
important artist management firm with several popular clients,
including Justin Timberlake and the Jonas Brothers. Due to its
significant presence in promotions, venues, and artist management, AEG
is the company best positioned to achieve the necessary scale, overcome
the other entry barriers discussed above, and compete successfully with
the merged firm in the market for primary ticketing services to major
concert venues.
The Final Judgment facilitates AEG's entry through a two-stage
process that gives it access to Ticketmaster's core primary ticketing
platform, which AEG can then use to service its own venues and to sell
primary ticketing services to third-party venues. In the first stage,
which must begin within six months of the proposed transaction's
consummation and may continue for up to five years, the Final Judgment
requires Defendants to provide AEG with its own branded Web site based
on Ticketmaster's Host platform, including any upgrades and
enhancements (the ``AEG Site''). AEG has the right to use the AEG Site
to sell tickets to events at specified venues it currently owns,
operates, and manages as well as to events at any other venues from
which AEG secures the right to provide primary ticketing services.
Though AEG must pay Defendants royalties for each ticket sold through
the AEG Site, those royalties are below the average rate Ticketmaster
currently charges, and Defendants have no control over AEG's final
prices. These provisions immediately provide AEG incentives to compete
with Defendants and diminish the risk that AEG would be unable to
compete successfully had it attempted to deploy a less established
primary ticketing platform.
The Final Judgment also requires Defendants to provide AEG with an
option to acquire a perpetual, fully paid-up license to the then-
current version of Ticketmaster's Host platform, including a copy of
the source code, which Defendants must install and then support during
the first six months after its installation. AEG is permitted to
exercise this option within four years of the proposed transaction's
consummation, which will allow AEG to assume full responsibility for
operating its own primary ticketing business, independently of
Defendants.
The Final Judgment gives AEG incentives to exercise its option to
acquire a copy of Host (or to develop or acquire a competing primary
ticketing platform) by prohibiting Defendants from providing primary
ticketing services to AEG's venues after AEG's right to use the AEG
Site expires. That provision is critical to preserving competition in
the primary ticketing services market because it guarantees that,
within five years, AEG will have to either supply its own primary
ticketing services or obtain them from some company other than the
merged firm. Because AEG cannot rely indefinitely on the AEG Site, it
will have incentives to plan for the future. Even if AEG's plans do not
involve exercising its option to acquire a copy of Host, the Final
Judgment will preserve competition because AEG will have to contract
for primary ticketing services with one of Defendants' rivals. AEG's
ticket volume would give that primary ticketing company sufficient
scale and credibility to compete effectively with the merged firm.
Second, the Final Judgment's requirement that Defendants divest
Ticketmaster's entire Paciolan business will establish another
independent and economically viable competitor in the market for
primary ticketing services to major concert venues. Ticketmaster
currently licenses its Paciolan platform both directly to venues
representing 3% of major U.S. concert venue capacity and to other
primary ticketing companies that sublicense the Paciolan platform to
venues representing an additional 4% of the relevant market. Before
consummating the proposed transaction, Defendants must enter a letter
of intent to divest to Comcast-Spectacor, L.P. (``Comcast-Spectacor'')
the entire Paciolan business, including all intellectual property in
the Paciolan platform and all contracts with venue and primary
ticketing company licensees of that platform. Through its New Era
Tickets (``New Era'') subsidiary, which currently licenses the Paciolan
platform from Ticketmaster, Comcast-Spectacor already provides primary
ticketing services to venues representing 2% of major concert venue
capacity. In addition to its interest in New Era, Comcast-Spectacor
owns 2 major U.S. concert venues and manages 15 others. When combined
with New Era's ticketing business and Comcast-Spectacor's venue
presence, the Paciolan business that the Final Judgment requires
Defendants to divest would provide Comcast-Spectacor sufficient scale
to compete effectively and independently with the merged firm in the
market for primary ticketing services to major concert venues. Comcast-
Spectacor and others have contended that the movement in primary
ticketing services will be towards ``self-enablement'' models, such
[[Page 6725]]
as Paciolan, which allow a venue to manage its own ticketing platform.
Within 60 days of signing the letter of intent, the Paciolan
business must be divested in such a way as to satisfy the United States
in its sole discretion, and in consultation with the Plaintiff states,
that the operations can and will be operated by Comcast-Spectacor or an
alternative purchaser as a viable, ongoing business that can compete
effectively in the relevant market. Defendants must take all reasonable
steps necessary to accomplish the divestiture quickly and shall
cooperate with any prospective purchaser. In the event that Defendants
do not accomplish the Paciolan divestiture in a timely fashion, the
Final Judgment provides that the Court will appoint a trustee selected
by the United States to effect the divestiture. If a trustee is
appointed, the proposed Final Judgment provides that Defendants will
pay all costs and expenses of the trustee. The trustee's commission
will be structured so as to provide an incentive for the trustee based
on the price obtained and the speed with which the divestiture is
accomplished. After his or her appointment becomes effective, the
trustee will file monthly reports with the Court and the United States
setting forth his or her efforts to accomplish the divestiture. At the
end of six months, if the divestiture has not been accomplished, the
trustee and the United States will make recommendations to the Court,
which shall enter such orders as appropriate, in order to carry out the
purpose of the trust, including extending the trust or the term of the
trustee's appointment.
Third, the Final Judgment prohibits Defendants from engaging in
certain conduct that would impede effective competition from equally
efficient rivals that may or may not be not vertically integrated.
Thus, the Final Judgment proscribes retaliation against venue owners
who contract or consider contracting for primary ticketing services
with Defendants' competitors. The Final Judgment also prohibits
Defendants from explicitly or practically requiring venues to take
their primary ticketing services if the venues only want to obtain
concerts the Defendants promote or concerts by artists the Defendants
manage, and it likewise prohibits Defendants from explicitly or
practically requiring venues to take concerts they promote or concerts
by artists they manage if those venues only want to obtain the
Defendants' primary ticketing services. These provisions preserve the
ability of primary ticketing companies that do not also have access to
content (and promoters and artist managers that do not also provide
primary ticketing services) to continue competing with Defendants.
Elsewhere, the Final Judgment prevents Defendants from abusing their
position in the primary ticketing market to impede competition among
promoters and artist managers by requiring that Defendants either
refrain from using certain ticketing data in their non-ticketing
businesses or provide that data to other promoters and artist managers.
Finally, the Final Judgment mandates that Defendants provide any
current primary ticketing client with that client's ticketing data
promptly upon request, if the client chooses not to renew its primary
ticketing contract. That provision reduces venues' switching costs and
lowers barriers to other companies competing for Defendants' primary
ticketing clients because it ensures that those venue clients will not
be forced to relinquish valuable data if they decide to switch primary
ticketing service providers.
Fourth, the Final Judgment requires Defendants to notify the United
States at least thirty days before acquiring any assets of or any
interest in any firm engaged in providing primary ticketing services in
the United States, regardless of whether the acquisition would
otherwise be subject to reporting pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, 15 U.S.C. 18a. If the
United States requests additional information within thirty days of the
Defendants notifying it of an acquisition, the Final Judgment prohibits
Defendants from consummating the acquisition until twenty days after
providing the requested information. These provisions facilitate the
vigilant and effective oversight that will be necessary to guard
against the potential for Defendants to frustrate the purposes of the
Final Judgment.
In short, the Final Judgment will eliminate the anticompetitive
effects of the proposed transaction in the provision of primary
ticketing services to major concert venues in the United States while
preserving the possibility of efficiency-enhancing vertical integration
in the concert industry and also preserving competition from
Defendants' non-vertically integrated rivals.
IV. Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in Federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment will neither
impair nor assist the bringing of any private antitrust damage action.
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C.
16(a), the proposed Final Judgment has no prima facie effect in any
subsequent private lawsuit that may be brought against Defendants.
V. Procedures Available for Modification of the Proposed Final Judgment
The United States and Defendants have stipulated that the proposed
Final Judgment may be entered by the Court after compliance with the
provisions of the APPA, provided that the United States has not
withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest.
The APPA provides a period of at least sixty (60) days preceding
the effective date of the proposed Final Judgment within which any
person may submit to the United States written comments regarding the
proposed Final Judgment. Any person who wishes to comment should do so
within sixty (60) days of the date of publication of this Competitive
Impact Statement in the Federal Register, or the last date of
publication in a newspaper of the summary of this Competitive Impact
Statement, whichever is later. All comments received during this period
will be considered by the United States Department of Justice, which
remains free to withdraw its consent to the proposed Final Judgment at
any time prior to the Court's entry of judgment. The comments and the
response of the United States will be filed with the Court and
published in the Federal Register.
Written comments should be submitted to: John R. Read, Chief,
Litigation III Section, Antitrust Division, United States Department of
Justice, 450 Fifth Street, NW., Suite 4000, Washington, DC 20530.
The proposed Final Judgment provides that the Court retains
jurisdiction over this action, and the parties may apply to the Court
for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment.
VI. Alternatives to the Proposed Final Judgment
The United States considered, as an alternative to the proposed
Final Judgment, a settlement that would have required Defendants to
divest the current set of divestiture assets to Comcast-Spectacor. The
United States
[[Page 6726]]
rejected that settlement because it would not have been as effective as
the remedy embodied in the proposed Final Judgment at replicating the
competitive dynamics that would have prevailed in the market for
primary ticketing services had the proposed transaction not occurred.
As another alternative to the proposed Final Judgment, the United
States considered a full trial on the merits against Defendants. The
United States could have continued the litigation and sought
preliminary and permanent injunctions against Defendants' merger. The
United States is satisfied, however, that the divestiture of assets and
prohibitions of anticompetitive practices described in the proposed
Final Judgment will preserve competition for the provision of primary
ticketing services to major concert venues in the United States. Thus,
the proposed Final Judgment would protect competition as effectively as
would any remedy available through litigation, but avoids the time,
expense, and uncertainty of a full trial on the merits of the
Complaint.
VII. Standard of Review Under the APPA for the Proposed Final Judgment
The Clayton Act, as amended by the APPA, requires that proposed
consent judgments in antitrust cases brought by the United States be
subject to a sixty-day comment period, after which the court shall
determine whether entry of the proposed Final Judgment ``is in the
public interest.'' 15 U.S.C. 16(e)(1). In making that determination,
the court, in accordance with the statute as amended in 2004, is
required to consider:
(A) The competitive impact of such judgment, including termination
of alleged violations, provisions for enforcement and modification,
duration of relief sought, anticipated effects of alternative remedies
actually considered, whether its terms are ambiguous, and any other
competitive considerations bearing upon the adequacy of such judgment
that the court deems necessary to a determination of whether the
consent judgment is in the public interest; and
(B) the impact of entry of such judgment upon competition in the
relevant market or markets, upon the public generally and individuals
alleging specific injury from the violations set forth in the complaint
including consideration of the public benefit, if any, to be derived
from a determination of the issues at trial. 15 U.S.C. 16(e)(1)(A) &
(B).
In considering these statutory factors, the court's inquiry is
necessarily a limited one as the government is entitled to ``broad
discretion to settle with the defendant within the reaches of the
public interest.'' United States v. Microsoft Corp., 56 F.3d 1448, 1461
(D.C. Cir. 1995); see generally United States v. SBC Commc'ns, Inc.,
489 F. Supp. 2d 1 (D.D.C. 2007) (assessing public interest standard
under the Tunney Act); United States v. InBev N.V./S.A., No. 08-1965
(JR), 2009-2 Trade Cas. (CCH) ]76,736, 2009 U.S. Dist. LEXIS 84787, at
*3 (D.D.C. Aug. 11, 2009) (noting that the court's review of a consent
judgment is limited and only inquires ``into whether the government's
determination that the proposed remedies will cure the antitrust
violations alleged in the complaint was reasonable, and whether the
mechanism to enforce the final judgment are clear and
manageable.'').\(5)\
As the United States Court of Appeals for the District of Columbia
Circuit has held, under the APPA a court considers, among other things,
the relationship between the remedy secured and the specific
allegations set forth in the government's complaint, whether the decree
is sufficiently clear, whether enforcement mechanisms are sufficient,
and whether the decree may positively harm third parties. See
Microsoft, 56 F.3d at 1458-62. With respect to the adequacy of the
relief secured by the decree, a court may not ``engage in an
unrestricted evaluation of what relief would best serve the public.''
United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (citing
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see
also Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152
F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787,
at *3. Courts have held that:
[t]he balancing of competing social and political interests affected
by a proposed antitrust consent decree must be left, in the first
instance, to the discretion of the Attorney General. The court's
role in protecting the public interest is one of insuring that the
government has not breached its duty to the public in consenting to
the decree. The court is required to determine not whether a
particular decree is the one that will best serve society, but
whether the settlement is ``within the reaches of the public
interest.'' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\6\ In
determining whether a proposed settlement is in the public interest, a
district court ``must accord deference to the government's predictions
about the efficacy of its remedies, and may not require that the
remedies perfectly match the alleged violations.'' SBC Commc'ns, 489 F.
Supp. 2d at 17; see also Microsoft, 56 F.3d at 1461 (noting the need
for courts to be ``deferential to the government's predictions as to
the effect of the proposed remedies''); United States v. Archer-
Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that
the court should grant due respect to the United States' prediction as
to the effect of proposed remedies, its perception of the market
structure, and its views of the nature of the case).
Courts have greater flexibility in approving proposed consent
decrees than in crafting their own decrees following a finding of
liability in a litigated matter. ``[A] proposed decree must be approved
even if it falls short of the remedy the court would impose on its own,
as long as it falls within the range of acceptability or is `within the
reaches of public interest.' '' United States v. Am. Tel. & Tel. Co.,
552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also
United States v. Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky.
1985) (approving the consent decree even though the court would have
imposed a greater remedy). To meet this standard, the United States
``need only provide a factual basis for concluding that the settlements
are reasonably adequate remedies for the alleged harms.'' SBC Commc'ns,
489 F. Supp. 2d at 17.
Moreover, the court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States has
alleged in its Complaint, and does not authorize the court to
``construct [its] own hypothetical case and then evaluate the decree
against that case.'' Microsoft, 56 F.3d at 1459; see also InBev, 2009
U.S. Dist. LEXIS 84787, at *20 (``[T]he `public interest' is not to be
measured by comparing the violations alleged in the complaint against
those the court believes could have, or even should have, been
alleged.''). Because the ``court's authority to review the decree
depends entirely on the government's exercising its prosecutorial
discretion by bringing a case in the first place,'' it follows that
``the court is only authorized to review the decree itself,'' and not
to ``effectively redraft the complaint'' to inquire into other matters
that the United States did not pursue. Microsoft, 56 F.3d at 1459-60.
As this Court recently confirmed in SBC Communications, courts ``cannot
look beyond the complaint in making the
[[Page 6727]]
public interest determination unless the complaint is drafted so
narrowly as to make a mockery of judicial power.'' SBC Commc'ns, 489 F.
Supp. 2d at 15.
In its 2004 amendments, Congress made clear its intent to preserve
the practical benefits of utilizing consent decrees in antitrust
enforcement, adding the unambiguous instruction that ``[n]othing in
this section shall be construed to require the court to conduct an
evidentiary hearing or to require the court to permit anyone to
intervene.'' 15 U.S.C. 16(e)(2). The language wrote into the statute
what Congress intended when it enacted the Tunney Act in 1974, as
Senator Tunney explained: ``[t]he court is nowhere compelled to go to
trial or to engage in extended proceedings which might have the effect
of vitiating the benefits of prompt and less costly settlement through
the consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement
of Senator Tunney). Rather, the procedure for the public interest
determination is left to the discretion of the court, with the
recognition that the court's ``scope of review remains sharply
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC
Commc'ns, 489 F. Supp. 2d at 11.\7\
VIII. Determinative Documents
In formulating the proposed Final Judgment, the United States
considered the AEG/TM Technology Agreement, dated January 11, 2010 and
attached hereto as Exhibit A,\8\ to be a determinative document within
the meaning of the APPA.
Dated: January 25, 2010.
Respectfully submitted,
Aaron D. Hoag, Attorney, U.S. Department of Justice, Antitrust
Division, 450 Fifth Street, NW., Suite 4000, Washington, DC 20530,
Telephone: (202) 514-5038, Fax: (202) 514-7308, E-mail:
[email protected].
Certificate of Service
I, Aaron Hoag, hereby certify that on January 25, 2010, I caused a
copy of the Competitive Impact Statement and attached Exhibit to be
served on defendants Ticketmaster Entertainment, Inc., and Live Nation,
Inc., and the plaintiff States of Arizona, Arkansas, California,
Connecticut, Florida, Illinois, Iowa, Nebraska, Nevada, Ohio, Oregon,
Rhode Island, Tennessee, Texas, and Wisconsin, and Commonwealths of
Massachusetts, and Pennsylvania by mailing the documents via E-MAIL to
the duly authorized legal representatives of the parties, as follows:
For Ticketmaster Entertainment, Inc., M. Sean Royall, Esq., Gibson,
Dunn & Crutcher LLP, 1050 Connecticut Avenue, NW., Washington, DC
20036, Tel: (202) 955-8546, Fax: (202) 467-0539, E-mail:
[email protected],
For Live Nation, Inc., Michael Egge, Esq., Latham & Watkins LLP, 555
Eleventh Street, NW., Washington, DC 20004, Tel: (202) 637-2200, Fax:
(202) 637-2201, E-mail: [email protected].
For Plaintiff State of Arizona, Nancy M. Bonnell, Antitrust Unit Chief,
Consumer Protection & Advocacy Section, 1275 West Washington, Phoenix,
AZ 85007, Tel: (602) 542-7728, Fax: (602) 542-9088, E-mail:
[email protected].
For Plaintiff State of Arkansas, David A. Curran, Assistant Attorney
General, 323 Center St., Suite 200, Little Rock, AR 72201, Tel: (501)
682-3561, Fax: (501) 682-8118, E-mail: [email protected].
For Plaintiff State of California, Paula Lauren Gibson, Deputy Attorney
General, California Office of the Attorney General, 300 So. Spring
Street, Suite 1702, Los Angeles, CA 90013, Tel: (213) 897-0014, Fax:
(213) 897-2801, E-mail: [email protected].
For Plaintiff State of Florida, Patricia A. Conners, Antitrust
Division, PL-01; The Capitol, Tallahassee, FL 32399-1050, Tel: (850)
414-3300, Fax: (850) 488-9134, E-mail: [email protected].
For Plaintiff State of Illinois, Robert W. Pratt, Chief, Antitrust
Bureau, Office of the Attorney General, State of Illinois, 100 West
Randolph Street, Chicago, Illinois 60601, Tel: (312) 814-3722, Fax:
(312) 814-4209, E-mail: [email protected].
For Plaintiff State of Iowa, Layne M. Lindebak, Assistant Attorney
General, Special Litigation Division, Iowa Department of Justice,
Hoover Office Building--Second Floor, 1305 East Walnut Street, Des
Moines, Iowa 50319, Tel: (515) 281-7054, Fax: (515) 281-4902, E-mail:
[email protected].
For Plaintiff State of Louisiana, Stacie L. de Blieux, Assistant
Attorney General, Public Protection Division, 1885 North Third St.,
Baton Rouge, LA 70802, Tel: (225) 326-6400, Fax: (225) 326-6499, E-
mail: [email protected].
For Plaintiff Commonwealth of Massachusetts, William T. Matlack, Chief,
Antitrust Division, Assistant Attorney General, Office of Attorney
General Martha Coakley, One Ashburton Place, Boston, MA 02108, Tel:
(617) 727-2200, Fax: (617) 727-5765, E-mail:
[email protected].
For Plaintiff State of Nebraska, Leslie Campbell-Levy, Assistant
Attorney General, Chief, Consumer Protection & Antitrust, Nebraska
Department of Justice, 2115 State Capitol, Lincoln, NE 68509, Tel:
(402) 471-2811, Fax: (402) 471-2957, E-mail: [email protected].
For Plaintiff State of Nevada, Brian Armstrong, Senior Deputy Attorney
General, State of Nevada, Office of the Attorney General, Bureau of
Consumer Protection, 555 E. Washington Ave., Suite 3900, Las Vegas,
Nevada 89101, Tel: (702) 486-3420, Fax: (702) 486-3283, E-mail:
[email protected].
For Plaintiff State of Ohio, Jennifer L. Pratt, Chief, Antitrust
Department, 150 E. Gay St., 23rd Floor, Columbus, OH 43215, Tel: (614)
466-4328, Fax: (614) 995-0266, [email protected].
For Plaintiff State of Oregon, Caren Rovics, Senior Assistant Attorney
General, Financial Fraud/Consumer Protection Section, Civil Enforcement
Division, 1162 Court Street NE., Salem, OR 97301-4096, Tel: (503) 934-
4400, Fax: (503) 378-5017, E-mail: [email protected].
For Plaintiff Commonwealth of Pennsylvania, James A. Donahue III, Chief
Deputy Attorney General, Office of Attorney General, Antitrust Section,
14th Floor Strawberry Square, Harrisburg, PA 17120, Tel: (717) 787-
4530, Fax: (717) 705-7110, E-mail: [email protected].
For Plaintiff State of Rhode Island, Patrick Lynch, Attorney General,
State of Rhode Island, 150 South Main Street, Providence, Rhode Island
02903, Tel: (401) 274-4400, Fax: (401) 222-2295, E-mail:
[email protected].
For Plaintiff State of Tennessee, Robert E. Cooper, Jr., Attorney
General and Reporter, State of Tennessee, 425 Fifth Avenue North,
Nashville, TN 37243, Tel: (615) 532-5732, Fax: (615) 532-2910, E-mail:
[email protected].
For Plaintiff State of Texas, David M. Ashton, Assistant Attorney
General, Office of the Attorney General, 300 W. 15th Street, Austin,
Texas 78701, Tel: (512) 936-1781, Fax: (512) 320-0975, E-mail:
[email protected].
For Plaintiff State of Wisconsin, Gwendolyn J. Cooley, Assistant
Attorney General, Wisconsin Department of Justice, 17 West Main Street,
Madison, WI 53703, Tel: (608) 261-5810, Fax: (608) 267-2778, E-mail:
[email protected].
[[Page 6728]]
Aaron D. Hoag, Esq., Attorney, U.S. Department of Justice, Antitrust
Division, 450 Fifth Street, NW., Suite 4000, Washington, DC 20530,
Telephone: (202) 514-5038, Fax: (202) 514-7308, E-mail:
[email protected].
Footnotes
1. After their initial sale, concert tickets may be resold on the
secondary ticketing market. Ticket brokers purchase tickets with the
intention of reselling them to concertgoers. Secondary ticketing
companies provide services that facilitate the resale of tickets to
concertgoers by ticket brokers and others.
2. While the conclusions reached in the antitrust analysis
described below are not sensitive to the precise number of venues
included within this class, for purposes of this Competitive Impact
Statement, ``major concert venues'' are the 500 U.S. venues generating
the greatest concert revenues in 2008, as reported in Pollstar, a
leading source of concert industry information. Concert ticket revenues
from events at these venues represent more than 90% of the concert
ticket revenues at all venues reported in Pollstar. Major concert
venues are a diverse group, which includes large stadiums and arenas
with relatively few concerts (e.g., the Verizon Center in Washington,
DC), mid-sized amphitheaters that host concerts regularly during
certain seasons (e.g., Nissan Pavilion in Bristow, VA), and smaller
clubs and theaters with frequent concerts throughout the year (e.g.,
Warner Theatre in Washington, DC and Live Nation's House of Blues
clubs). To account for this diversity, venues are weighted by their
capacity in calculating shares of the market for primary ticketing
services to major concert venues. Only public sources of information
were used to calculate the market shares described in this Competitive
Impact Statement.
3. In this case, there are not significant transportation costs
associated with the relevant services, so sellers' locations do little
to inform the market-definition inquiry, though they are not irrelevant
to antitrust analysis. To the contrary, only sellers capable of serving
major concert venues located in the United States can compete with
Defendants in the relevant market. Many of those sellers are located
within the United States, but some are foreign firms, as suggested by
Live Nation's adaptation of a European primary ticketing platform for
use in the United States, which is discussed below. Foreign sellers
historically have not competed effectively in the United States because
of the significant investments required to enter the domestic market.
Still, Live Nation's example suggests that, with a significant
investment of time and money, foreign primary ticketing companies might
be capable of adapting their products for U.S. customers.
4. Before 2009, by virtue as its position as a promoter, Live
Nation received roughly 10% of the tickets to concerts it promoted, and
it sold those tickets to concertgoers through its MusicToday subsidiary
and a platform licensed from eTix. Live Nation also used the MusicToday
platform to provide primary ticketing services to a few small venues.
5. The 2004 amendments substituted ``shall'' for ``may'' in
directing relevant factors for court to consider and amended the list
of factors to focus on competitive considerations and to address
potentially ambiguous judgment terms. Compare 15 U.S.C. 16(e) (2004),
with 15 U.S.C. Sec. 16(e)(1) (2006); see also SBC Commc'ns, 489 F.
Supp. 2d at 11 (concluding that the 2004 amendments ``effected minimal
changes'' to Tunney Act review).
6. Cf. BNS, 858 F.2d at 464 (holding that the court's ``ultimate
authority under the [APPA] is limited to approving or disapproving the
consent decree''); United States v. Gillette Co., 406 F. Supp. 713, 716
(D. Mass. 1975) (noting that, in this way, the court is constrained to
``look at the overall picture not hypercritically, nor with a
microscope, but with an artist's reducing glass''). See generally
Microsoft, 56 F.3d at 1461 (discussing whether ``the remedies [obtained
in the decree are] so inconsonant with the allegations charged as to
fall outside of the `reaches of the public interest' '').
7. See United States v. Enova Corp., 107 F. Supp. 2d 10, 17 (D.D.C.
2000) (noting that the ``Tunney Act expressly allows the court to make
its public interest determination on the basis of the competitive
impact statement and response to comments alone''); United States v.
Mid-Am. Dairymen, Inc., 1977-1 Trade Cas. (CCH) ] 61,508, at 71,980
(W.D. Mo. 1977) (``Absent a showing of corrupt failure of the
government to discharge its duty, the Court, in making its public
interest finding, should . . . carefully consider the explanations of
the government in the competitive impact statement and its responses to
comments in order to determine whether those explanations are
reasonable under the circumstances.''); S. Rep. No. 93-298, 93d Cong.,
1st Sess., at 6 (1973) (``Where the public interest can be meaningfully
evaluated simply on the basis of briefs and oral arguments, that is the
approach that should be utilized.'').
8. The United States redacted competitively sensitive information
and information unrelated to U.S. markets from the version of the AEG/
TM Technology Agreement attached as Exhibit A.
[FR Doc. 2010-2754 Filed 2-9-10; 8:45 am]
BILLING CODE 4410-11-P