Legal News

Live Nation Gets Its Deal: DOJ Signs Off on Ticketmaster Purchase

By Ashby Jones

Free-marketers, M&A lawyers, and antitrust followers of a certain stripe are breathing a sigh of relief today. At the same time, consumer-rights advocates and antitrust followers of a different stripe may be arriving at work having slept a bit fitfully last night.

The reason: The DOJ gave the go-ahead Monday to the merger between concert promoter Live Nation and ticket-selling and artist-management powerhouse Ticketmaster. That said, the DOJ nevertheless imposed some significant conditions before giving the deal its sign-off. The companies accepted the conditions and closed the deal Monday afternoon.

The merger creates a behemoth company, one with the power to manage artists, book them at venues that it owns and sell tickets to their concerts. The new company, called Live Nation Entertainment Inc., also will be able to sell merchandise and in some cases control the sale of recorded music. Click here for the WSJ story; here for the NYT story.

The DOJ’s conditions effectively establish AEG Live, the U.S.’s second-biggest concert promoter behind Live Nation, as a competitor in ticketing. The merged company will be required to license its ticketing software to AEG, a unit of Anschutz Corp.

Under the concessions demanded by the DOJ, Ticketmaster’s Paciolan division, which sells tickets to college sporting events, is to be sold to a unit of Comcast. The merged company also is barred from retaliating against venue operators that want to use ticketing services from competitors. For instance, the merged company would be prevented from blocking artists it represents from playing in those venues.

“We were prepared to litigate this case,” the DOJ’s Varney told reporters at a news conference Monday. But following the conditions imposed on the deal, there should now be three major ticketing players competing in the market, she said, and as a result, “We expect that we will see [ticket prices] coming down.”

Many antitrust lawyers believed the deal was about the best the Justice Department could have hoped for, given the circumstances. It is far more difficult for prosecutors to develop a compelling case that competition would be harmed as a result of such a vertical merger-in which the companies involved operate at different stages in the supply chain-than in a horizontal merger involving direct competitors. Had the Justice Department brought a tricky vertical case and lost, these lawyers said, they would have ended up with nothing.

Not everyone loved the deal. “The Department of Justice is asking consumers to take a pretty big leap of faith that this remedy will work,” said David Balto, a former Federal Trade Commission official now a fellow at the Center for American Progress, a left-leaning think tank.

Full post as published by Law Blog - WSJ.com on January 26, 2010 (boomark / email).