Corporate & Securities Law

Meese & Richman on Ticketmaster/ Live Nation

Alan Meese (William and Mary) and Barak Richman (Duke), have an op-ed over at the Huffington Post on the Ticketmaster Live nation merger and settlement.  They frame the DOJ decision to approve the merger as a victory of principle over politics and economic populism.  Here is an excerpt:

Many hoped that the Live Nation-Ticketmaster merger would fall prey to a new economic populism. When the companies announced their plans to merge, some characterized the merger as a consolidation of “entertainment powerhouses” designed to inflate ticket prices and squeeze consumers. Public figures, including none other than Bruce Springsteen, condemned the combination. Members of Congress piled on, characterizing the transaction as a naked combination of industrial titans and demanding action from antitrust enforcers.

Meese and Richman go on to argue, based on their own analysis, that the merger would have been pro-competitive:

The Live Nation-Ticketmaster merger would have been another procompetitive victim to an angry public. Our careful analysis of the proposed merger reveals that it is much more a response to Schumpeterian technological change than an effort to concentrate market power. In other words, the companies are combining forces to pursue an innovative business model, one that pursues new consumer demands and responds to the rise of electronic music. It is not an attempt to acquire a stranglehold over an industry that technological change has made increasingly resistant to strangleholds.

The populist anger directed at the proposed merger — which was in no small part fueled by the companies’ smaller competitors who feared having difficulty competing effectively against the new company– characteristically did not discern the complexities of the industry and evaluate the merger’s likely competitive impact. Of course, few in Washington brake for complexity. Which is why it is a relief the Obama administration did.

I’ve not yet read the analysis, but plan on doing so soon.  In the meantime, here is how Meese & Richman close:

Even while the Obama Administration might engage in antitrust saber rattling, its approval the Live Nation-Ticketmaster and the associated consent decree shows the triumph of economic reasoning that is often counterintuitive to policy advocates. Its settlement further extracts concessions that further enhances competition, promotes innovation, and protects consumers. It is the commendable product of careful analysis reflects a deliberate navigation across the minefield of antitrust politicization.

I’m left with two questions.

The first, which I hinted at here, is that the combination of the structural fix coupled with the non-retaliation provisions strikes me as somewhat odd.  If the structural fixes restore competition, then why the need for restricting vertical contractual arrangements as between Ticketmaster and venue owners/ customers?  Here is DOJ Competitive Impact Statement.  Meese and Richman describe the settlement as extracting concessions that are pro-competitive and the product of careful analysis.  I agree with the authors that refusing to succumb to economic populism when the data and analysis go the other direction is a victory for rigorous antitrust analysis.  But I’m not yet convinced that the conditions are to be celebrated.  So, I wonder what the authors mean when they say the  concessions are pro-competitive, and in particular, whether the conduct fix can be said to be pro-competitive if the structural fix restores any perceived competition problem?  Or is the DOJ just hedging?

The second is a rhetorical question: I wonder whether Intel feels like despite the Obama administration’s “saber rattling,” they can rest assured that the invocation of Section 5 is a sign that economic reasoning will triumph over populism and politicization?

Full post as published by Truth on the Market on February 02, 2010 (boomark / email).