Anti(trust)-Hero: The Consumer Welfare Standard, Ticketmaster, and Swifties

By Jennifer Huddleston of Cato.

"This week, Ticketmaster found itself under the hot lights of a U.S. Senate hearing room as a bipartisan group of senators roasted the company for allegedly engaging in anti‐​competitve practices.

When Ticketmaster angered musician Taylor Swift’s die‐​hard army of fans, known as Swifties, with a poorly managed pre‐​sale, those fans certainly felt harmed and they were not alone as policymakers quickly started calling the concert giant a monopoly. Is this a case of “Bad Blood” between Ticketmaster and ticketless fans or might fans find that antitrust action is “Better Than Revenge”?

In November, Ticketmaster’s website crashed after record breaking, leaving millions of Swift fans unable to purchase tickets to her upcoming tour despite having “exclusive” pre‐​sale codes. This brought renewed attention to competition in the ticket market and particularly to the impact of Ticketmaster’s merger with LiveNation. Music fans, artists, and policymakers have argued that the company’s practices, enormous market share, and alleged relationships with the largest ticket resellers allow it to add large service fees to tickets and limit fans’ access to tickets driving up costs and making it more difficult to attend events.

During the January 24 Senate Antitrust Committee hearing, Senators from both sides of the aisle accused the company, which merged with Live Nation in 2010, of engaging in anticompetitive behavior, and thus harming consumers. Several senators suggested the Ticketmaster/​Live Nation merger should be undone. (Live Nation schedules shows, books venues, and in some cases, manages artists; Ticketmaster holds exclusive ticketing rights to an estimated 80% of the concert ticket market.) There are already tools at enforcers disposable to examine these concerns in an objective way.

The consumer welfare standard is designed in a way where courts can look at the market and Ticketmaster’s actions impact on consumers and decide whether they need to tell Ticketmaster and LiveNation they should be “Never Ever Getting Back Together.” In fact, the Justice Department is already investigating whether Live Nation, as Ticketmaster’s parent company, is engaging in monopolistic, anti‐​competitive practices. Some state attorneys general have also launched probes.

So, while fans and policymakers may be upset, this latest accusation of “monopoly” does not require Congress to change existing competition laws, but is instead exactly the type of scenario they were designed to analyze and respond to. Changing away from an objective standard that focuses on the consumer – not competitors or political motivations – could turn quickly turn into a “nightmare dressed as a daydream”.

While Live Nation itself has said it “takes its responsibilities under the antitrust laws seriously and does not engage in behaviors that could justify antitrust litigation, let alone orders that would require it to alter fundamental business practices,” we shouldn’t necessarily take Live Nation’s word for it. After all, this is not the first time post‐​merger they’ve been accused of anti‐​competitive behavior. In 2019, the company reached a settlement with the Department of Justice after the DOJ determined it had violated a consent decree that stipulated certain requirements after the merger with Ticketmaster in 2010. Notably, the original consent decree barred Live Nation from requiring venues to use Ticketmaster to sell tickets to shows it was promoting, but investigators looked into whether Live Nation had ignored the order. The original consent decree was supposed to lapse in 2020, but the 2019 settlement extended it to 2025.

It may be easy to presume that the 2019 settlement is evidence Live Nation needs further restrictions on its actions in the market, but it also shows the current competition law system worked as it should. Post‐​2019, the Justice Department has greater latitude to investigate and punish Live Nation, and it now has the authority to fine the company up to $1 million per violation. The DOJ may now recover any of the costs it incurs from having to investigate Live Nation. In other words, further violations already have significant penalties on top of any new claims the enforcers may bring following their investigation.

Bending or rewriting the antitrust laws to address only fans upset about Live Nation/​Ticketmaster would ignore the existing consumer welfare standard of antitrust policy, which is specifically designed to ensure consumers benefit from a competitive market. Under the consumer welfare standard, the Federal Trade Commission and DOJ could each file a lawsuit against Live Nation right now if there is sufficient evidence of anti‐​competitive behavior that harms consumers.

Government interference in the market could distort the market rather than encouraging competition. Some proposed changes would leave consumers behind and instead prop up government favored numbers of competitors rather than spurring real innovation and change in markets like the ticket industry. In fact, as I have argued before, progressive politicians have spent an inordinate amount of time attacking so‐​called “big tech” companies for “monopolistic” practices that are anything but – yet here, they have an opportunity to go after an actual company engaged in anti‐​competitive practices.

Federal authorities have everything currently at their disposal to go after Ticketmaster and Live Nation if the market is not competitive. Sadly Congress cannot solve the natural monopoly that there is only one Taylor Swift, but Swifties may find that the consumer welfare standard is the “Anti(trust) Hero” they need for their concerns about Ticketmaster."