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Federal Court Rings Down The Curtain On Baltimore-D.C. Rock Promoters’ Antitrust Case Against Live Nation

Posted  February 27, 2015

By Allison F. Sheedy

A long-running antitrust battle of the bands between a Baltimore-D.C. area regional concert promoter and venue operator and the concert colossus Live Nation got the hook in the U.S. District Court of the District of Maryland last week when Judge J. Frederick Motz ruled that the plaintiffs had not presented evidence that Live Nation had violated the antitrust laws.

Although the court found that “Live Nation is undisputedly large, and utilizes its size and global reach to sign artists to exclusive contracts and steer them to perform in venues that it owns,” the court concluded that such conduct was not anticompetitive, and thus did not violate the antitrust laws.  The court’s conclusion was driven in main part by its view that the plaintiffs’ alleged antitrust markets did not harmonize with the evidence proffered on motions for summary judgment.

The lawsuit started in 2009 when Plaintiffs It’s My Party, Inc. and It’s My Amphitheater, Inc. (the “Indie Rock Plaintiffs”), which operate D.C.’s famed 9:30 Club and the Merriweather Post Pavilion, accused Live Nation of monopolizing a nationwide market for concert promotion and illegally tying promotion services to the use of Live Nation concert venues.  The complaint alleged separate product markets for concert promotion and for the operation of concert venues.  Not incidentally, at that time, Live Nation’s acquisition by Ticket Master was being investigated by antitrust regulators.

Six years later, the case seemed headed towards a live performance before a jury.  Live Nation lost not only its initial motion to dismiss, but also an early summary judgment motion in 2012, filed prior to expert discovery in the case.  However, Judge Motz’s decision to grant Live Nation’s second summary judgment motion last week ultimately came down to that very expert discovery.

First, the court determined the testimony of plaintiffs’ expert that the market definition for concert venues – the ostensible “tied” product market – was inadmissible under the Daubert test for expert testimony.  The court also found that plaintiffs’ music promotion product market was gerrymandered to include only them and Live Nation.  These rulings doomed the tying claim.

The Indie Rock Plaintiffs’ monopolization claim was also given the hook.  The court, in analyzing the tying claims, held that the Indie Rock Plaintiffs got the geographic scope of the product market for concert promotion wrong.  While the Indie Rock Plaintiffs had argued for a national market for concert promotion – in which Live Nation would have an overwhelming position – the court found the summary judgment evidence only supported a market for concert promotion that was local in scope – at least for purposes of plaintiffs’ tying claim.  Whereas Live Nation is a national concert promoter, the Indie Rock Plaintiffs promote concerts only in the Baltimore-D.C. area.  However, the Indie Rock Plaintiffs had not argued in support of a regional concert promotion market.

This holding is interesting in light of the FTC’s recent suit to block the Sysco-US Foods merger, where a similar industry dynamic exists, and there are national and local foodservice distributors competing against one another.  There, the FTC alleged both national and local markets.

But it is unclear whether successfully alleging a national market would have saved the Indie Rock Plaintiffs and their claims before this particular court.  Despite acknowledging that “[d]efining markets is necessarily fact-bound,” the court nevertheless held that “[t]here are no factual disputes on whether the promotion market is national or local because there is no affirmative evidence that artists enter into a national market with numerous promoters that can promote anywhere in the country, outside of Live Nation.”  Although the court held that the market for concert promotion is local, it analyzed plaintiffs’ monopolization claim using a national market for concert promotion and found Live Nation’s market share of between 60 and 66% to be insufficient to find monopoly power under Section 2 as a matter of law, under Fourth Circuit precedent.  Judge Motz also held that plaintiffs had not sufficiently shown that Live Nation’s market share was “durable” because it fluctuated during the relevant time period.  Apart from whether either of these holdings is legally correct (or, indeed, whether monopoly power should have been an issue for a jury), the court was careful to say that regardless of market share, plaintiffs’ evidence of Live Nation willfully acquiring or maintaining its market position through illegal acts, as required to support a monopolization claim, was lacking.

The Indie Rock Plaintiffs filed their initial lawsuit in the shadow of the investigation by the U.S. Department of Justice (“DOJ”) into potentially anticompetitive effects in the ticketing industry resulting from the proposed merger of Live Nation and ticketing giant Ticketmaster.  The DOJ ultimately sued in that matter, resulting in a 2010 consent decree requiring certain divestitures and prohibiting Live Nation and Ticketmaster from conditioning providing live entertainment to venues on those venues’ use of their ticketing services.  However, the DOJ’s remedy did not address the artist-facing conduct complained about by the plaintiffs here – that Live Nation uses its dominant position as a concert promoter to coerce artists to perform at only Live Nation operated venues.  While the DOJ alleged Live Nation to be “the country’s largest concert promoter,” and was concerned enough to include a prohibition of tying related to that market power in the consent decree, a federal court has now found that Live Nation does not possess monopoly power in a market for national concert promotion.

Sticking it to the man is a central and defining motif of much indie rock.  For many in the music industry, Live Nation may well be that man.  But this ruling shows that without a harmonious and supportable market definition, the man will remain unstuck.

Edited by Gary J. Malone

Tagged in: Antitrust Litigation,