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Live Nation investor sues over allegations of anti-competitive behaviour
By Chris Cooke | Published on Tuesday 8 August 2023
Live Nation is facing a lawsuit from an investor who claims that the live giant made false statements about its operations.
The legal action relates to the ongoing allegations that Live Nation and its Ticketmaster subsidiary abuse their market dominance. And more specifically the impact that media reports on and political scrutiny of those allegations has had on the Live Nation company’s share price. And, crucially, whether Live Nation has made misleading statements to its investors regarding how the different divisions of Live Nation interact.
Live Nation and Ticketmaster have been accused of acting in an anti-competitive way ever since the two companies merged back in 2010. In order to get regulator approval of that merger in the US, Live Nation made a number of commitments regarding how the Live Nation touring and venue businesses would interact with Ticketmaster via a ten year consent decree agreed with the American government’s Department Of Justice.
As that consent decree was getting close to expiring, Live Nation was accused of violating some of its terms. Having looked into the allegations, the DoJ began planning legal action. But a deal was done that stopped the matter from getting to court, and also extended the consent decree for another five years. Since then further allegations of misconduct have been made by Live Nation’s competitors and critics. And more recently it emerged that a new DoJ investigation was under way.
In an article last month, Politico reported that that new investigation could result in new legal action being instigated by the DoJ against Live Nation later this year. A Live Nation spokesperson said that didn’t seem likely, given its ongoing conversations with the government department. But Politico’s sources said that – while no decision had been made one way or another – “the DoJ is moving quickly and its litigation team is involved”.
Concurrent to all that, ticketing in general and Ticketmaster in particular have become big talking points in US political circles again, ever since the meltdown that occurred last year when tickets went on sale for Taylor Swift’s US tour via Ticketmaster.
For its part, Live Nation continues to insist that it does not operate in an anti-competitive way and that it is fully compliant with its consent decree. But things like the Politico report do cause Live Nation’s share price to wobble.
In his lawsuit, Live Nation investor Brian Donley documents various times that allegations of anti-competitive behaviour against Live Nation have hit the share price since February 2022. And he considers statements made by Live Nation in investor reports during that time.
His legal filing with the courts in California states: “Defendants failed to disclose to investors that Live Nation engaged in anticompetitive conduct, including charging high fees and extended contracts with talent, and retaliated against venues”.
Nor that, “as a result, Live Nation was reasonably likely to incur regulatory scrutiny and face fines, penalties, and reputational harm; and that, as a result of the foregoing, defendants’ positive statements about the company’s business, operations and prospects were materially misleading and/or lacked a reasonable basis”.
“As a result of defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the company’s securities”, the lawsuit then claims, “plaintiff [has] suffered significant losses and damages”.
As noted, Live Nation has always denied that it engages in any kind of anticompetitive behaviour. Meanwhile, it might argue, it is pretty common knowledge that its competitors and critics regularly accuse it of such behaviour and, as a result, the company is subject to considerable scrutiny by the DoJ and in Congress. And on that basis, it might conclude that Donley doesn’t have a very strong case here.
For his part, Donley wants class action status for his lawsuit and it remains to be seen if any other investors opt to join him as a named lead plaintiff in the litigation. They may also feel the case here isn’t very strong. Though, should any DoJ investigation conclude that there is, in fact, anti-competitive conduct within the Live Nation empire, then the number of investors considering legal action might increase.
