A Live Nation investor has sued members of the live giant’s board - including CEO Michael Rapino and CFO Joe Berchtold - in response to the recent filing of legal action against the company by the US Department Of Justice. The boss of Oak View Group, Tim Leiweke, is also named as a defendant over allegations of collusion between the two live music companies.
The government department accuses Live Nation and its Ticketmaster subsidiary of anticompetitive conduct, and has asked the court to force Live Nation to sell off the Ticketmaster business it acquired back in 2010.
At the time of the Live Nation/Ticketmaster merger, the company agreed a consent decree with the DoJ which regulated how the different strands of the business would work together to allay competition concerns. The DoJ reckons the company breached that decree.
The government's legal action, shareholder John Williams claims, will “severely damage and injure” Live Nation and its shareholders. Indeed, just responding to and fighting the action is costly for the live music company, Williams’ lawsuit notes, adding, “Live Nation has expended and will continue to expend significant sums of money”.
This is the fault of the board members, Williams alleges, because following the Live Nation/Ticketmaster merger they “continued to cause Live Nation to engage in anticompetitive conduct in defiance of the consent decree”. In doing so, he says, they “breached their fiduciary duties” to the company's shareholders.
When it emerged that the DoJ was investigating the company, Williams adds, the board “misrepresented to the company’s shareholders and the investing public” that they were “cooperating with federal investigators, when in fact the opposite was true: Live Nation was actively attempting to thwart the federal investigations and was not cooperating with them”.
The lawsuit also explains how the DoJ’s litigation “details many internal emails and correspondence between Live Nation and others demonstrating the brazen antitrust violations”. That includes correspondence between Live Nation and Oak View, the venue operator co-founded in 2015 by Leiweke and former Live Nation Chair Irving Azoff.
“Live Nation initially viewed Oak View Group as one of its biggest competitor threats”, Williams’ lawsuit states. “But instead of competing, the companies colluded with each other to avoid competition”, agreeing a “mutually beneficial scheme” to violate competition law and “increase profits at the expense of consumers”.
Williams alleges that Oak View and Leiweke “aided and abetted” the Live Nation board members, with the Oakview CEO even “calling his company a ‘pimp’ and a ‘hammer’ for Live Nation” and “sometimes delivering threats on behalf of Live Nation to venues that were considering dropping Ticketmaster for another ticket provider”.
The defendants are yet to respond to the new lawsuit, although Live Nation has strongly denied all the allegations of anticompetitive conduct made by the DoJ. And, if the company can prove there has been no anticompetitive conduct, it would be impossible to hold the board members liable for any breach of duty.