The Federal Bureau of Investigation (FBI) has reportedly opened an investigation into Ticketmaster following a botched sale of Taylor Swift concert tickets that left many fans angry and ticketless. The Department of Justice is also reportedly looking into whether Ticketmaster engaged in anticompetitive practices in the ticketing industry. While Ticketmaster has acknowledged there were issues with the Taylor Swift ticket presale, the company has not confirmed it is under investigation by any government agency. Here is a look at what we know so far about the allegations against Ticketmaster and the potential FBI and DOJ involvement.
What problems occurred with the Taylor Swift ticket presale?
In November 2022, Ticketmaster botched the presale for Taylor Swift’s upcoming Eras Tour. Millions of fans tried to buy tickets during presales, overwhelming the Ticketmaster website and mobile app. Many fans reported spending hours in queues and still not getting tickets. Ticketmaster ultimately canceled the general public sale scheduled for November 18, citing insufficient remaining ticket inventory.
The ticketing issues outraged Swift fans and sparked questions about Ticketmaster’s dominance in the industry. Ticketmaster cited massive demand and bot attacks as reasons for the presale disruptions. However, many accused the company of being unable to handle the predictable influx of eager Swifties. Ticketmaster apologized to Swift and her fans but remained adamant that verifiable bot attacks also hindered the presale.
Why is the FBI reportedly investigating Ticketmaster?
In the wake of the Taylor Swift ticketing debacle, the FBI has reportedly opened an investigation into Ticketmaster’s parent company, Live Nation Entertainment. According to the New York Times, the FBI is looking into whether Live Nation Entertainment abused its power in the multibillion-dollar live music industry.
Specifically, the FBI is reportedly examining whether Live Nation violated antitrust laws through monopolistic behavior. Live Nation Entertainment was formed in a 2010 merger between Live Nation and Ticketmaster. That merger combined the world’s largest concert promoter with the dominant ticketing service and was controversial at the time over antitrust concerns.
According to reports, the FBI has begun requesting information from venues, industry players, and even past Live Nation employees amid its investigation. The Department of Justice is also reportedly investigating Live Nation Entertainment.
What are the antitrust concerns with Ticketmaster and Live Nation Entertainment?
Critics have accused Ticketmaster of monopolizing the primary ticketing industry ever since its 2010 merger with Live Nation. Ticketmaster sells tickets for the vast majority of major concerts and live events in the United States.
According to TicketNews, Ticketmaster currently has ticket contracts with more than 70 of the top 100 arenas in the U.S. In 2021, more than 500 million tickets worth over $30 billion were sold on Ticketmaster. no other ticketing companies come close to matching Ticketmaster’s reach and ticket sales.
Having both the world’s largest concert promoter and dominant ticketing service under one roof in Live Nation Entertainment gives some industry watchers antitrust concerns. Ticketmaster also faces allegations of intimidating venues that partner with other ticket sellers. Critics say all of this stifles competition, harms consumers, drives up prices, and limits choices.
However, Live Nation Entertainment claims it does not have an illegal monopoly and faces vigorous competition in ticketing and promotions. The company says major artists choose Ticketmaster because they provide the best service and have the technology to handle enormous demand.
What laws may Ticketmaster have violated to prompt an FBI investigation?
If the FBI and DOJ are indeed investigating potential anticompetitive practices by Ticketmaster or parent company Live Nation Entertainment, here are some laws they may believe were broken:
Sherman Antitrust Act
The Sherman Antitrust Act, passed in 1890, bans monopolistic business practices and anticompetitive agreements between companies that restrain interstate trade or commerce. Violations can lead to investigations by the FBI and DOJ and potential civil or criminal penalties. If Ticketmaster engaged in anticompetitive, monopolistic practices, it could face accusations of violating the Sherman Act.
Clayton Antitrust Act
The Clayton Antitrust Act, passed in 1914, expanded upon the Sherman Act to further combat anticompetitive business practices. It specified certain activities it deemed harmful to consumers and competition, including price discrimination, tying sales, and mergers that may substantially lessen competition. The Ticketmaster-Live Nation merger already faced significant antitrust scrutiny, so their merged operations could still draw Clayton Act questions.
Federal Trade Commission Act
The Federal Trade Commission Act empowers the FTC to investigate and penalize companies engaging in unfair methods of competition and unfair or deceptive acts affecting commerce. Ticketmaster is no stranger to FTC action. In 2019, Ticketmaster paid a $4.5 million fine to settle FTC charges that it was deceptive about hidden fees. So additional unfair or anti-competitive behavior could potentially violate FTC rules.
State-level antitrust laws
In addition to federal laws, state attorneys general can bring civil and criminal actions under state antitrust laws. Multiple states reportedly began investigating Live Nation Entertainment’s practices following the botched Taylor Swift ticket sales. Any violations of state monopolization, restraint of trade, or unfair competition laws could thus also draw FBI and DOJ interest.
What are the potential outcomes if the FBI and DOJ find antitrust violations by Ticketmaster or Live Nation Entertainment?
Here are some potential repercussions if the FBI and DOJ investigations conclude Ticketmaster or Live Nation Entertainment illegally exercised monopolistic power or violated antitrust laws:
Criminal charges and fines
The DOJ has the power to bring criminal antitrust charges against companies and individuals who knowingly violate competition laws. Criminal convictions can lead to hefty corporate fines and jail time for individuals. However, criminal antitrust charges are less common than civil proceedings.
Civil injunctions and consent decrees
The DOJ and FTC more frequently file civil suits under federal antitrust laws seeking court injunctions banning certain anticompetitive practices. They can also pursue negotiated consent decrees with companies like Ticketmaster to end questionable conduct and submit to government monitoring. Violating injunctions or decrees can lead to contempt of court charges.
Restructuring or breaking up the company
If Live Nation Entertainment is found to have substantially harmed competition, the government could push for restructuring remedies. That could potentially include unwinding Live Nation’s 2010 merger with Ticketmaster to split the companies again. However, an actual breakup would likely require prolonged legal proceedings.
State and private civil suits
Federal antitrust enforcement would also prompt a flood of civil suits against Ticketmaster or Live Nation under state laws. Antitrust class actions from aggrieved consumers would likely follow any DOJ action. Even if no criminal antitrust charges are brought, private civil suits could still yield hefty payouts.
Stock declines and loss of consumer confidence
Even if no major structural or criminal remedies result, antitrust investigations alone can batter stock prices and consumer faith in a brand. Live Nation Entertainment’s stock dropped following initial reports of the FBI inquiry. Continued association with antitrust probes could hamper Ticketmaster’s customer retention and prospects.
What defenses could Ticketmaster raise amid the investigations?
If the FBI and DOJ pursue antitrust enforcement actions against Ticketmaster or Live Nation, here are some defenses they may raise:
They face abundant competition
Ticketmaster will likely argue the ticketing market is highly competitive, with rivals like AXS, StubHub, VividSeats, SeatGeek, and more. They’ll claim artists and venues have plenty of ticketing options and freely choose Ticketmaster for its superior technology, products, and security.
Consumers benefit from mergers and acquisitions
Live Nation Entertainment will defend its 2010 Ticketmaster merger by contending it has made the companies smarter, faster, and more innovative in ways that ultimately benefit consumers. They’ll pledge to show how the merger has amplified consumer choice.
Bot attacks and unprecedented demand hurt sales
For the Taylor Swift presale debacle specifically, Ticketmaster will likely blame unprecedented demand and nefarious bot attacks that overwhelmed its systems despite extensive preparations. They’ll frame it as an temporary crisis, not proof of inherent industry dominance.
Aggressive competition is still legal
Ticketmaster may argue that just because some practices appear unfair or contribute to a dominant market share, they still don’t constitute illegal monopolistic behavior. As long as they aren’t found to have actually engaged in prohibited anticompetitive collusion or contractual activities, they’ll claim aggressive business tactics are permissible.
Compliance programs prevent violations
Finally, Live Nation Entertainment will likely highlight its existing antitrust compliance programs meant to prevent illegal anti-competitive conduct. Effective compliance may help mitigate potential charges and penalties if any violations did occur.
Conclusion
The FBI has reportedly joined the DOJ in opening an antitrust investigation into Ticketmaster and parent company Live Nation Entertainment following Taylor Swift ticket sale troubles. Their inquiry appears aimed at determining whether Live Nation has abused its power as the dominant player in ticketing and live events. Ticketmaster could potentially face criminal charges, civil injunctions, and private lawsuits if found to have violated competition laws. However, Ticketmaster is likely to defend itself by arguing the ticketing industry is competitive and that extraordinary demand caused its issues in the Swift presale. With Live Nation’s stock already taking a hit, the stakes are high as the FBI digs in to examine these antitrust allegations. Until conclusions are reached, the investigations will keep fueling public scrutiny over Ticketmaster’s grip on the live events business.