By Cecilia Kang
Washington Post Staff Writer
Tuesday, July 28, 2009
A key lawmaker on Monday urged more scrutiny by regulators over a proposed merger between concert ticketing giant Ticketmaster and producer Live Nation, saying it presented "serious competition concerns."
Sen. Herb Kohl (D-Wis.), chairman of the Senate Judiciary Committee's antitrust subcommittee, sent a letter to the head of the antitrust division in the Justice Department, Christine A. Varney, raising a number of issues that he said could lead to higher ticket prices and less competition in the concert industry.
The deal, under review since February at the Justice Department, has been closely watched as a harbinger of the Obama administration's stance on antitrust. Varney and others in the administration have promised to step up scrutiny of anti-competitive practices, saying that the Bush administration contributed to the economic problems now confronting the nation by too easily permitting consolidations that led to decreased competition.
"Varney has been talking tough, but this merger will let us know if she's just talking or if there's proof in the pudding and she's willing to file a case on a controversial issue like this one," said Robert Lande, co-founder of the nonprofit American Antitrust Institute and a professor of law at the University of Baltimore.
Ticketmaster dominates its business, selling an estimated seven out of 10 concert tickets in the United States. Live Nation recently entered into the ticket sales business, which would strengthen Ticketmaster's power over that industry, Kohl said.
"Given the already-high market share possessed by Ticketmaster in the ticketing business and consumer complaints of high ticketing fees, special care must be taken to ensure that this merger does not create undue barriers to entry for competitors in the ticketing marketplace," he said.
Kohl also addressed "vertical" competition concerns, saying the merger could also create an entertainment giant with a stream of businesses in one industry. The merged company would have deep footprints in the concert business in addition to tickets, including the management of talent, marketing and production of shows, and sales of concert merchandise.
Live Nation owns or promotes concerts for some of the biggest venues in the nation, such as Tuesday's Depeche Mode show at the Nissan in Bristow, Va. If the firms merged, they could manage a group, promote the concert, decide whether they play at the 9:30 Club or the Verizon Center, and set prices for tickets.
That kind of vertical integration could make it difficult for an artist to go to a competing concert organizer and could lead to higher prices for consumers, Kohl said. Some critics have argued, for example, that concert ticket prices have only increased over the years despite the use of paperless tickets and other technologies that should reduce costs for companies like Ticketmaster.
Andrew Gavil, a professor at Howard University School of Law, said Varney has promised to clamp down on anti-competitive practices that arise from "vertical" mergers. The Bush administration, he said, did not see problems with such integration.
"Vertical merger concerns involve the exclusion of rivals, whether Ticketmaster would favor Live Nation over other companies when it comes to promoting concerns or would it be harder to enter the ticket business because of the link-ups are tighter between the two companies," Gavil said.