Fifty members of the U.S. House of Representatives joined together in signing a letter written by U.S. Rep. Bill Pascrell, Jr. (D-NJ-08), urging Assistant Attorney General Christine A. Varney to investigate the pending merger between Ticketmaster Entertainment, Inc. and Live Nation, Inc. for anti-trust law violations. 

 “We urge the Justice Department to analyze this proposed transaction closely and with great skepticism,” wrote Pascrell, a member of the House Ways and Means Committee, in the letter that was released today.  “Such scrutiny is critical to ensure that consumers are not harmed by the creation, entrenchment, extension, or undue exploitation of market power in an industry that affects every state, and virtually every congressional district, in the country.”

The merger would combine the top-two highest-ranked ticket-selling companies in the market, significantly quelling opportunities for competition, stated Pascrell, who testified before the House Judiciary Committee against the merger earlier this year.

 Pascrell has also urged a federal investigation of Ticketmaster since its February 2nd sale of tickets for Bruce Springsteen and the E Street Band’s “Working on a Dream” tour.  Online ticket buyers were redirected by Ticketmaster to its re-sale website, TicketsNow.com when the tickets were first offered for sale.  To bring transparency to the ticket marketplace, Pascrell recently introduced legislation entitled the BOSS ACT (Better Oversight of Secondary Sales and Accountability in Concert Ticketing Act).

The representatives who signed the letter to the Assistant Attorney General are: Bill Pascrell, Jr., Todd Russell Platts, Jo Ann Emerson, Bob Filner, Tim Holden, Eddie Bernice Johnson, Raúl M. Grijalva, Michael F. Doyle, Michael A. Arcuri, John B. Larson, Brian Higgins, Bart Stupak, Anthony D. Weiner, Jared Polis, Barney Frank, Dennis J. Kucinich, Brian Baird, Lynn C. Woolsey, Daniel Lipinski, Zach Wamp, Brad Miller, Jim McDermott, Joe Courtney, Debbie Wasserman Schultz, Donald M. Payne, Mike Quigley, David Wu, Carolyn McCarthy, Steven R. Rothman, Nick J. Rahall II, Peter Welch, Rush D. Holt, Robert A. Brady, Stephen F. Lynch, Frank A. LoBiondo, Bennie G. Thompson, Peter J. Visclosky, Michael E. Capuano, James Langevin, Maurice D. Hinchey, Tammy Baldwin, Jerrold Nadler, John F. Tierney, Jim Cooper, John H. Adler, Lois Capps, James P. McGovern, Frank Pallone, Jr., Albio Sires, Rosa L. DeLauro

The text of the letter follows:

 July 27, 2009

 The Honorable Christine A. Varney
Assistant Attorney General for Antitrust
United States Department of Justice
950 Pennsylvania Avenue, NW
Washington, DC 20530

Dear Assistant Attorney General Varney:

As Members of Congress, we wish to express our concern regarding the proposed merger between Ticketmaster Entertainment, Inc., and Live Nation, Inc.  We urge the Justice Department to analyze this proposed transaction closely and with great skepticism.  Such scrutiny is critical to ensure that consumers are not harmed by the creation, entrenchment, extension, or undue exploitation of market power in an industry that affects every state, and virtually every congressional district, in the country.

Ticketmaster Entertainment is the industry’s overwhelmingly dominant ticket seller, its largest provider of talent management services, and its second largest reseller of tickets.  Live Nation is the industry’s largest promoter of live entertainment events, the second largest ticket seller, and the second largest owner/manager of entertainment venues.  The transaction therefore would create an entity, Live Nation Entertainment, which would enjoy a virtual stranglehold over the live entertainment industry.  Together, the two parties sold more than 100 million tickets domestically in 2008, and there are few artists, promoters, venue owners, or concertgoers that would not feel the impact of this merger.  In our view, the merger should be prohibited.

From an antitrust perspective, the proposed merger is problematic in three ways.  First, the merger would reduce horizontal competition by combining the two leading firms in the market for primary ticket sales.  According to the May 30, 2009 rankings by TicketNews.com, the transacting parties, if merged, would be over five times more powerful than their next eight rivals combined.  Additionally, some of these rivals are operated by Ticketmaster or rely on software provided a Ticketmaster subsidiary, Paciolan.   Tellingly, the parties announced this merger less than three months after Live Nation entered the ticket sales market, suggesting they would prefer to combine rather than compete.  This is the essence of anticompetitive behavior.

The transaction would also exacerbate the already significant barriers to entering the ticket sales market.   Today, Ticketmaster enjoys long-term, exclusive contracts with most of its clients, typically the venues where the events occur.  Permitting Ticketmaster to merge with its most significant competitor effectively abandons any hope for the development of competition in the foreseeable future, and it would subject consumers to any exploitation, including higher ticket prices and fees, that the newly merged firm might wish to make of its monopoly power.

Second, the proposed merger would eliminate the possibility for one of the parties to enter the industry markets in which they don’t presently compete.  Fear of entry is often sufficient to curb the exploitation of existing market power.  Both are large enough to enter related markets and have a clear history of doing so.  For example, Live Nation recently entered the primary sales market on its own.  Entry is healthy as it often leads to market deconcentration and heightened rivalry.  Although the parties’ future expansion plans are uncertain if the transaction is prohibited, it is certain that the merger, if permitted, will preclude each party from expanding into the industry markets where it currently does not compete.

Third, the proposed merger would create a vertically integrated entity whose power would extend across five of the industry’s six main markets.  An entrant or competitor in any of these markets would face the merged firm not only as a market rival, but also as a power in other critically related markets.  A new promoter, for example, needs artists willing to perform and venues appropriate for staging the event.  A new venue needs artists and promoters willing to book the facility.  The vertically integrated firm can withhold these critical inputs, and its rival will suffer.  To avoid such problems, an entrant would need to enter the industry on several levels at