Pascrell Calls on DOJ to Investigate Ticketmaster Corruption
Pascrell letter to Sessions highlights Live Nation/Ticketmaster market malfeasance
Paterson, NJ, October 5, 2018
PATERSON, NJ – Today, Representative Bill Pascrell, Jr., New Jersey’s only member of the tax-writing House Ways and Means Committee, wrote to the Department of Justice to encourage it to conduct a thorough investigation of anticompetitive behavior by monopolistic Ticketmaster to root out speculation and anti-consumer behavior in the opaque ticket marketplace.
“The concentrated market power of Ticketmaster has made it a behemoth with little incentive to protect consumers in the live event industry. DOJ can, and should, thoroughly investigate and take strong steps to address any and all consent decree violations and anticompetitive practices of Ticketmaster/Live Nation,” Pascrell writes to Attorney General Jeff Sessions.
Pascrell’s letter comes on the heels of a recent sting operation report from the Canadian Broadcasting Corporation (CBC) that revealed the ways in which Ticketmaster appears to collude with ticket scalpers to sell higher volumes of tickets on its platform, distorting the marketplace and harming consumers in the process.
Pascrell requested more information into the Justice Department’s open investigation into the Live Nation monopoly. “Specifically, are you investigating potential violations to the 2010 consent agreement, as mentioned above? If the consent decree has been violated, is the DOJ prepared to take further action? Lastly, are you investigating additional monopolistic abuses resulting in higher prices and anticompetitive market distortions, like ticket holdbacks that drive up prices and colluding with scalpers to collect higher fees from consumers?” the letter writes.
Congressman Pascrell has been a leader in Congress calling for regulation of the opaque live events ticket market. Pascrell was an early critic of the Live Nation-Ticketmaster merger, and repeatedly urged the Obama administration to reject it, warning that the union would crush competition and harm consumers. After Ticketmaster infamously redirected Bruce Springsteen fans to its secondary site TicketsNow to buy marked up seats without notice, Pascrell introduced the BOSS Act in 2009 to create better transparency in the sale of live event tickets and provide overhaul reform of the unregulated secondary market. The legislation was offered in subsequent congresses and the subject of a House Energy and Commerce Committee hearing in 2016. Rep. Pascrell will be reintroducing a revamped version of his bill. In May, Pascrell wrote an op-ed in the Los Angeles Times on his attempts to impose greater positive regulation on the fraught live events ticket market. In September, Pascrell was featured in the wide-ranging investigation by the CBC into corruption in the live events ticket marketplace. Pascrell’s interview segment is available here.
The full text of Pascrell’s letter to Sessions is provided below.
October 5, 2018
The Hon. Jeff Sessions
U.S. Department of Justice
950 Pennsylvania Ave NW
Washington, DC 20530
Dear Attorney General Sessions:
I commend the Department of Justice (DOJ) for opening an investigation into Live Nation’s anticompetitive behavior and write to bring to your attention new investigative reporting and further lines of inquiry. The Canadian Broadcasting Channel (CBC) conducted a new investigation that reveals the ways in which Ticketmaster appears to collude with ticket scalpers to sell higher volumes of tickets on its platform -- distorting the marketplace and harming consumers in the process.
This comes on the heels of an April New York Times report that Live Nation may be in violation of the consent decree it agreed to as part of its 2010 merger with Ticketmaster. According to the New York Times, DOJ is looking into “possible cases where parent Live Nation Entertainment Inc. pressured venues in Atlanta, Las Vegas, and other cities into using Ticketmaster to sell tickets to those shows or lose the venue business.”
Live Nation owns most venues and has management contracts with artists. Through Ticketmaster, they claim rights to ticketing for these artists’ and venues’ events. This arrangement allows them to profit immensely, as ticket fees are routinely 27 to 31 percent above the base ticket price.
The CBC investigation demonstrates the ways in which Ticketmaster also withholds tickets during public on-sales to limit availability and control the supply of tickets to drive up prices and redirect consumers to the secondary market, where Ticketmaster (Live Nation) can get a second round of fees on tickets. Live Nation, in fact, reported its first $1 billion in annual profits from ticket reselling last year.
Scalpers are using fake identities to set up multiple accounts with Ticketmaster to buy and sell tickets. In the CBC investigation, Ticketmaster employees admitted to not policing these accounts. They’ve allowed brokers to continue to use fraudulent accounts to crowd out actual consumers trying to buy tickets to their favorite live events. These scalpers buy up all the tickets to an event immediately upon them going on sale to the public, in order to repost them for sale on the secondary market, where they can charge higher prices and higher fees.
CBC reporting revealed that Ticketmaster even has a secretive tool called TradeDesk that assists professional scalpers in reselling tickets in ways that would seem to violate Ticketmaster’s own rules. In the CBC video reporting, a Ticketmaster employee claims that 100 ticket resellers were using TradeDesk to sell a few thousand to several million tickets per year each. Ticketmaster even encourages volume reselling and knocks percentage points off its fees as scalpers sell more and more tickets.
Online ticketing services represent an estimated $9 billion market. Ticketmaster is the largest ticketing company, holding more than 80 percent of market share in 2008, and still the market leader as of 2017. They also hold the second-largest market share of secondary ticket sales as of 2016. With their hegemonic role in the ticket-selling marketplace, Live Nation can manage artists and bully venues into exclusively using Ticketmaster for event ticketing; can collude with scalpers to buy up all the tickets to crowd out consumers from the primary ticket selling marketplace; and can charge exorbitant, nontransparent fees on both the initial and secondary sale of the same tickets.
It is important to note that there is no additional value added to the consumer by Ticketmaster reselling its own tickets a second time and in so doing collecting additional fees; these fees are purely rent-seeking that squeeze consumers and add to Ticketmaster’s profits.
In 2009, before the merger, Live Nation’s then-CEO, Irving Azoff, told the Senate Judiciary Antitrust Subcommittee that he believed “scalping and resale should be illegal.”
When the DOJ approved the Live Nation and Ticketmaster merger, they issued a consent decree, valid until 2020, that was intended to block monopolistic behavior. A violation of this consent decree allows the DOJ to petition the court to “carry out of construe this Final Judgement, to modify any of its provisions, to enforce compliance, and to punish violations of its provisions” (Sec. XIV). Furthermore, the consent decree also acknowledges that the final judgement can be “modified or vacated” (Sec. XI) by the Court should it fail to comply with the consent decree.
Live Nation using its control over concert tours to pressure venues into contracting with Ticketmaster, as reported by the New York Times, is expressly prohibited by the consent decree, as per Sec. IX(A), which states that “Defendants shall not… Condition or threaten to Condition the Provision of Live Entertainment Events to a Venue Owner based on that Venue Owner refraining from contracting with a company other than Defendants for Primary Ticketing Services,” among other things.
We respectfully request more information regarding the Department’s investigation into Live Nation. Specifically, are you investigating potential violations to the 2010 consent agreement, as mentioned above? If the consent decree has been violated, is the DOJ prepared to take further action? Lastly, are you investigating additional monopolistic abuses resulting in higher prices and anticompetitive market distortions, like ticket holdbacks that drive up prices and colluding with scalpers to collect higher fees from consumers?
The concentrated market power of Ticketmaster has made it a behemoth with little incentive to protect consumers in the live event industry. DOJ can, and should, thoroughly investigate and take strong steps to address any and all consent decree violations and anticompetitive practices of Ticketmaster/Live Nation. Thank you for your prompt attention to this matter.
Bill Pascrell, Jr.
Member of Congress