[A2k] Help stop the Ticketmaster/Live Nation Merger. Ask your member of Congress to sign Pascrell letter to DOJ.

[James Love]

http://www.keionline.org/blogs/2009/07/08/pascrell-doj-ln-merger/
Rep Pascrell letter to US DOJ opposing Live Nation/Ticketmaster merger
July 8th, 2009

The following is a =E2=80=9CDear Colleague=E2=80=9D letter that Representat=
ive Bill
Pascrell is circulating to members of the US House of Representatives.
Pascrell is asking members of Congress to sign a letter to the US
Department of Justice (DOJ) to oppose the Ticketmaster/Live Nation
merger. If you oppose the merger, you can contact your member of
Congress, and ask them to sign the Pascrell letter to DOJ opposing the
Ticketmaster/Live Nation merger. You can find out the name of your
member of Congress by just entering your zip code here:
http://www.house.gov/. All members of Congress can be reached by phone
at this telephone number: 1.202.225.3121.

Earlier KEI blogs on the merger are available here:
http://www.keionline.org/blogs/2009/03/17/doj-tm-ln-merger/
http://www.keionline.org/blogs/2009/02/25/kei-on-ticketmaster-live-nation-m=
erger/

The Pascrell Dear Colleague letter, and the letter he proposes sending
to DOJ, follow:

    July 8, 2009

    Dear Colleague:

    Please join me in sending the attached letter to the Department of
Justice opposing the merger between Ticketmaster Entertainment, Inc. and
Live Nation, Inc.

    In February, Ticketmaster Entertainment, the industry=E2=80=99s number =
one
ticket seller and its largest provider of talent management services and
Live Nation, the industry=E2=80=99s largest promoter of live entertainment
events and its second largest ticket seller, announced plans to merge. I
have grave concerns that this merger will have far reaching negative
consequences for artists, fans, promoters, and the music industry as a
whole. This merger violates both horizontal and vertical anti-trust
principles, and will undoubtedly lead to higher ticket prices for the
average fan.

    Under the proposed merger, the combined company would have control
over nearly every aspect of the live music business: artist management,
record sales, promotion, licensing, venue control, parking, ticket sales
and resales, all the way down to the hot dogs and beer. According to
James Hurwitz of the American Antitrust Institute:

    =E2=80=9CIf the combination is permitted, [the merged company] will hav=
e a
powerful or dominant position in virtually all of the industry=E2=80=99s
markets. Viewed in combination, the merger will give Live Nation
Entertainment unarguable control of most competition within the
industry.=E2=80=9D

    Under the Bush Administration, the Justice Department=E2=80=99s enforce=
ment
of our country=E2=80=99s antitrust laws was almost nonexistent. The Antitru=
st
Davison brought zero cases against dominant firms for violating our
country=E2=80=99s antimonopoly law, to the detriment of consumers and small
businesses everywhere. Thankfully, the Obama Administration has
announced that they plan to reverse this policy and once again
vigorously enforce our country=E2=80=99s antitrust laws. This case represen=
ts a
high profile opportunity to prove that they mean business, and that our
country will put a healthy marketplace and consumer welfare ahead of
corporate and entrenched business interests.

    Live Nation and Ticketmaster have assembled a strong team of
expensive lobbyists, law firms and publicists to push for their goal of
merger. It is the job of those of us in the Congress to represent the
people and fight for what is in their best interest. We must ensure that
the concert industry returns to a business model that puts the fans,
artists and music first. Urging the Justice Department to reject this
merger will be a significant first step in that direction. Please
contact me for more information or to sign the letter.

    Sincerely,

    /s

    Bill Pascrell, Jr.
    Member of Congress.

    July XX, 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=E2=80=99s overwhelmingly dom=
inant
ticket seller, its largest provider of talent management services, and
its second largest reseller of tickets. Live Nation is the industry=E2=80=
=99s
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=E2=80=99t
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=E2=80=99 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=E2=80=99s six m=
ain
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 once, a burden that makes entry
far more daunting and costly. The combined entity could therefore use
its five-market vertical integration to restrain trade both by chilling
entry and disciplining rivals.

    We see little to commend this transaction. Ticketmaster
Entertainment and Live Nation have offered no plausible efficiency
justifications for the merger. To justify an anticompetitive merger such
as this one, efficiency benefits must, according to DoJ/FTC Horizontal
Merger Guidelines: arise specifically from the merger and not be
attainable in other reasonable ways, be verifiable rather than merely
speculative, and outweigh the transaction=E2=80=99s competitive injury in e=
very
adversely-affected market. Ticketmaster Entertainment and Live Nation
can achieve all the benefits they claim without the merger. Regardless,
these benefits promise only speculative advantages, at best, and are
almost surely insufficient to outweigh the merger=E2=80=99s competitive har=
m in
the ticketing and other industry markets.

    Restructuring will not cure this transaction=E2=80=99s competitive flaw=
s.
Live Nation could sell its primary ticketing business, but this
enterprise is far less likely to be viable in other hands. The merged
company could also be prohibited from using its vertical integration to
discriminate against entrants or rivals in the marketplace. However,
such strictures will be hard to enforce, as the prohibited conduct can
easily be accomplished from within corporate walls or through veiled,
well-placed hints.

    Consumers, business managers, artists, independent promoters, and
music fans in every state are likely to suffer if the merger is allowed
to occur. We urge you to give this transaction the closest possible
scrutiny and provide citizens the antitrust protection they deserve.

    Sincerely,

    Members of Congress

    cc: The Honorable Eric H. Holder Jr., Attorney General of the United
States
--
James Love, Director, Knowledge Ecology International
http://www.keionline.org | mailto:james.love at keionline.org
Wk: +1.202.332.2671 | US Mobile +1.202.361.3040 | Geneva Mobile +41.76.413.=
6584