Antitrust Law Daily Wrap Up, ANTITRUST—D. Md.: Concert promoters fail to state tying, monopolization claims against Live Nation, (Feb 20, 2015)

By Greg Hammond, J.D.

Local promoters in the concert industry failed to demonstrate material issues of fact that national promoter, Live Nation, Inc., unreasonably restrained trade by exercising market and monopoly power in the promotion and venue services markets, in violation of the Sherman Act and Maryland Antitrust Act. Live Nation’s motion for summary judgment was therefore granted by the federal district court in Baltimore (It’s My Party, Inc. v. Live Nation, Inc., February 19, 2015, Motz, J.).

Background. It’s My Party, Inc. and It’s My Amphitheater, Inc. are local promoters in the Baltimore and Washington, D.C. markets. Similarly, Live Nation, Inc. is a global business that has promoted more than 2,000 artists at venues across the United States and the world. It’s My Party and It’s My Amphitheater filed suit against Live Nation in 2009, alleging that Live Nation engaged in unlawful tying with regard to venues and promotion services, monopolization, and attempted monopolization. Live Nation moved for summary judgment and to exclude four of the plaintiffs’ experts. Conversely, the plaintiffs moved to exclude two of Live Nation’s experts and filed a cross-motion for partial summary judgment.

Expert testimony. The plaintiffs’ expert, Einer Elhauge, defined the venue and promotion markets that formed a basis of their claims, and further analyzed Live Nation’s share and control of these markets. Live Nation challenged Elhauge’s testimony on three grounds: his qualifications, the methodology underpinning his definition of the market for venues, and his opinions and conclusions regarding Live Nation’s alleged tying and foreclosure of those markets.

The court partially granted Live Nation’s motion to strike, finding that Elhauge’s testimony regarding the market definition was not the product of reliable principles and methods. Specifically, Elhauge set forth a histogram purporting to demonstrate that certain artists “prefer amphitheaters” in such a significant way that they constitute a distinct market. The histogram, however, only identified percentages of revenue artists make from amphitheater and non-amphitheater shows, and did nothing to demonstrate whether a change in the price to artists for amphitheaters would induce greater demand for arenas or other venues. Because Elhauge’s methodology was not based on sound logic or reasoning, his “venue market” definition was excluded.

The motions to strike the remaining five experts’ testimony were denied by the court, which found that each of the experts were qualified to testify and that their conclusions and analyses regarding the history and general practices in the concert industry, food and beverage prices at concert venues, and damages, were sound.

Tying. The plaintiffs alleged that Live Nation violated the Sherman Act by tying its promotion and venue services. Live Nation moved for summary judgment, arguing that the market definitions adopted by the plaintiffs are defective and that the plaintiffs failed to set forth any evidence of coercion.

The court agreed with Live Nation, finding first that there was no affirmative evidence that artists enter into a national market with numerous promoters that can promote anywhere in the country, other than Live Nation, and that evidence demonstrates that promoting shows is a highly localized business. Because the promotion market’s geographic dimension was deemed local, not national, Elhauge’s calculations on Live Nation’s market share in the alleged national promotion market were inapplicable, and the promotion-venue market tying claim could not survive. Even if the market was deemed national, the plaintiffs failed to set forth any evidence of coercion on Live Nation’s part.

The plaintiffs’ claim that Live Nation tied performances in venues it owned with performances in other venues was equally unavailing. The court found that Elhauge wrongfully defined the relevant venue market in this claim to include only outdoor amphitheaters, excluding valid and reasonable substitute venues such as indoor arenas. Consequently his calculations of Live Nation’s alleged market power in various markets were tainted, and summary judgment was warranted on the venue-venue tying claim. The court also noted that, even if the market definition and market power calculations were admissible, the plaintiffs failed to offer any evidence of coercion.

Monopolization. Live Nation also moved for summary judgment on the plaintiffs’ monopolization claim, which was based on Live Nation’s power in the promotion market. The court found that Live Nation did not have monopoly power, because from 2006 to 2010, Live Nation’s percentage of the national promotion market fluctuated between 60 and 66 percent. Specifically, the court concluded that the plaintiffs failed to meet their burden to establish that Live Nation’s power in the national promotion market rises to the level required for a monopoly—70 percent. Further, the durability of Live Nation’s market power was insufficient to meet the plaintiffs’ burden in opposing summary judgment, because Live Nation’s market share declined six percent in the last year for which there was data.

The court also determined that Live Nation did not willfully acquire or maintain any power, despite the plaintiffs’ arguments that Live Nation: (1) forced artists to use its promotion services at its venues as part of a scheme to enhance, maintain and abuse monopoly power; and (2) obtained overly broad exclusivity clauses from artists to further their monopoly scheme. The refusal to deal argument failed because the plaintiffs failed to present any evidence that Live Nation engaged in a cooperative scheme with other promoters and allowed them to book concerts at its venues and later withdrew that support, or that the plaintiffs ever asked to promote a show at a Live Nation venue in an effort to cooperate and were rebuffed. The exclusive dealing arrangement argument was also rejected, because the arrangement identified failed to demonstrate that Live Nation substantially foreclosed commerce.

The motion for summary judgment was also granted with regard to the attempted monopolization claims, because the plaintiffs failed to demonstrate that Live Nation engaged in anticompetitive acts, through supposed illegal tying arrangements, a refusal to deal, or exclusive dealing.

State law claims. The plaintiffs’ allegations that Live Nation violated the Maryland Antitrust Act and Maryland’s unfair competition law were also rejected. Specifically, because all of the federal antitrust claims failed as a matter of law, so too did the state antitrust claim. Further, because the plaintiffs failed to set forth any evidence demonstrating Live Nation engaged in dishonest or deceptive acts, summary judgment was entered in Live Nation’s favor with regard to the unfair competition claim.

The case number is JFM-09-00547.

Attorneys: L. Barrett Boss (Cozen O’Connor) for It's My Party, Inc. and It’s My Amphitheater, Inc. Franklin M. Rubinstein (Wilson Sonsini Goodrich and Rosati) for Live Nation, Inc.

Companies: It’s My Party, Inc.; It’s My Amphitheater, Inc.; Live Nation, Inc.

Cases: Antitrust MarylandNews