Antitrust Law Daily Wrap Up, TOP STORY—4th Cir.: Concert promoters’ tying, monopolization claims properly cut, (Feb 5, 2016)

By Greg Hammond, J.D.

Local promoters in the concert industry failed to demonstrate material issues of fact that national promoter Live Nation, Inc. engaged in unlawful tying and monopolization in the promotion and venue services markets, in violation of the Sherman Act and Maryland Antitrust Act, the U.S. Court of Appeals in Richmond, Virginia, has affirmed. The promoters failed to adequately identify the relevant markets or demonstrate any anticompetitive conduct (It’s My Party, Inc. v. Live Nation, Inc., February 4, 2016, Wilkinson, J.).

It’s My Party, Inc. and It’s My Amphitheatre, 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 Amphitheatre are appealing an order for summary judgment entered by the federal district court in Baltimore that disposed of the companies’ unlawful tying and monopolization claims with regard to venues and promotion services.

Lack of relevant market. The appellate court first agreed that It’s My Party failed to identify a relevant market for concert promotion because it characterized the market as national rather than local. The relevant competition, according to the court, was between It’s My Party and Live Nation for the Washington-Baltimore area.

The definition of the venue market was similarly defective, the court decided. In particular, It’s My Party confined the market to “major amphitheaters”—while excluding clubs, arenas, stadiums, and other venues—and further specified that amphitheaters must have a capacity of 8,000 or more, actually sell 8,000 or more tickets, and be in use from only May to September. The court noted that this approach left only two venues in the Washington-Baltimore area—the two venues at issue in the instant dispute. In addition, It’s My Party failed to adequately consider cross-elasticity of demand between the two types of venues—amphitheaters and non-amphitheaters—and therefore failed to carry its burden of demonstrating that amphitheaters were the only place certain artists were willing to perform, irrespective of the monetary or logistical advantages of other concert locations.

No anticompetitive conduct. It’s My Party’s case hinged on two closely related tying claims, according to the court, including: (1) artists who hire Live Nation for its promotion services are compelled to perform at its Nissan venue; and (2) Live Nation allegedly will give artists access to its amphitheaters in other locations only if they choose Nissan for their Washington-Baltimore date. Both tying claims, however, were properly rejected by the lower court.

First, the appellate court noted that It’s My Party argued that tying occurs any time a seller who has market power over product A offers it for sale together with product B. This kind of conduct, however, is not itself coercive, the court stated. Rather, “selling products A and B as a unit is simply one strategy for gaining an edge in a free marketplace.”

The court concluded that the record contained little basis for determining that artists were coerced into taking the tied product—performances at Nissan—with the tying product, Live Nation’s promotion services. There were no instances in which Live Nation conveyed that an artist could not receive its promotion services unless it appeared at Nissan. Consequently, Live Nation’s combined non-coercive offer of promotion and venues would not foreclose artists from choosing the Merriweather amphitheater over the Nissan amphitheater or other venue operators like It’s My Party from competing for that business.

The venue-to-venue tying claim was largely a repetition of its claim of venue-to-promotion tying. The court concluded that there was no direct evidence that Live Nation withheld access to amphitheaters in Live-Nation controlled areas unless artists chose Nissan over Merriweather. The mere fact that artists sometimes took a package deal of multiple Live Nation venues for a given tour did not prove tying.

The case is No. 15-1278.

Attorneys: Robert William Hayes (Cozen O’Connor) for It’s My Party, Inc. and It’s My Amphitheatre, Inc. Jonathan M. Jacobson (Wilson Sonsini Goodrich & Rosati) for Live Nation, Inc.

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

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