At first blush, it looked like a slam-dunk antitrust case for the government.
Ticketmaster, a company that came to dominate the live-music ticketing business by buying up seven of its rivals, was suddenly facing a challenge to its 83 percent market share. Its largest customer, Live Nation, a big venue manager and concert promoter, had decided to launch its own ticketing subsidiary and quickly grabbed 16 percent of the market. Ticketmaster responded in kind by purchasing Front Line Management, which manages tours for 200 of the country's top music artists.
By early 2009, Ticketmaster vs. Live Nation was turning into one of those price-reducing, service-improving rivalries that benefit consumers much more than shareholders. So in February, the two companies called a truce and announced they were merging. The Obama administration, eager to demonstrate that the era of no-touch antitrust enforcement was at an end, put the deal on hold, launched a wide-ranging investigation and told company lawyers it was prepared to block the transaction.
Only, it didn't.
Last week, the Justice Department reached a settlement with the companies. Although the merger will go through, Ticketmaster will be required to license its ticketing software to the Anschutz Entertainment Group, the country's second-largest concert promoter and manager of 30 major concert venues. The aim is to ensure that Ticketmaster/Live Nation will have at least one strong new competitor. Ticketmaster will be required to sell to Comcast a subsidiary that provides software to smaller venues that want to run their own ticket operations. The settlement also forbids Ticketmaster from retaliating against venues that use other ticket services or promoters who use other venues.
I have no doubt that antitrust chief Christine Varney and her team at the Justice Department were willing to go to court to block this deal. And it is clear that these conditions, which were strongly resisted by the companies, make the merger significantly less anticonsumer than it would have been. Even given those considerations, however, the better option would have been to block the deal.
The gradual retreat from antitrust enforcement over the past 30 years has led corporate executives and their lawyers to believe that there is no merger that cannot win approval if you're willing to make some relatively minor fixes.
The only way to restore credibility to competition law is to challenge a few high-profile mergers in court. Some of those challenges will be successful, others will not, but all will require companies to spend time and money to litigate, which will raise the bar generally.
Without that, it's only a matter of time before Coke swallows Pepsi.
Perhaps the most troublesome, however, is that to provide sufficient competition to a bigger and more vertically integrated Ticketmaster, the government has put itself in the position of playing midwife to two other vertical mergers — one involving Anschutz, the other Comcast — making it even more difficult for small venues and independent promoters to survive.