Live Nation Gets Appellate Victory in Antitrust Dispute

“Big is not necessarily bad,” writes the 4th Circuit in a case that examined whether the concert giant coerced performing artists.

On Thursday, the 4th Circuit Court of Appeals affirmed the dismissal of a long-lasting antitrust lawsuit against Live Nation.

In 2009,It’s My Party, Inc., which runs the famed outdoor venue MerriweatherPost Pavilion in Maryland, sued the concert and promotion giant for allegedly wieldingitsnational power to entice and coerce artists to appear only at local amphitheaters and other venues it owned and operated. Some of the artists who were allegedly coerced included Counting Crows, Goo Goo Dolls, Santana and Ashlee Simpson.

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Looking at the dispute, circuit judge J. Harvie Wilkinson III knocks the plaintiff for a failure to identify the market that Live Nation is accused of monopolizing. The judge fails to accept the national vs. local power structure as defined by IMP. “Its market definitions are blind to the basic economics of concert promotion,” he writes, citing the need to market at the local level even for a company that helps artists tour nationally.

The judge also discusses the allegation that Live Nation has tied its promotional and concert booking services together in a way that coerces artists and disadvantages local competitors.

Since the topic of coercion has come up recently in the context of a movie theater competing with the national film exhibition giant Regal in the same region, the appellate court’s ruling figures to matter. Wilkinson writes that “pure speculation” isn’t enough to carry a coercion claim, that IMP’s own evidence suggests that some artists on Live Nation-promoted tours choseMerriweather (14 percent of the time) andthat courts need to “rule out alternative market-based explanations” like better compensation or superior facilities for why many artists might have preferred to use Live Nation’s venues.

In this case, the opinion of artists mattered when it was at a district court. For example, in a deposition in the case, Trent Reznor of Nine Inch Nails testified that while he “personally enjoy[s] playing amphitheaters as opposed to arenas,’ this preference “plays a small factor, but not a huge one” in where he chooses to perform.

Music industry agents also testified in the case that their artists weren’t being forced to perform anywhere, to which IMP unsuccessfully argued that such testimony was “shaded” in favor of the entity that dictated whether clients work.

The opinion (read here) from Wilkinson who was once interviewed for a Supreme Court seat by President George W. Bush ends with a rhetorical flourish that posits that “big is not necessarily bad, small is not necessarily weak,” along with a pro-integration view that values conglomeration and rejects using antitrust law to prop upDavids in their competitive battles with Goliath.

Wilkinson writes, “By cutting ties among related products and related producers, IMPs view of economic activity, if allowed to take hold, would box firms both into their own product markets and into their own geographic locales. That tendency toward isolationism has more in common with the market squares and horse-drawn buggies of the nineteenth century than with the interconnected and technology-driven contemporary world.”