Breaking Down the DOJ Lawsuit

 

Breaking Down the DOJ Lawsuit

Populist antitrust advocates argue that companies should be targeted once they reach a size that allows them to "dominate" markets, even if their growth was achieved through market success and not through practices harmful to consumers, which is the traditional focus of antitrust laws. According to this perspective, “dominant platform companies” should generally be prohibited from vertical integration due to alleged “conflicts of interest” that are not related to antitrust concerns.

However, there is no legal foundation for objecting to vertical integration on these grounds. Antitrust law typically views vertical integration as beneficial to competition. As a leading antitrust treatise states, "vertical integration is ubiquitous and … [in] the great majority of cases no anticompetitive consequences can be attached to it." Furthermore, companies like Live Nation have demonstrated that vertical integration can result in better prices and services for fans, artists, and venues than if these complementary businesses operated separately. Under Live Nation's ownership, Ticketmaster has become a more artist- and fan-focused business than it was as an independent company. Despite this, the current DOJ seems to be antagonistic towards vertical integration.

The Obama Administration had a different approach. It allowed the merger of Live Nation and Ticketmaster, recognizing that there was no legal basis for challenging the vertical aspects of the merger, specifically the combination of a large concert promoter with a large ticketing company. In defending its position, the administration stated that it could not prove that the vertical integration from the merger would significantly harm competition in the concert promotion market. There is no factual basis to conclude otherwise today. The merger has resulted in a better overall market, not a worse one.Read more...