The Beat Goes On: Fourth Circuit Clears Live Nation of Concert Industry Tying Allegations | Practical Law

The Beat Goes On: Fourth Circuit Clears Live Nation of Concert Industry Tying Allegations | Practical Law

The US Court of Appeals for the Fourth Circuit held that concert promoter and venue owner It's My Party, Inc. failed to define the relevant markets or show anticompetitive conduct in allegations that its competitor Live Nation, Inc. used tying and exclusive dealing arrangements to monopolize the music concert industry.

The Beat Goes On: Fourth Circuit Clears Live Nation of Concert Industry Tying Allegations

by Practical Law Antitrust
Published on 16 Feb 2016 • USA (National/Federal)
The US Court of Appeals for the Fourth Circuit held that concert promoter and venue owner It's My Party, Inc. failed to define the relevant markets or show anticompetitive conduct in allegations that its competitor Live Nation, Inc. used tying and exclusive dealing arrangements to monopolize the music concert industry.
On February 4, 2016, a three-judge panel for the US Court of Appeals for the Fourth Circuit held in It's My Party, Inc. v. Live Nation, Inc. that It's My Party, Inc. (IMP) failed to show that its competitor Live Nation, Inc. (LN) used anticompetitive tying and exclusive dealing arrangements to monopolize the music concert industry ( (4th Cir. Feb. 4, 2016)).
In its complaint, IMP alleged that LN forced musicians to use its concert venue in the Washington, D.C. area by leveraging its market power over concert promotion services and venues across the US. IMP claimed that LN's conduct foreclosed competition in the concert promotion and venue markets by coercing its artists to use LN services nation-wide. However, the court found that IMP failed to adequately define the relevant geographic markets or show coercion, a crucial element of a tying claim.

Market Definition

The court found that IMP failed to adequately define the markets for:
  • Concert promotion.
  • Concert venues.

Concert Promotion

Although IMP characterized the market for concert promotion as national, the court reasoned that the market is confined to the area in which musicians would look to find alternative concert promotion services should the price of a chosen promotion service increase. The court found that because demand for concerts is local, and concertgoers will generally not travel outside of their region to find a better ticket price, the concert promotion market is also local.

Concert Venues

The court found that IMP's characterization of the concert venue market as major amphitheaters with a seating capacity of at least 8,000 to be too narrow. The court noted that music venues are reasonably interchangeable, and IMP failed to show that musicians would not choose a lower-cost substitute should their preferred amphitheater increase its price.

Monopolization and Tying Claims

IMP alleged that LN:
  • Offered nation-wide promotion services to compel musicians to use its Washington, D.C. area venue.
  • Only allowed musicians to use its other venues if they agreed to use the Washington, D.C. area venue.
The court found that IMP failed to show that the two offers constituted tying. The court reasoned tying requires a customer to be coerced into buying two products, and that one product would be unavailable without the other. The court noted that in this case, IMP presented little evidence that customers were coerced into buying both products, and instead found that LN's products were simply offered as a bundle.
The court stated that tying is not unlawful if the buyer is able to turn down the tied product or purchase the two products separately, and notes many instances in the record where musicians were able to use LN's promotional services and perform at LN's other venues without also using its Washington, D.C. venue. The court noted that fourteen percent of the time, LN-promoted musicians chose to perform at the IMP venue, and twenty-six percent of the time, musicians performing at other LN venues chose to perform at the IMP venue. The court reasoned that defendants can rebut an inference of tying if at least ten percent of the products' sales are separate, but did not adopt that number as a definitive baseline.
The court noted that there may be other, market-driven reasons for why the artists chose to purchase both products from LN, including:
  • Lowering transaction costs.
  • Lowering distribution costs.
  • Meeting customer demand.
  • Increasing quality.
The court reasoned that finding packaged, complementary products to be tying would:
  • Disadvantage the consumer.
  • Chill constructive methods of integration.
  • Lessen business motivation to operate in more than one geographic market.
For more information on tying, see Antitrust Considerations for Distribution and Dealer Agreements Checklist and Customer Loyalty Programs in the US.