By Blake Stafford
On February 4, 2016, the Fourth Circuit issued its published opinion in It’s My Party, Inc. v. Live Nation, Inc., a civil case concerning state and federal antitrust law. In this case, It’s My Party, Inc. (“IMP”) contended that Live Nation, Inc. (“LN”) violated the Sherman Antitrust Act as well as equivalent Maryland state antitrust law by engaging in monopolization, tying arrangements, and exclusive dealings in the music concert industry. The district court granted summary judgment in favor of LN. The Fourth Circuit affirmed, finding that IMP’s market definitions were defective and that IMP failed to provide any evidence of anticompetitive tying; thus, LN’s practices reflected successful competition, not violations of federal or state antitrust law.
Facts & Procedural History
LN and IMP are competitors in the music industry. LN is a national player that provides concert promoting services to artists throughout the country. IMP is a regional player that provides services in the Washington, D.C. and Baltimore, MD area. Additionally, both operate outdoor amphitheaters: IMP operates Merriweather Post Pavilion in Columbia, MD; LN operates Nissan Pavilion (now called Jiffy Lube Live) in Bristow, Virginia. Merriweather’s seating capacity is roughly 19,000; Nissan’s is roughly 25,000. Concert venues in the Washington-Baltimore range in seating capacity from 1,000 small clubs to 60,000 sports stadiums.
LN and IMP operate in the music concert industry, competing for the business of artists, vying to promote their concerts and showcase them in their venues. Promoters work on financing concerts, scheduling dates and venues, and advertising. Generally, artists have two main options for organizing concert tours. First, artists can contract “locally” by using a different local promoter for each location, securing venues through each promoter. Artists who contract “locally” are typically compensated by a percentage of the gross ticket sales from each concert. Alternatively, artists can contract “nationally” by working with a national promoter (such as LN) for most of all of the tour. Artists who contract “nationally” are typically compensated by receiving a minimum guaranteed payment from the promoter based on the number of shows organized by the promoter.
IMP sued LN, contending that LN foreclosed competition in the concert promotion and venue markets, thereby violating §§ 1 and 2 of the Sherman Act and parallel Maryland antitrust law. Specifically, IMP alleged that LN engaged in monopolization, tying arrangements, and exclusive dealings. The district court found insufficient evidence of any such practices and granted summary judgment on both the federal and state law claims. IMP appealed.
Threshold Question: Identification of the Relevant Market
As a threshold issue in monopolization claims under the Sherman Act, Plaintiffs must define the relevant competitive market. Absent a plausible market definition, courts are hard pressed to find an anticompetitive injury. The relevant geographic market in antitrust cases is defined by the “area within which the defendant’s customers can practicably turn to alternative supplies if the defendant were to raise its prices.”
Here, the Court noted that there are two separate but related markets: (1) the market for concert promotion and (2) the market for concert venues. The consumers in both are the performing artists, who contract with promoters and venues while on tour.
(1) Concert Promotion Market. For the claims of monopolization and tying in the promotion market, the Court noted that the relevant inquiry focused on the area within which artists can find alternative promoters if any one promoter were to increase its prices. Because the demand for concerts is local, the actual concert promotion is also local, even if the promoter is national. While IMP attempted to define the promotion market as national, the Court rejected this definition, instead holding that the market for concert promotion is local; thus, the relevant competition is between LN and IMP in the Washington-Baltimore area.
(2) Concert Venue Market. To define the relevant market for the claims of venue monopolization and tying, the market of the product—here, amphitheaters—is that in which it is “reasonably interchangeable” with other products or the extent to which consumers will change their consumption of one product in response to a price change in another. This is known as the “cross-elasticity of demand.” IMP attempted to confine the market to “major amphitheaters” that have a capacity of 8,000 or more and be in use only from May to September. The only two venues that meet this definition are IMP’s Merriweather and LN’s Nissan. The Court also rejected this definition, finding that IMP presented no evidence that artists will stick with amphitheaters in the event of a price change. Thus, there was an insufficient basis for excluding “reasonably interchangeable” venues such as similarly sized arenas or stadiums from the market definition.
Tying Claims
In addition to IMP’s ill-defined markets, the Court dismantled IMP’s claims of tying. A tying arrangement is a competition suppressant whereby a party agrees to sell one product only if the buyer also agrees to purchase a different (tied) product. The Court noted that the core element in a tying claim is coercion by the seller, forcing the buyer into the purchase of the tied product that the buyer either did not want at all, or might have preferred to purchase elsewhere on different terms. This is distinguishable from the mere bundling of two products—merely offering two products in a single package, allowing each to enhance the appeal of the other, is not itself coercive.
IMP brought two principal tying claims. First, IMP claimed that artists who hire LN for its promotion services are compelled to perform at its Nissan venue. Second, IMP claimed that LN will give artists access to its amphitheaters in other locations only if they choose Nissan for their Washington-Baltimore date. For these claims, the tying products used to lure artists were promotion services and amphitheaters in other areas, respectively. The tied product for both claims was Nissan.
The Court found no direct evidence that supported either claim. For the venue-to-promotion claim, the Court found that LN never conveyed that an artist could not receive its promotion services unless it appeared at Nissan. In fact, some artists on LN-promoted tours actually chose IMP-owned Merriweather fourteen percent of the time. For the venue-to-venue claim, IMP presented no evidence that LN withheld access to its other amphitheaters unless artists chose Nissan over Merriweather.
Additionally, the Court found no circumstantial evidence to support either claim. To prove coercion circumstantially, the plaintiff must present evidence that tends to exclude the possibility of independent conduct consistent with competition, ruling out alternative market-based explanations for why consumers might prefer to purchase the tied product along with the tying product. Here, the Court found a number of independent reasons that could have led artists to choose Nissan, including artist compensation, artists’ desire for efficiency that accompanied working with the same promoter, and artists’ preference for Nissan over Merriweather as a better venue.
Conclusion & Disposition
Ultimately, the Court held that LN did not engage in any antitrust violations. The consumers Artists were free to take a package deal of promotion and venues, free to purchase those products separately, free to turn down both, and where they in fact exercised all those options to their advantage. Thus, the Fourth Circuit affirmed the district court’s grant of summary judgment in favor of LN.
