Several law firms are investigating whether Live Nation lied to investors by failing to disclose the scope of its legal vulnerability for allegedly abusing its power in the live music industry.
New York-based firm Bernstein Liebhard sent out a notice on Tuesday soliciting investors to join a lawsuit that was filed last week against Live Nation, with three others already having done the same in the wake of reports that the Department of Justice plans to sue the company for antitrust violations. In a class action filed on Aug. 4 in California federal court, investors accused the company of lying to them about allegedly anticompetitive company operations that include charging bloated fees, bundling services and retaliating against venues that choose a ticketing service provider other than Ticketmaster.
Last year, The New York Times reported that the Justice Department had opened an antitrust investigation into Live Nation, which owns Ticketmaster, after the ticketing platform’s systems crashed during a highly-anticipated presale for Taylor Swift tickets. It became a flashpoint into the company’s power over the live music industry.
Live Nation’s stock price fell nearly eight percent that day to close at roughly $66 per share, according to the complaint. It fell another eight percent last month upon Politico reporting that competition enforcers could file an antitrust suit against the company by the end of the year.
Investors point to a series of allegedly false or misleading statements made by the company over antitrust scrutiny about its business practices. For example, Live Nation said last year in response to Ticketmaster canceling plans for a public sale of Swift concert tickets that it “does not engage in behaviors that could justify antitrust litigation, let alone orders that would require it to alter fundamental business practices.” In a lengthy statement, it claimed that there’s robust competition with StubHub, SeatGeek and Vivid, among others, and that “no serious argument can be made that Ticketmaster has the kind of market position in secondary ticketing” that would support a lawsuit.
Live Nation chose not to disclose that it is “reasonably likely to incur regulatory scrutiny and face fines, penalties, and reputational harm” as a result of its allegedly anticompetitive conduct, writes Pavithra Rajesh, a lawyer representing investors, in the complaint.
If the Justice Department chooses to sue, it wouldn’t be Live Nation’s first run-in with competition enforcers. The agency found in 2019 that the company had been violating the terms of a settlement to greenlight its 2010 merger with Ticketmaster by forcing venues to accept Ticketmaster’s ticketing services as a condition for hosting Live Nation performers and retaliating against those that refused. Under an amended deal that allows a monitor to investigate further breaches of the consent decree until 2025, the company was barred from tying services and is subject to a $1 million fine for violations.
The suit also argues Live Nation misled investors by saying last year that there “never has been and is not now any evidence of systemic violations” of the settlement.
The complaint names chief executive Michael Rapino and chief financial officer Joe Berchtold. It alleges violations of the Securities Exchange Act, which prohibits misrepresentations and misleading omissions in connection to securities transactions, and seeks to represent investors who bought securities from February 23, 2022 to July 28, 2023.
To prevail, investors will need to point to statements that are more than so-called “puffery,” or statements of corporate optimism that don’t lead to liability for companies. Under securities laws, there must be proof in most cases that officers knew their statements over antitrust liability were false or misleading but made them anyway.
Ticketmaster and Live Nation merged in 2009, two years after the live-events organizer announced plans to build its own ticketing service. Prior to the deal, Live Nation was Ticketmaster’s largest customer.
Antitrust regulators approved the deal with certain conditions. They required Ticketmaster to sell its ticketing service subsidiary, Paciolan, to Comcast and to license its ticketing software to Live Nation’s competitor, AEG. The new company was also not allowed to bundle or retaliate against venues for working with other ticketing services.
Live Nation didn’t immediately respond to a request for comment.