Stay Nation Antitrust Trial: 3 issues to know as landmark case kicks off in New York courtroom
Practically two years after the US Division of Justice and a bunch of state attorneys common sued Stay Nation Leisure, the case has lastly reached a Manhattan courtroom.
Jury choice started Monday (March 2), with opening statements anticipated tomorrow.
The trial, anticipated to final 5 to 6 weeks, will take a look at whether or not the world’s largest reside leisure firm has illegally monopolized key elements of the live performance business — and whether or not the 2010 merger that united Stay Nation and Ticketmaster needs to be unwound.
However the case arriving at trial seems to be considerably completely different from the one filed in Might 2024. Court docket rulings have narrowed the federal government’s claims, the DOJ’s antitrust management has been thrown into turmoil, and Stay Nation tried, and failed, to keep away from a jury altogether.
Listed here are three issues to know because the trial will get underway.
1. The federal government’s case has been narrowed — however its most potent claims survived
Choose Arun Subramanian trimmed the federal government’s case significantly in his February 18 abstract judgment ruling. He dismissed the declare that Stay Nation monopolizes the nationwide live performance promotion market and threw out the allegation that its conduct has resulted in larger ticket costs for followers.
However what survived might matter greater than what didn’t. The jury will hear proof on three core allegations: that Ticketmaster has monopolized major ticketing at main live performance venues by means of allegedly coercive, long-term unique contracts; that Stay Nation illegally ‘ties’ entry to its amphitheater community to its promotion companies, successfully forcing artists who need to play Stay Nation venues to rent Stay Nation as their promoter; and {that a} particular ticketing settlement between Stay Nation and Oak View Group is anticompetitive.
The choose discovered that the federal government “plausibly paints a grim image for brand spanking new entrants” and that Stay Nation had “vastly overstated” the competitiveness of the ticketing market. On the tying declare, he wrote that “an affordable jury might actually discover that artists have been coerced into going with Stay Nation as their promoter to get into its amphitheaters.”
Stay Nation then launched a barrage of last-ditch motions: requesting reconsideration, searching for an interlocutory enchantment, asking to bifurcate the trial, and difficult the states’ damages knowledgeable. As MBW reported, the DOJ known as the delay bid a “determined plea” and argued it was “statutorily barred.”
In a February 27 opinion (which you’ll learn in full right here), Choose Subramanian denied all 4 motions in a single order.
He was notably pointed on reconsideration: Stay Nation had raised authorized arguments it did not current throughout abstract judgment, together with a novel declare that tying requires formal market definition for the tied product.
The choose performed a radical evaluation of the precedent and concluded it doesn’t, dismissing the out-of-circuit circumstances Stay Nation cited as offering “little-to-no reasoning” for his or her place.
2. The DOJ’s antitrust division is in turmoil — and Stay Nation has been pushing for a settlement
The trial is continuing in opposition to a backdrop of political turmoil on the Justice Division.
On February 12, Assistant Lawyer Normal Gail Slater (pictured) — the pinnacle of the DOJ’s Antitrust Division — resigned after the White Home reportedly requested her departure, lower than a yr into the function following a bipartisan Senate affirmation. Her high deputy, Mark Hamer, resigned shortly earlier than that. Final week, one of many DOJ’s trial legal professionals on the case disclosed that he too is leaving.
Bloomberg and Semafor reported in latest weeks that Stay Nation has been trying to barter a settlement for months, with discussions happening with DOJ officers outdoors the Antitrust Division — reportedly over Slater’s objections. These efforts have to this point been rebuffed.
The political dynamics have drawn scrutiny. A gaggle of seven Democratic senators led by Amy Klobuchar wrote to Lawyer Normal Pam Bondi, warning that Stay Nation could also be “trying to evade duty by convincing Justice Division management to settle the case on phrases favorable to the corporate.”
Stay Nation appointed Trump ally Ric Grenell to its board final yr, and a Trump-aligned lawyer who has suggested the corporate celebrated Slater’s departure on X, writing: “Good riddance.”
The state attorneys common, largely insulated from these federal dynamics, have made clear they may press forward.
California AG Rob Bonta issued a press release arguing that Stay Nation “has manipulated the market and made itself untouchable by any competitor — not as a result of it’s higher, however as a result of it has created a monopoly.”
3. The DOJ needs to pressure a breakup, however that consequence is much from sure
For the reason that lawsuit was filed, the headline consequence has at all times been the potential pressured separation of Stay Nation and Ticketmaster — an unwinding of the 2010 merger that the federal government now seeks to reverse.
That treatment stays technically on the desk, however its prospects have narrowed.
The dismissal of the live performance promotion monopoly declare weakens the federal government’s narrative that Stay Nation’s vertical integration throughout ticketing and promotion is itself the aggressive downside. Stay Nation’s EVP of Company and Regulatory Affairs, Dan Wall, seized on this in a since-deleted weblog publish titled ‘It’s Time to Transfer On.’ He argued that the dismissal of the live performance promotion claims “undermines any critical argument for breaking apart Stay Nation and Ticketmaster” and “ends the narrative that live performance promotion and ticketing are ‘mutually reinforcing monopolies’.”
However the vertical integration principle hasn’t disappeared totally. The surviving tying declare, that Stay Nation allegedly leverages its amphitheaters to coerce artists into its promotion companies, nonetheless rests on the interaction between the corporate’s venue, promotion, and ticketing companies. If the jury finds that this conduct is anticompetitive, a choose might nonetheless conclude that structural separation is the suitable treatment.
Below the trial construction, the jury will decide legal responsibility and any damages owed to the states on behalf of customers. If the federal government prevails, Choose Subramanian would then individually resolve the treatment — together with whether or not to order a breakup.
If Stay Nation is discovered liable, the states are searching for monetary compensation on behalf of followers who have been allegedly overcharged. Their damages knowledgeable, Dr. Rosa Abrantes-Metz, has constructed a mannequin utilizing AXS, the subsequent largest major ticketing firm, as a benchmark for what pricing may appear to be in a aggressive market.
In keeping with Choose Subramanian’s February 27 ruling, her evaluation works in two steps: first, she calculates how way more Ticketmaster costs venues than AXS does, what she calls the ‘supracompetitive cost,’ then makes use of a tax-incidence mannequin to estimate how a lot of that overcharge venues move on to followers by means of larger ticket charges.
The February 27 ruling upheld the admissibility of her mannequin, although the choose famous that the ultimate calculation of whole damages, accounting for purchaser residency, relevant statutes of limitations, and different variables, could also be addressed in a post-trial continuing moderately than put to the jury.
The trial will function testimony from a parade of music business figures. Witness lists embrace Stay Nation CEO Michael Rapino, Stay Nation president Joe Berchtold, SeatGeek CEO Jack Groetzinger, AEG Presents CEO Jay Marciano, Roc Nation’s Desiree Perez, and Mumford & Sons’ Ben Lovett. Child Rock — who informed a Senate listening to in January that the Stay Nation-Ticketmaster merger “has failed miserably” — is among the many few performing artists cited in courtroom filings, although he’s presently working with Stay Nation for his newest tour.
Regardless of the consequence, the trial itself marks a major second, and its implications will prolong nicely past ticketing, pertaining to how vertical integration, unique dealing, and market energy are understood throughout the leisure business.
The query now’s whether or not the federal government, regardless of its inner upheaval, could make its case stick.
Reservoir (Nasdaq: RSVR) is a publicly traded, world impartial music firm with operations throughout music publishing, recorded music, and artist administration. Music Enterprise Worldwide
