Ticketmaster - Issues and Hearings Regarding Anti-competitive Practices

Issues and Hearings Regarding Anti-competitive Practices

In 1994-1995 the LA Times published a series of articles by reporter Chuck Philips that helped trigger a federal anti-trust investigation. In 1994 Ticketmaster's tickets often had surcharges as large as 25% of the base ticket price. Moreover, an unwanted and unnecessary “tying” of services (such as parking and “conveniences”) to the cost of the concert placed an unfair burden on customers and constituted an anti-competitive practice according to a legal analysis of investigative pieces by Philips .

The grunge band Pearl Jam petitioned the Antitrust Division of the United States Department of Justice, complaining that Ticketmaster adopted monopolistic practices and refused to lower service fees for the band's tickets Pearl Jam wanted to keep ticket prices under $20.00, with service charges no greater than $1.80. Fred Rosen of Ticketmaster refused and because Ticketmaster had exclusive contracts with many of the large venues in the United States they threatened to take legal action if those contracts were broken. Pearl Jam was forced to create from scratch its own outdoor stadiums in rural areas to perform. Pearl Jam’s efforts to organize a tour without the ticket giant collapsed which Pearl Jam said was further evidence of Ticketmaster’s monopoly. An analysis of Philips' investigative series in well known legal monograph concluded that it was hard to imagine a legitimate reason for their exclusive contracts with venues and contracts which covered such a lengthy period of time. The authors said, “The pervasiveness of Ticketmaster's exclusive agreements, coupled with their excessive duration and the manner in which they are procured, supported a finding that Ticketmaster had engaged in anticompetitive conduct under section 2 of the Sherman Act.” Members of Pearl Jam testified on Capitol Hill on June 30th of 1994. Pearl Jam alleged that Ticketmaster used anti-competitive and monopolistic practices to gouge fans. Congressman Dingell (D-Mich.) after Pearl Jam’s testimony before congress wrote a bill requiring full disclosure to prevent Ticketmaster from burying escalating service fees. Pearl Jam’s manager said he was gratified that that Congress saw the problem as a national issue .

Later in the year the Justice Department opened an investigation into anti-competitive practices in the ticket industry. It continued for close to a year until July 6 of 1995 when the Justice Department abruptly closed its antitrust probe in a two-sentence press release. . The announcement came shortly after the Arena Auditorium and Coliseum Coalition organized by Fred Rosen, then head of Ticketmaster, hired the Phoenix law firm of Brown and Bain. Investigative reporter Chuck Philips notes that the firm's partners then occupied top posts in the anti-trust division, including the head of the anti-trust division Assistant Attorney General Anne K. Bingaman. . Brown and Bain denied any collusion and the Justice Department concluded that there was competition among music ticketing agencies in the industry. A spokesman for Pearl Jam told the LA Times Chuck Philips, “Unfortunately, those who will be most hurt by the Justice Department’s cave-in are the consumers of live entertainment…The consumers are the ones who ultimately pay for the lack of choice in the marketplace.”