Welcome to The Corner. In this issue, we look at how fixing Ticketmaster also means fixing the problem of exclusive dealing. And we lead a call on the FTC to issue bright-line rules to outlaw non-competes.

Fixing Ticketmaster Also Requires Cracking Down on Exclusive Dealing

Karina Montoya

Over the last few weeks, the ticket sales fiasco caused by Ticketmaster’s mismanagement of Taylor Swift’s Eras tour has led to an outpouring of public condemnation of monopolistic control over the ticketing market. The rage of the ‘Swifties’ has led to renewed calls — including from leading lawmakers — to break up the entertainment giant created by the Ticketmaster’s 2010 purchase of concert promoter Live Nation.

The merger, which was approved by the Obama Department of Justice (DOJ), has resulted in a live entertainment market dominated by one player, in which music fans face skyrocketing fees for ticketing services and automated price gouging by Ticketmaster and secondary brokers.

But besides revisiting that decision, the public anger also offers an opportunity for the DOJ and the Federal Trade Commission (FTC) to crack down on an increasingly common way that big corporations abuse their power, which is to restrict the freedom of smaller companies to do business with whomever they choose. The practice — often called exclusive dealing — has long been used by monopolists to stifle competition. Extensive consolidation in recent years, combined with a collapse in enforcement, has led to a surge in the practice.

In the case of Ticketmaster-Live Nation, enforcing the law should be relatively easy. In its 2010 deal with the DOJ to get the merger approved, Ticketmaster-Live Nation promised not to retaliate against venues that refused to deal exclusively with Ticketmaster. In 2020, the DOJ found the conglomerate had violated that condition. But rather than impose fines or restructure the corporation, the Antitrust Division agreed to another settlement with Ticketmaster-Live Nation to “clarify” that prohibition.

Ticketmaster abuse of its power dates back to long before it purchased Live Nation. As a recent antitrust lawsuit filed in a federal California court claims, Ticketmaster first began to push such exclusive deals in the early 1980s. The corporation began offering upfront fee payments to venues in exchange for long-term rights to handle their ticket sales. The move significantly changed traditional business practices in the live entertainment market. According to the lawsuit, it enabled Ticketmaster to “quickly snap up a web of long-term exclusive dealing contracts with venues throughout the country.”

By the early 1980s, however, the radical Chicago School reinterpretation of competition policy had also altered attitudes among enforcement agencies and the courts towards such exclusive dealings. The overall effect was to largely ignore the problem.

In late November, the DOJ announced that it has opened a new investigation of Ticketmaster-Live Nation’s business conduct. This will provide the DOJ with a new chance to correct the record by truly enforcing the Ticketmaster-Live Nation’s 2010 agreement not to engage in exclusive dealing.

But as the Open Markets Institute made clear in a July 2020 petition to the FTC, the time has come for a more far-reaching ban on such agreements. Otherwise, the DOJ and FTC will be left playing an endless game of whack-a-mole through costly and protracted litigation under current monopolist-friendly legal standards.

Open Markets and Farming Groups Send Letter Urging FTC To Block Kroger-Albertsons Merger

Open Markets Institute partnered with leading farming advocacy groups to submit a letter to Federal Trade Commission Chair Lina Khan calling on the agency to block the pending merger between Albertsons and Kroger. The letter argues that the merger of these grocer giants would result in higher food prices, store closures, and layoffs and lower wages, as well as drive out independent grocers and food businesses. "This is a time when we need more community control over our food system, not more corporate concentration,” the letter read.

OMI’s farming advocacy partners included HEAL Food Alliance, National Farmers Union, Rural Advancement Foundation International-USA, National Family Farm Coalition, and Farm Action. Reuters covered the coalition letter calling for the FTC to block the Kroger-Albertsons merger.

Open Markets and Public Citizen Draft Letter to FTC Calling for Ban on Non-Competes

Open Markets Institute and Public Citizen led an effort to draft a letter to the Federal Trade Commission urging the agency to ban the use of non-compete clauses in employment contracts, which depress wages and prevent workers from seeking new jobs. Two dozen consumer advocacy and organized labor groups joined OMI in signing the letter, which read: “It is vital that the FTC begin the rulemaking process to signal to the public, courts, and corporate America that it is committed to fair competition in the labor market.”

OMI legal director Sandeep Vaheesan co-authored an article on the same topic that was published in Project Syndicate . Describing the coercive nature of non-competes, he and co-author Najah Farley from National Employment Law Project called on U.S. President Biden to use his executive powers to outlaw non-competes.

OMI Strategic Councilor on Democracy and Power Spoke at House Judiciary Committee Hearing

Open Markets Institute’s Strategic Councilor on Democracy and Power Caroline Fredrickson last week spoke at a House Judiciary Committee hearing on how conservative activists have long coordinated campaigns to influence Supreme Court justices. Entitled “Undue Influence: ‘Operation Higher Court’ and Politicking at SCOTUS,” the hearing was held in the wake of an eye-opening report from the New York Times, which was based on allegations from whistleblower Rev. Robert Schenck, who also spoke at the committee hearing.

📝 WHAT WE'VE BEEN UP TO:

Open Markets Institute put out a statement on the FTC’s move to block Microsoft’s $69 Billion acquisition of major game developer Activision Blizzard. Legal director Sandeep Vaheesan states, “If Microsoft acquired Activision, it could use Activision's valuable portfolio of games as a competitive weapon, withholding titles from rival consoles or offering lower quality versions of them, to give its own Xbox and cloud-gaming service a leg-up.” Common Dreams quoted Vaheesan in a story on FTC’s attempt to block the merger.
Open Markets Institute joined an amicus brief drafted by the Washington Employment Lawyers Association and Towards Justice concerning the enforceability of arbitration clauses under Washington state law. The lawsuit involves a case in which a woman placed with Microsoft through staffing company Allyis was forced to sue both companies for violating her right to a safe environment despite only being in a contractual relationship with Allyis. The amicus brief that Open Markets joined argues that the woman should not be required to arbitrate her lawsuit against Microsoft under established principles of Washington state law.
Politico quoted food farming systems manager Claire Kelloway on an appeal by poultry processing company Pilgrim’s Pride, which disputed charges that it misclassified its contract growers as independent contractors rather than workers. Kelloway said, “the stakes are significant. This would really change the way they do business.” The dispute comes at a time when the Biden administration is considering making changes that would grant more benefits to growers under the one-sided poultry contracting system.
Cristina Caffarra, one of Europe’s leading antitrust experts, credited OMI executive director Barry Lynn with being on the vanguard of the U.S. antitrust movement in the mid-2010s in an interview with ScheerPost.
Real Clear Markets highlighted Open Markets’ letter to the FTC and DOJ calling on the agencies to investigate Elon Musk’s Twitter takeover. The website says of the letter, “Along with asking these government officials to investigate Mr. Musk's take-over, OMI proposes to subject Twitter to stringent government control.”
Mediapost cited OMI’s support of Genius, a website that transcribes song lyrics, in its legal battle against Google, for which OMI submitted an amicus brief. The battle has gone all the way to the Supreme Court.

🔊 ANTI-MONOPOLY RISING:

Senator Amy Klobuchar kickstarted a new round of investigations into the lack of competition in the ticketing industry following last month’s debacle over Taylor Swift concert tickets. In addition to an open letter Klobuchar wrote to CEO Michael Rapino, she announced that her subcommittee will hold a bipartisan hearing with Senator Mike Lee on the matter, saying, “This is about a monopoly that can charge higher prices, hide fees, and fail to give quality service because it doesn’t need to.” (Variety)
Concerned that Twitter’s exodus of staff, which includes many lawyers, has led to lax security, the FTC has sent letters to Twitter asking if the company is able to comply with a consent decree that it signed with the agency in 2011 following the company’s failure to protect user data in a 2009 hack. (Bloomberg)
Penguin Random House CEO Markus Dohle has decided to leave the company, weeks after a federal judge sided with the DOJ to block its $2.2 billion purchase of Simon & Schuster. Penguin Random House abandoned plans to appeal the decision once Simon & Schuster’s parent company indicated it would explore other options. (CNBC)
Microsoft has offered a preliminary settlement to EU antitrust regulators to stave off concerns over its workplace messaging app Teams following a complaint from Salesforce’s Slack, which accused Microsoft of unfairly bundling Teams into its Office product offering. (Reuters)

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📈 VITAL STAT:

10%

The percentage of global revenue EU antitrust regulators could exact from Amazon had it not reached an agreement to give rivals equal access to valuable space on its website and stop using information it gathers from independent merchants selling on its sites to improve its own product offerings. The company earned $470 billion last year. (New York Times)

📚 WHAT WE'RE READING:

“The Code: Silicon Valley and the Remaking of America.” (Penguin Random House, Margaret O'Mara). In her book, O’Mara chronicles the evolution of the Silicon Valley mythos, including how the Reagan era’s unlikely public funding proved foundational to the U.S. tech industry and to laying the groundwork for the new breed of today's tech moguls who reshaped America and the world.

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