Justice Won't Bring Antitrust Case Against Ticketmaster
MICHAEL J. SNIFFEN
Jul. 06, 1995
WASHINGTON (AP) _ The Justice Department declined Wednesday to bring an antitrust case against Ticketmaster, the nation's largest distributor of tickets for live sports events and concerts.
A target of widely publicized protests by the rock band Pearl Jam and by consumer groups, the Los Angeles-based company had been under investigation by the department's antitrust division for alleged anticompetitive and monopoly practices.
The company sold 55 million tickets last year for an estimated $1.6 billion. Pearl Jam claimed the company priced tickets too high for the band's teenage fans.
In a two-sentence statement, the Justice Department said it had informed the parent company, Ticketmaster Holdings Group Inc., that ``it is closing its antitrust investigation into that firm's contracting practices.''
No lawsuit was filed so the case is over. But the antitrust division warned industry participants that the government ``will continue to monitor competitive developments in the ticketing industry.'' That kind of statement means the government would have to see actions or evidence it currently cannot find before taking any action.
Department spokesman James Sweeney declined to elaborate on the reasons for the government's decision.
Ticketmaster spokesman Larry Solters said the Justice Department's decision confirmed his company's belief in the American system.
``Its investigation, which was ... exploited by self-serving special interest groups, demonstrates that these claims have no merit,'' Solters said. ``Ticketmaster does not set ticket prices or determine touring schedules. We simply provide consumers with a convenient way of buying tickets.''
At ETM Entertainment Network, which ticketed Pearl Jam's tour this summer, Peter Schniedermeier said the Justice Department's decision came as no surprise and that he's not worried because he believes the market will take care of itself.
``We're doing the industry much differently than the competition,'' he said. At his company, ``It's definitely business as usual.''
Ticketmaster earned an estimated $240 million last year from its service fees on tickets sold for 3,000 locations around the nation.
Two-thirds of the nation's 10 million concert arena seats are governed by exclusivity contracts between Ticketmaster and arena managers, according to the industry newsletter Pollstar.
Pearl Jam fought with Ticketmaster last year over the service charge it tacks on the price of tickets. The band decided to tour without Ticketmaster, but canceled the plans after learning it wouldn't be easy. Two of its members testified against the agency last year at a congressional hearing.
Pearl Jam is itching to perform, said Kelly Curtis, the Seattle-based band's manager. The band recognizes that will mean no concerts in arenas controlled by Ticketmaster contracts, he said.
On June 16 this year, the group launched its first concert tour without Ticketmaster _ in smaller locales without appearances in New York or Los Angeles.
The Justice Department's refusal to act against Ticketmaster was blasted by Ray Garman, president of Fillmore Mercantile Bank of Philadelphia, which financed the Pearl Jam tour and developed the software to sell tickets for it.
``The Justice Department did not step up to the plate but rather handed the keys back to the monopolists, shutting us out,'' Garman said. He complained that he had been scheduled to provide Justice lawyers on Thursday with actual economic data about Ticketmaster's impact on the industry that his company had derived from working on the Pearl Jam tour.
``I find it amazing they would choose to make this decision the evening before receiving that real data and chose to make that decision based on their theoretical models,'' Garman said.
Although Pearl Jam was able to put together a tour, Garman said ``the venues we played were out of the way and not the normal venues a band of Pearl Jam's stature would play. Competition does not exist in the large venues which are necessary for the economics of a live touring band to work.''
A consumer group, U.S. PIRG, said a study of 80 recent events from California to Maryland showed Ticketmaster added an average 27 percent in fees to ticket prices.
Judy Black, a senior vice president of Ticketmaster, said earlier this year that the company handles more than 150,000 events annually and that its fees averaged about 12 percent over the last five years.
Ticketmaster fees ``have remained consistent even though the entertainers' fees have gone up,'' Black said.
Ticketmaster officials also have argued that agencies such as their own provide services that merit compensation.
As an example, they cited the Holocaust Museum in Washington, where admission is free if tickets are obtained at the door. Ticketmaster charges a $3 service fee for advance tickets to the museum. But if Ticketmaster wasn't providing such tickets, long lines would form and tourists might not be able to get tickets at the museum door.
The Justice Department decision doesn't end Ticketmaster's problems. New York's attorney general has been looking into whether state antitrust violations have occurred, and consumers have mounted a group of class action lawsuits.