Live Nation faces a class action investor lawsuit as several law firms investigate whether the live events giant lied to investors by failing to disclose anti-competitive business practices.
In a class action lawsuit filed on August 4 in California federal court, investors accused Live Nation of lying to them over allegedly anti-competitive business practices, including charging exorbitant fees, bundling services, and retaliating against venues that use a ticketing service provider other than its subsidiary Ticketmaster.
The complaint originates from the increasing attention on Live Nation’s hold on the live music industry after the Justice Department opened an antitrust investigation into the company last year. That investigation followed Ticketmaster’s systems crash during the highly anticipated presale of Taylor Swift’s Eras Tour tickets.
According to the complaint, Live Nation’s stock price dropped by nearly eight percent that day. Then another eight percent last month following Politico’s report that competition enforcers could file an antitrust suit against the company by year’s end. Investors cite a series of allegedly false or misleading statements made by the company surrounding antitrust scrutiny over its business practices.
According to Pavithra Rajesh, a lawyer representing investors in the complaint, Live Nation did not disclose that it is “reasonably likely to incur regulatory scrutiny and face fines, penalties, and reputational harm” due to its allegedly anti-competitive conduct.
In 2019, the Justice Department found the company violated the terms of a settlement to approve its 2010 merger with Ticketmaster by forcing venues to accept their ticketing services as a condition for hosting Live Nation performers and retaliating against those who would not. The company was barred from tying services and is subject to a $1 million fine for violations under an amended deal that allows a monitor to investigate further breaches of the consent decree until 2025.
Further, the lawsuit argues that Live Nation misled investors when it said last year there “never has been and is not now any evidence of systemic violations” of that settlement.
Ticketmaster and Live Nation merged in 2009, two years after the live events organizer announced plans to build its own ticketing service. Live Nation was Ticketmaster’s largest customer before the merger.
The complaint also names CEO Michael Rapino and chief financial officer Joe Berchtold and alleges violations of the Securities Exchange Act, which prohibits misrepresentations and misleading omissions in securities transactions. The suit seeks to represent investors who bought securities from February 23, 2022, to July 28, 2023.
Investors must prove that officers knew their statements over antitrust liability were false or misleading to prevail in their lawsuit under securities law.