Investing.com-- Shares of Live Nation Entertainment Inc (NYSE:LYV) sank on Wednesday following reports that the Department of Justice was planning to sue the firm over antitrust violations by Ticketmaster and to seek its separation from the firm.
The DOJ and a group of states were preparing the lawsuit, which could be filed in the Southern District of New York by as soon as Thursday, Bloomberg reported, citing people close to the matter.
Live Nation shares are currently down 5.3% to $96.01 after the report, recovering some of their earlier losses.
The lawsuit is set to bring up multiple antitrust violations by Ticketmaster over its seemingly unrivaled hold on concert ticket sales, the report said. The lawsuit will seek remediation, with a break-up of Live Nation and Ticketmaster being a point of focus.
Live Nation- the biggest concert operator in the U.S.- merged with Ticket Master in 2010. The deal was approved by authorities on the grounds that Live Nation would not discriminate against concert venues that opted out of Ticketmaster.
But multiple investigations since then found that Live Nation had repeatedly violated the agreement. The company has repeatedly drawn ire from performers and consumers over its seemingly monopolistic hold over ticket sales for major concerts in the country.
This came to a boil in 2022 after Ticketmaster’s mishandling of "astronomical" demand for pop sensation Taylor Swift's "Eras" tour. Several fans of the performer had sued the company and Live Nation over allegations of deceptive practices, fraud and price fixing after the event.
President Joe Biden’s administration also opened a new probe into the company in 2022.
Following the news, analysts at Macquarie were skeptical. They firstly stated that they believe "breaking up a company, whose prior merger was approved, could be a high hurdle," with the facts potentially having to be "convincing enough that any breaches of the consent decree, if deemed credible, are then deemed likely structurally engrained in the merged business."
In addition, the firm feels that the sought remedy of a breakup would presumably have to result in a materially different market dynamic than the one the DoJ is alleging is anti-competitive for it to be a viable option. Even so, "the marketplace would still be left with the two respective industry leaders each having a commanding position relative to peers," they wrote.
"In other words, Ticketmaster would still have the largest US footprint for distribution of tickets across live event types and hence the most scaled service offerings for clients, while Live Nation as the largest promoter would continue to be best-positioned to deliver major tours for global acts," adds Macquarie.