Overview
Cohen Milstein represents shareholders of Live Nation Entertainment, Inc. in a derivative action against the Company’s directors, alleging breaches of fiduciary duties and violations of the federal securities and insider trading laws.
The Complaint alleges that the Board acted in bad faith by disregarding the antitrust consent decrees that Live Nation entered into with the U.S. Department of Justice (“DOJ”) in connection with the Company’s acquisition of Ticketmaster and other red flags, thereby allowing the company to pursue unlawful anticompetitive business strategies designed to increase Live Nation’s profits, suppress competition, and enhance officers’ annual compensation.
Shareholders further allege that the Board caused Live Nation to issue materially false and misleading statements from 2022 through 2024 by omitting material information concerning the regulatory and legal risks associated with its anticompetitive practices.
Case Background
With operations in 51 countries, Live Nation is widely recognized as one of the most powerful companies in the concert business, touching literally every corner of the live entertainment industry – from promotions to ticket sales to venue ownership to music festivals, artist management, and sponsorships.
As early as 2010, when Live Nation entered into a merger agreement with Ticketmaster, the DOJ and 19 state attorney generals flagged Live Nation’s vast power and potential to stifle competition. Specifically, these regulators found that the merger, which was ultimately consummated, presented an instance of both horizontal and vertical integration.
To address these anticompetitive concerns, Live Nation signed a DOJ consent decree which was set to expire in 2020. However, in December 2019, the DOJ filed a petition seeking to extend the consent decree by another five years due to Live Nation’s repeated violations of its terms using its Ticketmaster services. Live Nation agreed to this extension.
Shareholders claim that Live Nation’s compliance with U.S. antitrust laws was mission critical to remain operational. As such, the Board was required to make good-faith efforts to establish reasonable antitrust monitoring and reporting systems.
Shareholders also claim that Live Nation’s directors and officers nonetheless participated in, approved, and/or permitted Live Nation to engage in a slew of unlawful actions to suppress competition – both before and after the 2020 amended consent decree.
Specifically, Live Nation’s Board caused the company to engage in the following anticompetitive conduct:
- Acquiring or entering into joint ventures and other contractual agreements with potential competitors and nascent threats to neutralize any competition.
- Threatening and intimidating competitors directly and/or through intermediaries.
- Colluding with would-be competitors to avoid competition in the concert promotions market.
- Threatening and intimidating venues that considered working with competitors.
- Inducing venues into signing longer-term exclusive ticketing contracts.
- Conditioning artists access to Live Nation’s network of amphitheaters and other venues on choosing Live Nation as a promoter.
- Using these anticompetitive practices to increase Live Nation’s share of sales made in Ticketing’s secondary markets.
Shareholders also claim that the Board improperly incentivized Live Nation’s five top officers to engage in these unlawful anticompetitive business practices to increase their compensation. Specifically, a large portion of their compensation, including large cash bonuses, is “at risk,” meaning the officers were not fully paid unless the company reached the Board’s adjusted operating income targets. Shareholders allege that the officers resorted to anticompetitive conduct in order to reach those targets and secure their large compensation packages.
The negative impact of Live Nation’s domination of the U.S. ticketing market was exposed in November 2022 when Ticketmaster’s systems crashed during the presale for Taylor Swift’s Eras Tour. Days later, it was reported that the DOJ and Senate Subcommittee were investigating Live Nation for antitrust violations. On May 23, 2024, the DOJ, joined by 40 states, brought an antitrust lawsuit against the Company, United States v. Live Nation Ent., Inc., No. 1:24-cv-03973 (S.D.N.Y.).
In addition to the DOJ lawsuit, throughout this period, Live Nation faced multiple high-profile consumer, antitrust, and securities class action lawsuits all related to the company’s anticompetitive behavior. Nevertheless, shareholders claim, Live Nation continued its conduct to stifle competition and grow its monopoly hold.
Shareholders also claim that Board member and longtime CEO of Live Nation Michael Rapino capitalized on his knowledge of the company’s non-public information by selling more than $250 million in Live Nation shares when the Company was under investigation by the DOJ and Senate Committee, further breaching his fiduciary duty to the company.
Finally, shareholders claim that certain directors also caused Live Nation to file proxy statements with the SEC from 2022 to 2024 that made false and misleading statements creating a misleading impression of Live Nation’s business that differed in a material way from the one that actually existed. Specifically, the proxy statements omitted material information about Live Nation’s anticompetitive conduct, thereby hiding from investors the Company’s exposure to serious and significant regulatory risk. The proxy statements also made false and misleading statements about Live Nation’s compensation structures, which incentivized officers to engage in anticompetitive conduct in violation of U.S. antitrust laws and the DOJ consent decrees.