When companies merge, leaving a mega-corporation with no competitors, consumers suffer. The most recent example of this general capitalist truism comes in the form of fallout from the federal government allowing Live Nation and Ticketmaster to merge in 2010. What fallout, you ask? Ask anyone who recently tried to get a ticket to see Taylor Swift live. Not only were there not enough tickets to go around, but the Ticketmaster website was, to put it kindly, a freaking mess, with glitches, bugs, error messages, and hours-long wait times for ticket purchases to go through.
Columnist Binyamin Appelbaum traces the Taylor Swift debacle to the government’s tendency to be too credulous when companies promise that their merger will not be detrimental for customers. In 2010, for example, the Justice Department released a press release in which it confidently asserted that Ticketmaster and Live Nation’s merger would “protect competition for primary ticketing” and “maintain incentives for innovation and discounting”—none of which has come to pass. Instead, a nearly universal view reflects widespread agreement that Ticketmaster’s virtual monopoly in the concert ticket arena led to Swift-gate.
It is not the only example though. Various Department of Justice–approved mergers have allowed for and led to monopolies, which in turn produced negative outcomes such as stifled innovation, laziness on the part of the now-insulated companies, and consumers who are worse off. When the DOJ allowed T-Mobile to acquire Sprint in 2019, it produced less competition when it comes to the price of mobile services. When Dollar Tree acquired rival Family Dollar in 2015, the DOJ required the two companies to divest themselves of more than 300 stores and create another, competing company—Dollar Express—which then went bankrupt within two years, having allegedly been pushed out of business by market-dominant Dollar Tree’s predatory practices.
Applebaum asks why the government “didn’t just prevent Dollar Tree from buying Family Dollar” in the first place. Of course, even with an answer to that question, it would be too late to go back in time and fix the mistake. But in the last couple of years, perhaps learning from its experience, the federal government seemingly has been exercising deeper scrutiny of proposed mergers. For example, the DOJ recently successfully blocked book publisher Penguin Random House from buying its rival publisher Simon & Schuster.
In light of the Taylor Swift ticket disaster, the Department of Justice also has opened an antitrust investigation into Ticketmaster’s parent company, Live Nation. It may be too late to see Taylor Swift live this time, but thinking ahead to the next tour, you just might be able to score some tickets.
- How can consumers be harmed when companies merge?
- In what circumstances should the government prevent companies from merging on antitrust grounds?
- Do you think it would have been easier and less glitchy to buy Taylor Swift tickets, had the government not allowed Live Nation to buy Ticketmaster in 2010?
Sources: Binyamin Appelbaum, “Overconfident Regulators Caused the Ticketmaster Mess,” The New York Times, November 23, 2022; “Justice Department Requires Ticketmaster Entertainment Inc. to Make Significant Changes to Its Merger with Live Nation Inc.,” justice.gov, January 25, 2010; Alex Abad-Santos, “How Disappointed Taylor Swift Fans Explain Ticketmaster’s Monopoly,” Vox, November 21, 2022; David McCabe and Ben Sisario, “Justice Dept. Is Said to Investigate Ticketmaster’s Parent Company,” The New York Times, November 18, 2022; Winston Cho, “Fear for Your Megamergers: The Justice Dept. Is (Finally) Taking Action,” The Hollywood Reporter, November 19, 2022