Block this music monopoly

Nine months after Ticketmaster announced its proposed merger with Live Nation, the Justice Department's antitrust investigation seems to be entering the ninth inning, and the bases are loaded. Numerous consumer groups and 50 members of Congress have written in opposition to the merger. Britain's antitrust cops have also come out against it. And it's becoming clear to the public that the merger will harm consumers and competition.

The reasons for the deal are quite transparent. Ticketmaster faced its first significant competitive threat when Live Nation announced earlier this year that it was entering the primary ticketing market. Most monopolists would like to quash any new threats to their dominance. But if they can't quash them, they might choose to buy them out - which is precisely why this merger is illegal.

The merger would combine a ticketing powerhouse with the country's dominant concert promoter. But the integration would go much further.

Ticketmaster controls roughly 80 percent of the ticketing business in the United States, but it also owns an artist-management business, Front Line Management, which contracts with roughly 200 artists. Live Nation owns or has exclusive deals with 139 venues, but it also manages about 150 artists. This merger would allow a Live Nation-Ticketmaster entity to determine the prices of access to venues, concert promotion, ticketing, and other services, permitting a single firm to dominate the market.

Merger analysis is usually challenging because it involves a prediction: whether a merger will lead to increased prices, poorer service, or less innovation. But in this case the challenge is far less daunting.

Very few firms can match Ticketmaster's dubious record of acquiring and exploiting monopoly power to harm consumers. What other ticketing entity charges you for the privilege of printing your own tickets, on your own computer, with your own ink? To predict the future, just look at the past: Ticketmaster would have even more leverage to price-gouge after acquiring Live Nation.

When you can't justify a merger with evidence that it will lead to lower prices and better service, what do you do? Create a false enemy and claim the merger is necessary to combat it. This is most likely the reason for Ticketmaster CEO Irving Azoff's false recent suggestion that the merger would promote competition by helping rid the market of secondary ticketing.

Secondary ticketing helps consumers and the market by increasing supply and competition. No one can question that there is tremendous rivalry in secondary ticketing, with hundreds of brokers competing every moment of the day for the loyalty of consumers and the distribution of tickets. Secondary ticketers sell more than 40 percent of their tickets for less than face value. They are not a competitive problem; they are a competitive solution.

But have no doubt, Ticketmaster does not want to eliminate secondary ticketing; it wants to monopolize it. The company has already begun the process in the primary ticketing market: limit and manipulate supply to hike prices as far as they will go; restrict consumers from trading, selling, and giving away tickets to friends, family, and other fans; and allow consumers to transfer tickets only through Ticketmaster's TicketExchange, racking up another fee. If this merger happens, Ticketmaster will be able to control the flow of ticketing and set prices beyond the control of any third party.

Creating a successful music business requires access to key raw materials: artists, venues, and ticketing services. By controlling them, Ticketmaster could force artists to use its concert promotion and management services, along with ancillary services such as venues, ticketing, merchandising, and fan club management.

Under its plan, Ticketmaster would possess critical access to artists and venues, making it more difficult for existing companies to survive and for new companies to enter the market. It could raise competitors' costs in an anticompetitive manner or reduce the incentives to compete in the industry. Perhaps most important, it would have access to the most competitively sensitive information of its concert promotion rivals.

There are rumors that Ticketmaster is ready to make concessions to secure Justice Department approval, but reining in a monopolist is nearly impossible. Fortunately, Ticketmaster's efforts to blind the Justice Department are unlikely to succeed. The department's vision should be clear, and it should block this merger.