Competition Currents | June 2024 (2024)

On May 21, the FTC issued a statement about Altus Group Limited (Altus) abandoning its proposed acquisition of Situs Group, LLC’s commercial real estate valuation and advisory services business, REVS. The FTC said that the agency welcomes the news, given that REVS services “touch on nearly all commercial real estate in the United States by ensuring pension and other fund investors have near-to real-time insight into the value of their commercial real estate assets.”

Altus, which provides asset information for commercial real estate, stated in its announcement that it had actively engaged with the FTC over the past six months, but ultimately believed that the transaction would not receive regulatory approval in a timely manner. In not moving forward with the acquisition, Altus and REVS will continue to compete, which the FTC believes will foster innovation in the market.

On May 9, the DOJ announced the Antitrust Division’s new task force on Health Care Monopolies and Collusion (HCMC). The task force will guide the Antitrust Division’s enforcement strategies and policies on health care and attend to various competition concerns mutually shared by providers, patients, and other industry professionals, including payer-provider consolidation, serial acquisitions, quality of care, billing, IT services, and misuse of health care data, among other issues.

“Every year, Americans spend trillions of dollars on health care, money that is increasingly being gobbled up by a small number of payers, providers and dominant intermediaries that have consolidated their way to power in communities across the country,” Assistant Attorney General Jonathan Kanter said. “[T]he task force will identify and root out monopolies and collusive practices that increase costs, decrease quality and create single points of failure in the health care industry.” To that end, HCMC will bring together prosecutors, economists, industry experts, data scientists, investigators, policy advisors, and others to evaluate and address antitrust issues in the health care market.

Katrina Rouse, who has served in the Division for over a decade, will lead the task force. Rouse will serve concurrently as the Division’s Special Counsel for Health Care and its Deputy Director of Civil Enforcement.

The HCMC encourages members of the public to share their relevant experiences by visiting the online portal at HealthyCompetition.gov.

On May 23, the Antitrust Division of the DOJ filed andannounceda lawsuit against Live Nation Entertainment Inc. and its wholly owned subsidiary, Ticketmaster LLC, for various antitrust violations. Thecomplaint, filed in the U.S. District Court for the Southern District of New York and joined by 29 states and the District of Columbia, alleges that Live Nation unlawfully exercises monopoly power in the live music market, in violation of Section 2 of the Sherman Act. Attorney General Merrick Garland said that Live Nation’s conduct comes “at the cost of fans, artists, smaller promoters, and venue operators,” as “fans pay more in fees, artists have fewer opportunities to play concerts, smaller promoters get squeezed out, and venues have fewer real choices for ticketing services.” The lawsuit follows a two-year-long investigation of the company’s activities within the live music concert market.

The complaint alleges that Live Nation sustains dominance and control over each category of stakeholder in the live music market (fans, artists, promoters, and venues) through various anticompetitive behaviors, including exclusionary conduct and long-term exclusive contracts. The DOJ notes that Live Nation and potential competitor Oak View Group – global operator of stadiums, arenas, and convention centers – have a collaborative relationship whereby Oak View steers clients into signing exclusive agreements to use Ticketmaster for ticketing services, and Oak View avoids bidding against Live Nation for artist talent. The complaint describes this as a “competitive détente” in concert promotions that purposely avoids competition over artists and tours. In explaining the relationship between Live Nation and Oak View, the DOJ also noted that Oak View was co-founded by former Live Nation chairman Irving Azoff.

The complaint further alleges that Live Nation has retaliated and threatened to retaliate against potential market entrants, locked out competition through long-term exclusionary contracts that prevent stakeholders from exploring alternative management companies or other ticketing platforms, blocked venues from using multiple ticketers, and acquired competitors and competitive threats.

For example, in 2021, Live Nation allegedly threatened to retaliate against private equity firm Silver Lake unless one of Silver Lake’s portfolio companies, TEG, stopped competing with Live Nation for artist promotion contracts in the United States. The DOJ alleges that these threats succeeded, and that Silver Lake is now seeking to sell TEG.

According to the complaint, Ticketmaster, which is the largest primary ticketer in the United States, has employed various anticompetitive tactics to edge out competitor ticketing platforms such as StubHub and SeatGeek. Further, Ticketmaster has become the default ticketing platform for many artists simply by virtue of Live Nation’s control over a large share of the venues in which artists seek to perform. Artists and venues are pressured to use Ticketmaster’s services for fear of being locked out of favorable performance venues. Live Nation’s dominance is supported by the fact that it manages over 400 musical artists, owns or controls more than 265 concert venues in North America--including more than 60 of the top 100 amphitheaters in the U.S., and has exclusive agreements that entitle it to 70% of the live music ticketing market (and Ticketmaster accounts for at least 80% of all tickets sold for shows at major concert venues).

These circular arrangements ultimately harm concertgoers by allowing Live Nation the latitude to charge fans varied fees, including “service”, “handling”, “convenience”, “per-order”, and “processing” fees (which Attorney General Garland described as “exorbitant”), the DOJ argued in the complaint. These arrangements also allegedly insulate Live Nation from the competition that would result in Live Nation updating and/or innovating the technology associated with its ticketing systems, thereby depriving consumers of potentially lower prices and better experiences.

With its lawsuit, the DOJ seeks an order forcing Live Nation to divest Ticketmaster, forcing the termination of Live Nation’s ticketing agreement with Oak View, enjoining Live Nation from engaging in anticompetitive conduct, and granting other necessary and appropriate relief.

On May 13, the United States District Court for the Southern District of Texas granted a motion in favor of Welsh Carson Anderson & Stowe (Welsh Carson), dismissing the FTC’s antitrust claims against the New-York based private equity company. The FTC’s claims had arisen primarily from a roll-up scheme carried out by US Anesthesia Partners (USAP), a company in which Welsh Carson once held a 50.2% interest, but as of 2017, holds a 23% stake and two out of 14 of board seats. In the alleged roll-up scheme, according to the FTC, USAP bought “nearly every large anesthesia practice in Texas to create a single dominant provider with the power to demand higher prices.”

The FTC based its action against Welsh Carson on an interpretation of 15 U.S.C. § 53(b) (commonly referred to as “Section 13(b)” of the FTC Act) that would have allowed a minority, non-controlling investor of a company to be charged under this section for the company’s alleged antitrust violations, even without an allegation of any actual ongoing or impending violation by the investor. Judge Kenneth Hoyt rejected the FTC’s proposed approach and said that Section 13(b) is not a catch-all statute and does not allow the FTC to sustain claims based upon “long-past conduct” without some evidence that the defendant is currently committing or is about to commit a violation. Judge Hoyt explained that holding a minority, non-controlling interest in a company does not in and of itself constitute an ongoing violation by the interest-holder, noting that the FTC had failed to cite any precedent or support for the proposition that “receiving profits from an entity that may be violating antitrust laws is itself a violation of antitrust laws.”

The court explained that Section 5(b) of the FTC Act is a much broader grant of antitrust authority, and looks backward, whereas Section 13(b) looks forward. Therefore, such actions arising from past conduct would instead be brought under Section 5(b). Note that only the claims against Welsh Carson were dismissed from the lawsuit; the FTC’s claims against USAP were allowed to continue.See a previous GT Alertregarding the FTC’s initial complaint anda recent GT Alerton the decision.

The NCAA and its Power Five conferences agreed to pay $2.75 billion in damages to college athletes over a 10-year period in a deal that seeks to resolve three pending antitrust lawsuits. According to the firms representing the athlete plaintiffs, Hagens Berman and Winston & Strawn LLP, the agreement also eliminates NCAA and conference rules that prohibit direct payments from schools to athletes and allows direct revenue sharing through new payments and benefits. This settlement resolves three antitrust cases, all brought by athletes claiming the NCAA’s rules violate antitrust law.

The split of the $2.8 billion will be determined by sport economists and go to the 10,000 former and current athletes affected by the settlement. The first agreement is “back pay,” or payment for work done in the past. This $2.8 billion payment, to be made over the course of 10 years, is geared to the current and former athletes as far back as 2016 that lost out on possible profits from the name, image, likeness landscape post-2021. The NCAA is responsible for 40% of the $2.8 billion using its reserve fund. The conferences are responsible for the remaining 60%.

The current proposal creates a spending cap, similar to salary caps used by professional sports leagues, of no more than $22 million annually for each university, starting in the 2025-26 season. This figure represents 22% of “average media rights, ticket sales and sponsorship revenue of each power-conference school.” The settlement does not resolve the issue of players’ employment status or the bedrock of the NCAA — that the athletes are amateurs and not professionals.

Chief Judge Miranda M. Du of the U.S. District Court for the District of Nevada dismissed a case against Caesars Entertainment Inc. and other Las Vegas hotel companies accusing them of fixing prices for rooms. Judge Du dismissed the plaintiffs’ amended complaint with prejudice, saying a group of consumers who stayed at various Las Vegas locations failed to plausibly allege a tacit agreement between the hotels to inflate room prices using an algorithm.

The court reasoned that this is in part because customers were not required to accept the pricing recommendations of hospitality industry software provider Cendyn Group. The judge also drew distinctions from a Dec. 28, 2023, order that refused to dismiss similar claims in a case against another software provider, noting “the complaint, in that case, included allegations of the exchange of otherwise confidential information between competitors through the algorithm, while this case did not.”

The judge continued, “mere use of algorithmic pricing based on artificial intelligence by a commercial entity, without any allegations about any agreement between competitors—whether explicit or implicit—to accept the prices that the algorithm recommends does not plausibly allege an illegal agreement.” The judge also commented on the nature of the case as a whole: “This case remains a relatively novel antitrust theory premised on algorithmic pricing going in search of factual allegations that could support it.”