Two top executives at sports and entertainment agency Endeavor have resigned from the Live Nation board of directors following antitrust concerns over their presence from the US Department of Justice (DOJ).
Endeavor’s chief executive and director Ariel Emanuel and president Mark Shapiro have stepped down from their positions with Live Nation’s board as it creates an “illegal interlocking directorate.”
The DOJ states that there is a conflict of interest because the two firms “compete closely” in many sports and entertainment markets.
Both Live Nation and Endeavor, through its wholly owned and minority owned subsidiaries, promote and sell tickets and VIP packages that include tickets, lodging and travel accommodations, to live music, sporting and other entertainment events.
Endeavor acquired hospitality firm On Location in January 2020, which produces annual events like the Super Bowl, Ryder Cup, NCAA Final Four, and music festival Coachella, it said in a recent S-1 filing. Endeavor also owns the Ultimate Fighting Championship, sports and fashion event company IMG and Hollywood talent agency WME.
Acting Assistant Attorney General Richard A. Powers of the Justice Department’s Antitrust Division, said: “These resignations ensure that Endeavor and Live Nation will compete independently. Executives are not permitted to hold board positions on companies that compete with each other. The division will enforce the antitrust laws to make sure that all companies compete on the merits.”
Interlocking directorates can restrict competition, according to the DOJ, by providing a “conduit for the exchange of competitively sensitive information and by facilitating coordination between competing companies”.
The antitrust concerns relate to Section 8 of the Clayton Act, which prohibits the same person or company from serving as an officer or director of two competing companies, except under certain defined safe harbours.
The DOJ states: “Section 8 imposes bright line prohibitions designed to prevent harm from competitors having overlapping directors or managers, regardless of whether any anticompetitive conduct actually occurs.
“By eliminating the opportunity to coordinate – explicitly or implicitly – through interlocking directorates, Section 8 prevents violations of the antitrust laws before they occur.”