Court Opinion

ID: 3173891
Source: CourtListenerOpinion
Date Created: 2016-02-05 08:27:15.670831+00
Date Added: 2024-06-11T09:37:00.843325
License: Public Domain

PUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                             No. 15-1278

IT’S MY PARTY, INC.; IT’S      MY   AMPHITHEATRE,    INC.,   d/b/a
Merriweather Post Pavilion,

                Plaintiffs - Appellants,

           v.

LIVE NATION, INC.,

                Defendant - Appellee.

Appeal from the United States District Court for the District of
Maryland, at Baltimore.     J. Frederick Motz, Senior District
Judge. (1:09-cv-00547-JFM)

Argued:   December 8, 2015                Decided:   February 4, 2016

Before WILKINSON, NIEMEYER, and DIAZ, Circuit Judges.

Affirmed by published opinion.       Judge Wilkinson wrote           the
opinion, in which Judge Niemeyer and Judge Diaz joined.

ARGUED: Robert William Hayes, COZEN O’CONNOR, Philadelphia,
Pennsylvania, for Appellants.     Jonathan M. Jacobson, WILSON
SONSINI GOODRICH & ROSATI, New York, New York, for Appellee. ON
BRIEF: Abby L. Sacunas, Philadelphia, Pennsylvania, L. Barrett
Boss, COZEN O’CONNOR, Washington, D.C., for Appellants.     Chul
Pak, Lucy Yen, Kimberley Piro, WILSON SONSINI GOODRICH & ROSATI,
New York, New York, for Appellee.
WILKINSON, Circuit Judge:

     Plaintiff It’s My Party, Inc. (IMP) contends that defendant

Live Nation, Inc. (LN) has violated the Sherman Antitrust Act by

engaging       in   monopolization,     tying       arrangements,       and   exclusive

dealing    in       the   music    concert       industry.      The   district      court

granted summary judgment to defendant LN. Because plaintiff has

failed    to    define     the    relevant       markets   or   to    demonstrate     any

anticompetitive conduct, we affirm.

                                          I.

                                          A.

     IMP and LN are competitors in the live music industry. Both

promote    concert        tours   and   operate       concert     venues,     but   they

differ in geographic reach. Plaintiff IMP is a regional player

that promotes concerts and works with venues in the Washington,

DC and Baltimore, MD area. Defendant LN is a national promoter

that provides services to artists throughout the country. It

owns, leases, or holds exclusive booking rights at venues across

the United States. LN has expanded over time by acquiring other

concert promoters as well as Ticketmaster, a major ticket sales

and distribution company.

     In addition to promoting concerts, IMP and LN both                          operate

outdoor    amphitheaters.         IMP   manages      and     operates    Merriweather

Post Pavilion in Columbia, Maryland, and LN owns Nissan Pavilion

(now called Jiffy Lube Live) in Bristow, Virginia. Merriweather

                                             2
has a seating capacity of roughly 19,000 with 5,000 fixed seats,

while Nissan has a capacity for 25,000 with 10,000 fixed seats.

Concert venues range in size from small clubs with a capacity of

about 1,000 to sports stadiums seating over 60,000.

       Artists    select       venues          based    on    their     capacity,        revenue

potential, and the option of playing outdoors. The Washington-

Baltimore     area     has     a    number        of       concert    venues       other    than

Merriweather and Nissan. Among the other venues are the Filene

Center   at    Wolf     Trap       (7,000       person       amphitheater),         the    First

Mariner Arena (14,000 person arena), the Patriot Center (10,000

person       arena),        the         Pier      Six        Pavilion        (4,200        person

amphitheater),        and    the    Verizon          Center    (19,000       person       arena).

J.A.     1516.        Notwithstanding                the     abundance        of         options,

Merriweather has more than held its own. Between 2006 and 2012,

it hosted an impressive line-up of prominent artists, including

Bob Dylan, John Legend, Maroon 5, Nickelback, Nine Inch Nails,

Sheryl Crow, Taylor Swift, The Black Eyed Peas, and The Fray.

J.A. 827-40.

       The    basics    of        the     music        concert    industry         are     easily

described. IMP and LN compete for the business of artists, vying

to promote their concerts and showcase them in their venues.

Promoters,       in    negotiation         with        artists,       work    on      financing

concerts, arranging dates and locations, securing venues, and

advertising.      In    terms       of    compensation,          the    artist        typically

                                                 3
receives either a minimum guaranteed payment or an agreed-upon

percentage of the gross ticket sales.

     Artists have two main options for organizing the individual

concerts that make up their tours. One approach is to use a

different local promoter for each location and secure venues

through the promoters. Alternatively, an artist can work with a

national promoter such as LN for most or all of the tour. The

two options frequently offer different modes of compensation.

“Artists who contract with one or a few national promoters to

organize their tours often receive a guaranteed payment from the

promoter       based    on     the    number      of    shows     organized       by     that

promoter. Artists who contract ‘locally’ and book with several

promoters in various parts of the country will often receive

instead    a    percentage       of    the     gross      ticket       sales    from    each

concert.” It’s My Party, Inc. v. Live Nat., Inc., 88 F. Supp. 3d

475, 481 (D. Md. 2015).

                                             B.

     IMP was dissatisfied with the workings of the industry as

described      above.     Plaintiff      brought         suit     on    March    5,     2009,

alleging that LN had violated § 1 and § 2 of the Sherman Act and

parallel    Maryland         antitrust   law      through       monopolization,         tying

arrangements, and exclusive dealing. The result of LN’s conduct,

claims IMP, was the foreclosure of competition in the concert

promotion      and     venue   markets.      The       district    court       denied    LN’s

                                             4
motion to dismiss in July 2009 and an initial motion for summary

judgment without prejudice in August 2012. Following briefing

and argument, the court granted summary judgment in LN’s favor

in February 2015.

       In a careful opinion, the district court declined to adopt

IMP’s     definition      of   the   promotion          market    and     excluded   the

portion of its expert analysis defining the venue market. It’s

My Party, 88 F. Supp. 3d at 485-88, 490-92. The trial court also

found        insufficient      evidence          that     LN      had     engaged     in

monopolization,       tying,    or   any    other       anticompetitive       behavior.

Plaintiff’s state law claims were deemed to fall in tandem with

its federal ones. IMP now appeals.

       Our standard of review is well settled. Summary judgment is

justified if “there is no genuine dispute as to any material

fact and the movant is entitled to judgment as a matter of law.”

Fed.    R.    Civ.   P.   56(a).     “In   reviewing       a     motion    for   summary

judgment, the court must ‘draw any permissible inference from

the underlying facts in the light most favorable to the party

opposing the motion.’” Sylvia Dev. Corp. v. Calvert County, Md.,

48 F.3d 810, 817 (4th Cir. 1995) (quoting Tuck v. Henkel Corp.,

973 F.2d 371, 374 (4th Cir. 1992) (citation omitted)).

                                           II.

       Plaintiff faces here the initial challenge of identifying

exactly       what   market    defendant         is     accused    of     monopolizing.

                                            5
Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 455-56 (1993)

(discussing the definition of a relevant market as a threshold

issue for monopolization claims under § 2); Eastman Kodak Co. v.

Image Tech. Servs., Inc., 504 U.S. 451, 464 (1992) (treating

“appreciable economic power in the tying market” as a “necessary

feature of an illegal tying arrangement”). In the absence of a

plausible market definition, courts are hard pressed to discern

the    nature       or   extent    of   any   anticompetitive     injury     that

plaintiff and other similarly situated parties may be suffering.

       This case involves two separate but related markets: the

market for concert promotion and the market for concert venues.

In    both,   the    relevant     consumers   are   performing    artists,    who

contract with promoters and venues to put on concerts. In its

market    definition       analysis,    IMP   characterized      the   promotion

market as national rather than local and restricted the venue

market to major amphitheaters to the exclusion of other venues.

As the district court recognized, these definitions were plainly

designed to bolster IMP’s monopolization and tying claims by

artificially exaggerating LN’s market power and shrinking the

scope of artists’ choices.

                                         A.

       To support its claims that LN was monopolizing the concert

promotion market and tying promotion services to its venues, IMP

had to first define the promotion market and demonstrate LN’s

                                         6
market     power        therein.    According      to    IMP,     promoters      compete

nationally for contracts to promote performances anywhere in the

country.    By     defining       the   market    as    national,      IMP    could    more

easily construe LN’s nationwide network of promoters and venues

as evidence        of    market    power.    In   contrast,      IMP     could   portray

itself   as    a    modest    regional      outfit      whose    resources       pale    in

comparison.        If    instead    the   market       were    defined       locally    and

narrowed to just the Washington-Baltimore area, then IMP would

appear     more     evenly    matched       against     LN’s     regional      capacity.

Unfortunately for plaintiff, its market definitions are blind to

the basic economics of concert promotion.

     The      relevant       geographic      market      in     antitrust      cases     is

defined by the “area within which the defendant’s customers . .

. can practicably turn to alternative supplies if the defendant

were to raise its prices.” E.I. du Pont de Nemours & Co. v.

Kolon Indus., Inc., 637 F.3d 435, 441 (4th Cir. 2011). Applied

to this case, that inquiry focuses on the area within which

artists can find alternative promoters if any one promoter were

to increase its prices. The goal of concert promotion is of

course to boost ticket sales. Therefore, artists’ demand for

promotion     services       is    derivative     of    the    public’s       demand    for

concert performances. Concertgoers will typically not travel out

of their region to attend a concert in response to higher ticket

prices in their area. Heerwagen v. Clear Channel Commc’ns, 435

                                             7
F.3d 219, 228 (2d Cir. 2006). Because the demand for concerts is

local, promoters need to target their advertising to the area

surrounding a particular venue. As the district court found in

reviewing the record, “promoting shows is highly localized, and

. . . most promoters promote in specific locations.” It’s My

Party, 88 F. Supp. 3d at 492. “For example, Live Nation books

the majority of its television advertising locally, with only

about five percent spent on national advertising.” Id. at 491.

     These market dynamics favor promoters familiar with local

media outlets and the local audience. An artist is unlikely to

switch to a promoter based in Miami simply because a Baltimore

promoter demands a bigger cut of the ticket sale proceeds. IMP

sidesteps this point by focusing on the feasibility of promoting

concerts     from     anywhere      using      modern       technology.       That

technological capacity is useless, however, without the relevant

local knowledge and local contacts. Indeed, IMP itself must be

aware   of   that   reality     since   it   does    not   attempt   to   promote

beyond its Washington-Baltimore base. Even a national promoter

like LN is almost exclusively focused on local advertising and

operates its promotion services through regional offices rather

than a central hub. J.A. 2427. The ability of national promoters

to coordinate cross-country tours does not change the fact that

they provide services and compete for business on a local basis.

Heerwagen,    435   F.3d   at    230.   In   short    then,   the    market   for

                                        8
concert promotion is local, and the relevant competition in this

case is between IMP and LN for the Washington-Baltimore area.

The battle, in other words, is on IMP’s own turf.

                                         B.

      IMP’s     definition      of     the    venue     market     is        similarly

defective.      It      first     confined       the     market         to     “major

amphitheaters,” large outdoor spaces suitable only for popular

artists,     while    excluding      clubs,   arenas,    stadiums,       and    other

venues. Not content with that narrow definition of the venue

market, IMP further specified that the amphitheaters must have a

capacity of 8,000 or more, actually sell 8,000 or more tickets,

and be in use only from May to September. Only two venues in the

entire   Washington-Baltimore         area    meet    IMP’s    specifications      –-

the   very    two    venues   featured   in    this    case,    Merriweather      and

Nissan. IMP’s approach is akin to defining a market to include

tennis players who have won more than three Olympic gold medals

and finding that only Venus and Serena Williams fit the bill.

      This exercise in precise line-drawing “suits the needs of

plaintiffs,” as the district court observed. It’s My Party, 88

F. Supp. 3d at 488. LN’s market power appears magnified when the

relevant market contains only two competitors, and any business

taken away from Merriweather seems to flow directly to Nissan.

But in its haste to stage this one-on-one showdown, IMP again

casts sound economics aside.

                                         9
       Whether a product, in this case amphitheaters, commands a

distinct       market         depends      on        whether          it      is     “reasonably

interchangeable,” United States v. E.I. du Pont de Nemours &

Co.,    351    U.S.      377,    395    (1956),          with      other    products       or   the

“extent to which consumers will change their consumption of one

product in response to a price change in another, i.e., the

‘cross-elasticity of demand.’” Eastman Kodak Co., 504 U.S. at

469 (citations omitted) (quoting E.I. du Pont de Nemours & Co.,

351    U.S.    at   400).       Here,    IMP    has       not       pointed    to    any     record

evidence demonstrating that artists are so likely to stick to

amphitheaters            in     the     event        of        a    price      increase         that

amphitheaters         comprise        their     own       market.        Artists     who     prefer

amphitheaters may nonetheless turn to a lower-priced substitute,

which, after all, allows the show to go on. There is therefore

an insufficient basis for excluding “reasonably interchangeable”

venues    such      as    similarly      sized          arenas      or     stadiums    from     the

market definition.

       Plaintiff has simply not carried its burden of showing that

amphitheaters are the only place certain artists are willing to

perform, irrespective of the monetary or logistical advantages

of     other    concert       locations.           As     the       district       court     noted,

“artists       regularly        perform       at        both       amphitheaters       and      non-

amphitheaters,” and any “artist dissatisfied with Live Nation’s

conditioning of amphitheaters could simply perform at another

                                                10
venue.” It’s My Party, 88 F. Supp. 3d at 497. IMP’s key evidence

supporting its venue market definition –- a statistical analysis

that    purportedly        shows     that       some     artists       prefer     either

amphitheaters or arenas -- fails to adequately consider cross-

elasticity      of    demand   between     the    two     types   of    venues.     IMP’s

reliance on this evidence is akin to claiming that Pepsi and

Coke are in different markets because consumers generally prefer

one or the other. Mere consumer preference does not indicate

what Pepsi enthusiasts would do in response to an increase in

its    price.    Similarly,      a   particular         artist’s       preference    for

amphitheaters or arenas does not reveal what the artist would do

if the cost of performing in an amphitheater began to rise.

       In defending its market definition, IMP chides the district

court for rigorously challenging its expert’s analysis. But that

court     was   not     required     to    accept       uncritically      two     market

definitions      --    a   sweeping       national       promotion      market    and   a

cramped    amphitheater-only         venue      market    –-   that     coincidentally

fit plaintiff’s precise circumstances. No party can expect to

gerrymander its way to an antitrust victory without due regard

for market realities. See E.I. du Pont de Nemours & Co., 637

F.3d at 442.

                                          III.

       Lacking sound market definitions, IMP’s monopolization and

tying claims are left in a weakened state. Even assuming the

                                           11
plausibility          of     those     definitions,            however,        plaintiff’s

allegations of anticompetitive conduct fail of their own accord.

The   bulk     of   IMP’s    case     hinges      on    two    closely      related     tying

claims. First, plaintiff argues that artists who hire LN for its

promotion services are compelled to perform at its Nissan venue.

Second,      LN       allegedly      will        give     artists       access     to    its

amphitheaters in other locations only if they choose Nissan for

their Washington-Baltimore date. In these two claims, the tying

products       used     to   lure     artists       are    promotion        services     and

amphitheaters in other areas, whereas the tied product forced

upon artists in both instances is Nissan. We will address the

venue-to-promotion           and     venue-to-venue           tying     claims     in   that

order.

                                             A.

      A tying arrangement is “defined as an agreement by a party

to sell one product but only on the condition that the buyer

also purchases a different (or tied) product.” N. Pac. Ry. Co.

v.    United      States,    356     U.S.    1,     5     (1958).      Tying     suppresses

competition in two ways: “First, the buyer is prevented from

seeking      alternative      sources       of    supply      for     the   tied   product;

second, competing suppliers of the tied product are foreclosed

from that part of the market which is subject to the tying

arrangement.” Advance Bus. Sys. & Supply Co. v. SCM Corp., 415

F.2d 55, 60 (4th Cir. 1969).

                                             12
       What causes these anticompetitive harms and distinguishes

tying from ordinary market behavior is not the mere bundling of

two products together but rather the coercion of the consumer.

As the Supreme Court put it, the crux of tying lies in “the

seller’s exploitation of its control over the tying product to

force the buyer into the purchase of a tied product that the

buyer either did not want at all, or might have preferred to

purchase elsewhere on different terms.” Jefferson Parish Hosp.

Dist. No. 2 v. Hyde, 466 U.S. 2, 12 (1984), abrogated on other

grounds by Ill. Tool Works Inc. v. Indep. Ink, Inc., 547 U.S. 28

(2006)    (emphasis     added);    accord    Phillip     E.   Areeda    &     Herbert

Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles

and    Their   Applications    ¶   1700i    (3d    ed.   1995)   (deducing         from

longstanding case law that “no tie exists unless the customer

was ‘coerced’ into taking both products”). If instead the buyer

is free to decline the tied product or to purchase the two

products separately, then by definition there is no unlawful

tying. See Times-Picayune Pub. Co. v. United States, 345 U.S.

594,     614   (1953)    (stressing      the      importance     of     a    “forced

purchase”); Stephen Jay Photography, Ltd. v. Olan Mills, Inc.,

903 F.2d 988, 991 (4th Cir. 1990) (same). That is precisely the

case here.

       While   paying    lip   service      to    the    tying   case       law,   IMP

proceeds to strip the doctrine of its core element of coercion.

                                       13
By its proffered definition, IMP argues that tying occurs any

time a seller who has market power over product A offers it for

sale together with product B. But merely offering two products

in a single package, allowing each to enhance the appeal of the

other, is not itself coercive. Otherwise, the seller would be

guilty      of     anticompetitive          conduct        even    if        buyers       in    fact

preferred        and    freely      chose    to     buy    product       A    and     product      B

together         and    competitors         were    not        foreclosed       from       selling

alternatives           to   product    B.    Without       the    element       of     coercion,

IMP’s version of tying targets none of the anticompetitive harms

animating the doctrine. Advanced Bus. Sys. & Supply Co., 415

F.2d at 60 (outlining the harms to competitors and consumers).

Without coercion -- i.e., without requiring the customer to buy

product B when buying product A -- selling products A and B as a

unit   is    simply         one   strategy     for    gaining       an       edge    in    a     free

marketplace. To allow tying doctrine to swell to the point of

prohibiting        such      legitimate       means       of    competition         would       make

antitrust law its own worst enemy.

                                               B.

       A review of the facts in this case reveals IMP’s reason for

excising coercion from tying doctrine: plaintiff has no prospect

of   satisfying         that      element    here.    The       record       contains          little

basis for concluding that artists were coerced into taking the

tied product, performances at Nissan, with the tying product,

                                               14
LN’s    promotion         services.      IMP      cherry-picks        excerpts        of       LN’s

communications,            mostly       internal      emails,         that        discuss       its

negotiations         with      artists    over      concert    tours        and    the     Nissan

venue. In no instance, however, did LN convey that an artist

could not receive its promotion services unless it appeared at

Nissan. In fact, several agents specifically denied being forced

to put their artists in LN venues as part of their agreements

with LN. J.A. 6556-57, 6580-82. In response, IMP conjectures

that    the    “agents         shaded    their      testimony     for        an    entity       who

dictates whether their clients ‘work.’” Appellant’s Br. at 44-

45. But if pure speculation by a competitor were enough to prove

the    opposite      of     what     consumers      describe     is    happening          in    the

market, then antitrust defendants should surrender every time a

rival files a complaint.

       There       is,    moreover,      ample      evidence    suggesting          the     exact

opposite      of    what       IMP   seeks   to     prove,     namely       the    absence       of

coercion and tying. Plaintiff’s own analysis reveals that the

tying    product         was    sometimes      sold    without        the    tied     product.

Artists on LN-promoted national tours, the very artists who were

supposedly strong-armed into performing at Nissan, in fact chose

IMP-owned Merriweather fourteen percent of the time. J.A. 4630-

31. Ten percent has been cited as the minimum benchmark for

separate sales sufficient to rebut any inference of tying. 10

Areeda & Hovenkamp, supra, at 328, ¶ 1756b2. Without adopting

                                               15
that particular figure as the definitive baseline, we note that

non-tied sales in this case exceed it sufficiently to cast doubt

on any allegation of tying.

         Even without direct evidence, a plaintiff could still prove

coercion circumstantially. See Serv. & Training, Inc. v. Data

Gen. Corp., 963 F.2d 680, 688 (4th Cir. 1992). Here, IMP relies

on   a    regression         analysis       purporting      to       show    that      artists       on

national        tours      promoted     by    LN       disproportionately              perform       at

Nissan rather than Merriweather. From that analysis, IMP infers

that LN must be tying Nissan to its promotion services. For

plaintiff,          there    could     be    no    other    reason          for    the    artists’

choice to pair an LN venue with LN promotion.

         But    that    supposition         likewise       falls      short.       To    prove       an

antitrust           violation,    a    plaintiff         must    present          evidence       that

“tends         to    exclude     the    possibility”            of    independent             conduct

consistent          with     competition.         Matsushita         Elec.    Indus.          Co.    v.

Zenith Radio Corp., 475 U.S. 574, 588 (1986) (quoting Monsanto

Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 764 (1984)). A

successful           tying     claim    in        particular         needs        to     rule       out

alternative market-based explanations for why the consumer might

prefer         to    purchase    the    tied       product       along       with       the     tying

product. See Serv. & Training, Inc., 963 F.2d at 687-88. In this

case, IMP ignores a host of independent reasons that could have

led artists on LN tours to freely choose Nissan.

                                                  16
       One obvious explanation is that LN simply outcompeted IMP

and gave artists better compensation to appear in LN venues. In

one    case,   two       artists    declined      Merriweather          only    after    LN

offered   100%      of    the    gross   ticket       sales    (minus        expenses)   to

perform at Nissan and another LN amphitheater. J.A. 2716. In

another instance, LN enticed a band to play at Nissan by adding

$150,000 to the guaranteed payment for a slate of performances

around the country. J.A. 6447-48. These differences in artist

compensation offered by IMP and LN, clearly signs of competitive

negotiations,        were       curiously     missing        from    IMP’s     regression

analysis.

       Plaintiff also ignores the simple fact that it could have

been more efficient for artists already on LN tours to work with

the    same    concert       promoter       and       venue    operator        for   their

Washington-Baltimore date. The artist may have dealt with LN on

other occasions and come to appreciate the working relationship.

More broadly, the national promoter holds distinct advantages

over    its    regional         competitor:      it    can     offer    tour     packages

combining a series of venues with promotion services in multiple

locations.     By    contrast,       IMP    is    limited       to     the    Washington-

Baltimore area, most likely a single stop on any given tour.

Accepting      a    comprehensive        and      cost-effective         package      that

happens to include Nissan is not tying –- it is simply a good

deal for the consumer.

                                            17
     The final and perhaps most salient factor is that Nissan

may be a superior venue to Merriweather. IMP scoffs at this

idea, boasting that “Merriweather is an iconic amphitheater in a

bucolic    setting,”       whereas     “Nissan       is     a       concrete     shell     with

horrific parking problems.” Appellant’s Br. at 42. Setting aside

IMP’s    potential     bias    for    its    own     venue,         Nissan     possesses    at

least     some     advantages.       It     carries       the        prestige      and    name

recognition       of   being       affiliated       with        a    top-flight         concert

promoter.        Nissan     also     holds        over     5000       more      seats      than

Merriweather, nearly all of which are fixed seats that command a

higher     ticket      price   than       open      lawn        space,        giving     Nissan

significantly greater earning potential. As the Supreme Court

reminds us, “intrinsic superiority of the ‘tied’ product would

convince    freely        choosing    buyers       to     select         it    over    others”

without any coercion from the seller. Times-Picayune, 345 U.S.

at 605; accord Serv. & Training, Inc., 963 F.2d at 687-88. Yet

IMP fails to account for Nissan’s or LN’s inherent advantages,

or indeed any explanation of artists’ preference for that venue

other than an illicit tying arrangement.

     Not only did artists have various reasons to choose Nissan

of their own accord, but they were also equally free to turn

down that venue or LN’s entire package deal of venues and tour

promotion. Artists have always had two options for structuring

their    tours.     Instead    of     contracting          with      a    single       national

                                             18
promoter for all concert dates, performers can work with local

promoters on a concert-by-concert basis and pick any venue they

want for a specific date. If at any point LN tried to tie Nissan

to   its   promotion         services,      the   artist       could    book     its    tour

“locally,”     use     another      promoter      for    the    Washington-Baltimore

area,   and    opt     for     Merriweather       instead.      When     promotion       and

venues “may be purchased separately in a competitive market, one

seller’s decision to sell the two in a single package imposes no

unreasonable restraint on either market.” Jefferson Parish, 466

U.S. at 11. In other words, LN’s combined but non-coercive offer

of   promotion       and     venues       would   not    foreclose           artists    from

choosing Merriweather over Nissan or other venue operators like

IMP from competing for that business. If, however, LN happened

to   out-bargain           IMP     with     better       package        deals,         better

compensation,        and   a     better    venue,    then      an   antitrust      lawsuit

would not be the answer to plaintiff’s troubles.

                                             C.

      IMP’s venue-to-venue tying claim is largely a repetition of

its claim of venue-to-promotion tying. The key difference is the

tying product. Plaintiff argues that LN leveraged its market

power in      areas    where      it   controlled       the    only    amphitheater       to

force   artists       to   perform     at    Nissan.     Again,        IMP    presents    no

direct evidence that LN withheld access to amphitheaters in LN-

controlled areas unless artists chose Nissan over Merriweather.

                                             19
Nor does its circumstantial evidence manage to rebut the myriad

reasons discussed above for why artists would independently make

that choice of venue. The mere fact that artists sometimes took

a package deal of multiple LN venues for a given tour does not

prove tying. At the same time, the record shows a proportion of

non-tied     sales   that    far     exceeds   the   ten-percent    benchmark:

twenty-six     percent       of     artists    who   performed     at   an   LN

amphitheater in a locality where it owned the only such venue

ended up choosing Merriweather, not Nissan, for its Washington-

Baltimore show. J.A. 5529-30. With one in four consumers buying

the tying product without the tied product, it becomes hard to

accept a story of LN strapping Nissan to its other venues and

forcing artists to perform there.

     The change in the tying product thus makes no difference to

plaintiff’s case. IMP still fails to prove anything more than,

as   the     district       court    found,     “vigorous   competition      by

Merriweather and Nissan in negotiating with artists to perform

at their respective venues.” It’s My Party, Inc., 88 F. Supp. 3d

at 495. In a world of robust market competition where artists

were free to take a package deal of promotion and venues, free

to purchase those products separately, free to turn down both,

and where they in fact exercised all those options to their

                                        20
advantage, the strands of IMP’s reasoning begin to resemble the

invisible ropes allegedly tying LN’s products together. *

                                                   IV.

       Quite           beyond    the     specifics        of     market       definitions     and

product       tying,       IMP       levies    a   more    general       attack.      Its   brief

stresses LN’s market position as “the largest promoter in the

world, larger than all other promoters combined.” Appellant’s

Br.    at        63.    Size     and    scope,      in    IMP’s    eyes,       are    cause    for

suspicion. LN’s nationwide reach, “1,000 artist relationships,”

id., and exclusive access to venues are apparently so dominant

that       the    network       itself      deters       entry    into    the    industry     and

unfairly disadvantages localized competitors like IMP. Id. at

63-65.      According           to   plaintiff,         “attempting      to    replicate      LN’s

network and promotion relationships would cost ‘billions.’” Id.

at 63.

       The sweeping attack upon LN’s size in this action cannot

without more suffice to prove an antitrust infraction.                                        Upon

further          inspection,         what     plaintiff        characterizes         as   illegal

conduct turns out to be lawful pro-competitive behavior. To hold

otherwise would have the most serious implications. Carried to

       *
       IMP’s other claims of anticompetitive conduct by LN fall
in tandem with its tying allegations since all are based on the
same misconceptions. Likewise, plaintiff’s state antitrust law
claims echo its allegations under the Sherman Act and thus also
fail. Finally, plaintiff’s remaining state-law claims fail for
the reasons outlined by the district court.

                                                   21
their logical end, plaintiff’s arguments would cast a pall over

all manner of packaged deals, free contractual negotiations, and

any endeavor to become the dominant player in an industry. To do

so would undermine the very competition that antitrust law was

designed to encourage. See Verizon Commc’ns Inc. v. Law Offices

of Curtis V. Trinko, LLP, 540 U.S. 398, 407 (2004) (“The mere

possession of monopoly power, and the concomitant charging of

monopoly prices, is not only not unlawful; it is an important

element of the free-market system.”).

     The word “tying” at the core of plaintiff’s claims carries

a   sinister   connotation,      evoking       the       image    of     an    unwelcome

parasite tightly bound to the desired product with the helpless

consumer    unable   to   take   one    without      the     other.      In    outlawing

tying    arrangements,     Congress     and        the    Court       were    originally

concerned    with    egregious   forms       of    leverage,          such    as   tacking

superfluous goods onto a patented product. Areeda & Hovenkamp,

supra, at ¶ 1700d. That leverage was understandably seen as an

unfair   way   for   monopolists       in    one    market       to    invade      related

markets. Erik Hovenkamp & Herbert Hovenkamp, Tying Arrangements

and Antitrust Harm, 52 Ariz. L Rev. 925, 931 (2010).

     Yet even as the Court recognized that evil, it hastened to

stress the value of offering “package sales” of multiple goods,

“conduct    that    is   entirely   consistent           with    the    Sherman      Act.”

Jefferson Parish, 466 U.S. at 12; see also Serv. & Training,

                                        22
Inc., 963 F.2d at 688.              What buyers often want is “the purchase

of several related products in a single competitively attractive

package,”         especially      where       each    component      alone     would     hold

comparatively little value. Phillips v. Crown Cent. Petroleum

Corp., 602 F.2d 616, 628 (4th Cir. 1979) (giving the example of

a   restaurant          franchise    as        a     packaged      product     desired     by

restaurateurs).          Offering        an        “attractive      package,”       however,

becomes       indistinguishable          from       anticompetitive        conduct     under

IMP’s conception of coercion-less tying. If that view carries

the day, no seller could combine related goods or leverage its

competitive         advantage       in    related          markets       without     risking

antitrust charges.

       The real loss would be the productive synergies created

when sellers package complementary products. LN’s business model

serves       as   an    example.    When       LN     bundles      promotion,      including

financing         and   advertising,          and    a    series    of    concert    venues

together, it becomes a one-stop shop for touring artists. In

such     a    case,     the    practice        of     “[b]undling        obviously     saves

distribution and consumer transaction costs . . . [and] can also

capitalize        on    certain    economies         of   scope.”     United    States     v.

Microsoft Corp., 253 F.3d 34, 87 (D.C. Cir. 2001). Artists do

not have to seek out and transact with separate sellers for each

of the services offered by LN.

                                               23
      The whole thereby becomes greater than the sum of its parts

as LN is able to offer advantages only made possible by selling

distinct but complementary products together. As one example,

managing concerts in multiple locations allows LN to “cross-

collateralize” its tours. It’s My Party, 88 F. Supp. 3d at 481.

The   national   promoter       can   “cover    losses    from     concerts     that

underperformed with revenue from concerts that met or exceeded

expectations,” thereby reducing the overall risk for itself and

for the artists. Id. A local promoter responsible for a single

concert in a single location lacks this risk-pooling ability. It

is likely one reason why national promoters are often able to

attract artists with a higher guaranteed payment, while their

local counterparts can only offer a cut of the ticket sales for

a particular show. Id. If, however, the packaging inherent in

coordinating     concert    tours     were     deemed    unlawful      tying,    for

instance of one venue to another, then this synergy and its

attendant benefits would be at risk.

      Of course, the idea of synergy is not unique to the live

music industry. It, and thus the potential for tying, is present

whenever     products      or    production      processes       fit     naturally

together. A prime example is vertical integration, where a firm

houses     multiple   stages     of    the     production    and    distribution

process for a single good or related goods. Andy C. M. Chen &

Keith N. Hylton, Procompetitive Theories of Vertical Control, 50

                                        24
Hastings L.J. 573, 578 (1999). Take a computer manufacturer, for

example, that “makes its own steel, types its own documents,

creates and places its own advertising, transports the finished

product   to       dealers,    or    repairs      the    product       in    the    hands       of

consumers. To that extent it ‘forecloses’ independent makers of

steel   or    suppliers       of    typing,       advertising,        transportation            or

repair services.” Areeda & Hovenkamp, supra, at ¶ 1700j1. One

could conceivably accuse the vertically integrated manufacturer

of tying those goods and services together in selling the end

product, the computer.

     And yet it is no surprise that vertical integration has

generally      been      permitted    despite       its     apparent         similarity         to

tying. See id. (noting antitrust law’s tolerance of vertical

integration);         Roger   D.     Blair    &    David       L.    Kaserman,          Vertical

Integration, Tying, and Antitrust Policy, 68 Am. Econ. Rev. 397

(discussing        the     functional        similarities           between        tying       and

vertical integration). A single firm incorporating separate but

closely      related      production     processes         can      often     be    far       more

efficient      than      various     independent           entities      transacting            to

produce the same good or bundle of goods. See Jefferson Parish,

466 U.S. at 41 (O’Connor, J., concurring in judgment) (quoting

Fortner   Enters.        v.   U.S.    Steel       Corp.,    394      U.S.    495,       514    n.9

(White,      J.,     dissenting)       (1969)).         With        advances       in    modern

technology         comes      even     greater          potential           for     efficient

                                             25
integration,     increased    compatibility      among   products,    and    ties

that are technological as much as or more than contractual. See

Areeda & Hovenkamp, supra, at ¶ 1701d. It would be unfortunate if

an    overly   aggressive     tying   doctrine      were   to    impede      that

innovation.

      Because concert venues and promotion are not technically

part of the same production process, this may not be a case

involving vertical integration per se. Nonetheless, one can see

how IMP’s expansive tying definition could chill constructive

forms of integration. Unable to sell goods and products as a

single unit, businesses may have little reason to consolidate

underlying     production    processes     and   promotional    strategies    no

matter how efficiently they fit together. The eventual outcome

would be a strange world in which sellers go out of their way to

isolate their own products and different components of their

production and promotion processes from one other.

      The ultimate victim in that scenario would be the consumer

and   his    ability   to    freely   contract     for   desired     goods   and

services. So long as a transaction is free from coercion, the

consumer has every right to walk away from package deals or

demand more from the seller. It is paternalistic for either a

competitor or the court to just assume that taking two products

together is not the result of independent decision-making. See

Microsoft, 253 F.3d at 87-88 (reiterating consumer choice as the

                                      26
touchstone       of    tying      doctrine      and    the      need     to    assess    whether

consumers prefer to buy products together).

     From     its        market      definitions           to     its       descriptions       of

anticompetitive conduct, IMP’s entire case sets up a David-and-

Goliath battle between an industry behemoth and its regional

challenger. The tying argument in particular is predicated on

the fact that LN can leverage its sprawling national network of

promoters and venues to oblige artists to perform at Nissan. At

certain     points,         the    whole    argument         seems       to    turn     on   LN’s

dominant market position, on what LN is rather than what it did.

It may be understandable as a matter of strategy for antitrust

plaintiffs to target industry giants. Certainly, many such cases

do require a finding of market power, and the evidence may show

what it fails to show here, namely that the dominant player in

an industry used that very domination for anticompetitive ends.

See E.I. du Pont de Nemours & Co., 351 U.S. at 389-90 (focusing

monopolization          doctrine     on    the     exercise         of      market    power    to

foreclose fair competition).

     And    yet       big    is    not    invariably         bad.      An     outsized    market

position may reflect nothing more than business success achieved

through superior effort and sound strategy. See United States v.

Grinnell    Corp.,       384      U.S.   563,     570-71        (1966).       After   all,    the

purpose     of        antitrust      law     is       to     penalize         anticompetitive

practices, not competitive success. Even monopoly power, long

                                             27
considered       a    red    flag     in    antitrust       law,   can    under    certain

circumstances be a legitimate advantage:

          Firms may acquire monopoly power by establishing an
          infrastructure that renders them uniquely suited to
          serve their customers. Compelling such firms to share
          the source of their advantage is in some tension with
          the underlying purpose of antitrust law, since it may
          lessen the incentive for the monopolist, the rival, or
          both to invest in those economically beneficial
          facilities.

Trinko, 540 U.S. at 407-08. LN invested heavily in developing

just such an infrastructure, expanding beyond its core promotion

business to acquire exclusive booking rights at concert venues

nationwide           and     merging       with       a    leading     ticket      vendor,

Ticketmaster. The synergies among promotion, venues, and ticket

sales, all of which serve to bring live music to the public,

should be obvious.

     In     a        world    where        the    “big     is   bad”      mantra     reigns

unquestioned, we would be left with separate tour promoters,

separate venue operators, and separate ticket vendors, each with

little incentive to interact or join with the others despite

their natural affinities. See Fed. Trade Comm’n v. Proctor &

Gamble Co., 386 U.S. 568, 597-98 (1967) (Harlan, J., concurring)

(considering          the    possible        efficiencies       created      by    merging

producers       of    complementary         goods     in   adjacent      markets).    IMP’s

tying allegations thus threaten in the end to bring us three

forms of strict economic segregation, first of products, then of

                                                 28
production      processes,     and       finally       of    producers     in     adjoining

markets. It is not wholly fantastical to wonder if even ketchup

and mustard, salt and pepper, forks and knives will have to bid

each    other    adieu,      doomed      to     solitary       existences       along     the

grocery aisle.

       The     Davids   of    the       world        need    not   hope    for     such      a

marketplace in order to thrive. Just as big is not necessarily

bad, small is not necessarily weak. Even though national firms

undoubtedly have an edge over smaller competitors and David may

not triumph over Goliath everywhere, he can certainly hone his

home    court     advantage.        While       LN     was    busily      spreading       its

operations all over the country, IMP could have focused instead

on   branding     itself     as     a    uniquely        attractive       local    outfit,

striving to know the Washington-Baltimore audience better than

any other promoter and deepening its relationships with local

clubs, businesses, and media. As it is, IMP has in fact enjoyed

much success at its Merriweather venue, hosting scores of major

artists and doubling its revenue from $11.8 million in 2006 to

$22.5 million in 2012. J.A. 827-40, 4908.

       IMP’s    distortion     of    tying         doctrine    serves     in    fact    as   a

potential template for any local business wishing to drive a

national competitor out of its regional market. That template

would   prove     particularly          useful       when,    as   in   this    case,     the

competition is on a local basis and the competitors are a mix of

                                              29
national and local players. If offering products or services

across a particular field is tying and if a national network is

itself   suspect     when      compared    to     the    resources       of    a    regional

contender, then businesses have much less motivation to operate

in    multiple    geographic          markets.    Why     shoulder       the       costs    of

expansion when the specter of antitrust liability awaits?

      Cornering      the      local    Washington-Baltimore             market      may    not

have been far from IMP’s mind. Seth Hurwitz, IMP’s principal,

has protested that “the scourge of the [live music] industry is

too many shows.” J.A. 1566. According to Hurwitz, LN was “paying

way too much money just to keep [a] show away from [IMP],” and

the bidding process for concerts –- the key mechanism for price

competition among promoters -- made it “prohibitive to actually

do a show and make money.” J.A. 1560, 1562. To ease what it

considered an excess of competition, Hurwitz sought to eliminate

its    archrival.        He     suggested        either        that     LN     “sell       the

Nissan/Jiffy      Lube     property”      or     that    the    two     promoters      “work

together”    to     stop      bidding    against        each    other    when      bringing

artists to the Washington-Baltimore area. J.A. 1560-62, 1570.

After failing to collude with LN or expel it from the market,

plaintiff turned to the next best option –- antitrust law.

      This   case    thus      captures    the     anticompetitive            effects      and

consequences that can ironically arise from antitrust lawsuits.

See Matsushita Elec. Indus., 475 U.S. at 594 (warning against

                                           30
allowing      antitrust       doctrine      to    “chill         the    very    conduct      the

antitrust laws are designed to protect”); William J. Baumol &

Janusz A. Ordover, Use of Antitrust to Subvert Competition, 28

J.L.   &   Econ.    247    (1985).       This         can   be    a    special      hazard    in

antitrust litigation brought by competitors of the defendant.

See Edward A. Snyder & Thomas E. Kauper, Misuse of the Antitrust

Laws: The Competitor Plaintiff, 90 Mich. L. Rev. 551 (1991). If

abused, such suits can ineluctably lead to an environment of

commercial parochialism. By cutting ties among related products

and    related     producers,       IMP’s    view       of     economic        activity,     if

allowed    to    take     hold,    would     box       firms      both       into   their    own

product    markets      and    into   their       own       geographic        locales.      That

tendency toward isolationism has more in common with the market

squares and horse-drawn buggies of the nineteenth century than

with    the     interconnected        and        technology-driven              contemporary

world. The loser in all this is of course the consumer, left

with a patchwork of localized monopolies and one-product wonders

flourishing        at   the       expense        of    larger          and     more    diverse

competitors. To help prevent antitrust law from being hijacked

for such anticompetitive ends, we join the district court in

sending this tussle between two rivals back to the marketplace

from whence it came. The judgment is hereby

                                                                                      AFFIRMED.

                                            31