AEG Faces Antitrust Lawsuit over Territorial Restrictions for Coachella Artists

Coachella Stage during Day 3 of the 2017 Coachella Valley Festival -Getty-H 2017
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The promoter of a music festival in Portland, Ore., is accusing AEG of anti-competitive behavior by refusing to allow Coachella musicians to play other regional events.

Soul'd Out Productions filed the antitrust lawsuit in Oregon federal court on Monday and takes issue with a so-called "radius clause" for artists who sign up for AEG's Coachella Valley Music and Arts Festival, which draws hundreds of thousands to southern California in mid-April.

"By means of this clause, Defendants prohibit artists who seek to perform at Coachella from performing at any other festival or themed event within a distance that extends over 1,300 miles, and for a period of nearly five months surrounding Coachella," states the complaint. "Such a clause has a substantial chilling effect on the market for music venues within the territory covered by the Radius Clause."

Soul'd Out objects to the expansion of the radius clause to cover Oregon and Washington and alleges the territorial restrictions have no pro-competitive effect as Coachella already sells out within a matter of hours.

"Because Defendants have substantial market power, they are able to coerce artists into agreeing to these unlawful restrictions on trade," continues the complaint, handled by attorneys at Schwabe, Williamson & Wyatt. "As a result, those artists have lost the benefits of performing at competitive venues or festivals that exist on the West Coast. The restriction on the ability of these artists to choose performance venues has thus affected a substantial volume of commerce on the West Coast and has an anticompetitive effect on the consumer, music venues and festivals on the West Coast, and promoters of such events — entirely as a consequence of Defendants’ strong-arming and leveraging tactics."

The plaintiff seeks a declaration that the radius clause is unenforceable and an injunction. Additionally, treble damages are being sought.

AEG's Goldenvoice division (a co-defendant) offered a response to the lawsuit.

"Radius clauses are an industry standard used by festival, concert and tour promoters designed to protect the integrity and exclusivity of their events," said a spokesperson. "While Coachella is a marquee brand, with close to 250,000 people attending from across the world and is a premier performance stop for 120 artists and bands, there are hundreds if not thousands of artists available to perform at venues around the country. The producers of Coachella will vigorously defend ourselves against this lawsuit, which calls into question the common industry practice employed by promoters and producers throughout the year."

The lawsuit marks yet another dispute for the suddenly hot issue of competition in the live concert business. Just last month, AEG was hit with an antitrust lawsuit led by Ozzy Osbourne for allegedly conditioning use of the O2 Arena in London on a commitment to play the Staples Center in Los Angeles. Meanwhile, AEG's rival Live Nation is facing its own problems, as the Justice Department is reportedly investigating how venues are being pressured into contracting with Ticketmaster.