Coachella Radius Clause Lawsuit Tossed Out
By: Francisco Rendon
L-AcousticsCoachella Main Stage in Indio, California, USAL-Acoustics provided the systemA federal judge has ruled against Soul’d Out Productions in its suit accusing Coachella Valley Music & Arts Festival and promoters Goldenvoice and AEG Presents of anticompetitive practices related to the festival’s radius clause.
The crux of the suit, filed April 9, was that the Oregon-based Soul’d Out claimed that Coachella’s broad radius clause prevented many acts from being able to play its annual festival in Portland, more than 1,000 miles away, for nearly five months, and that such market power was being used anticompetitively and violated federal antitrust laws.
“Numerous artists have declined to perform at the Soul’d Out Music Festival and have cited the unlawful Radius Clause in their contracts,” the suit stated, “with Coachella as the sole reason that they cannot do so.”
AEG called for the dismissal of the suit in June, claiming that Soul’d Out failed to properly state claims for violation of antitrust laws, unlawful restraint, intentional interference, and unfair competition.
Chief District Judge Michael W. Mosman sided with AEG, according to Courthouse News Service, dismissing the case March 12.
A key part of Mosman’s ruling is the term “market power,” or “monopoly power.” Most types of antitrust violation require proof of “market power,” according to documents available through the Department of Justice, and Mosman rejected the plaintiff’s attempts to prove the existence of such power in Coachella, despite its massive profitability.
“I think the more fundamental problem is that you have numerous facts alleged that show profitability and success in this market but they don’t show market power,” Judge Mosman said, as reported by Courthouse News Service. “Some get close, for example the facts show the rise in ticket prices. That’s on the path, but they would have to show that in comparison to other ticket prices.”
“I also reject the sort of horseshoe argument that if you stack up enough facts about profitability you show market power,” Mosman added. “But profitability doesn’t require a company to defend an antitrust claim. Because I see this as a case that is facts in search of a theory, I am granting the motion to dismiss with prejudice.”
Coachella may well be the highest-grossing event in the industry, as the festival reported a $114,593,000 gross on 250,000 tickets in 2017. This year will feature Ariana Grande, Tame Impala, and Childish Gambino as headliners.
When the suit was initially filed, Pollstar explored the ramifications of large radius clauses with Seth Hurwitz, chairman of I.M.P., owner of the 9:30 Club and The Anthem in Washington, D.C.: “It’s important to protect any big play in a market, but it’s gotten out of hand as agents close deals. Either the buyer or seller says well OK, for that much money, nobody plays this far from it.
“The seller doesn’t think this through because they are so overjoyed at getting that big number to impress everyone, it doesn’t occur to them how it hurts surrounding markets. Or they don’t care.”
“The buyer has no reason to care. The fact is, the further a radius clause, the more you might force someone far away to go to your show. It’s incredibly short-sighted to let these borders creep and make new bad precedents. Serves nobody except that one deal.”