Does Coachella Violate Antitrust Laws?

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Coachella Valley Music and Arts Festival owner Anschutz Entertainment Group Inc. (“AEG”) and its subsidiaries and affiliates were hit with a lawsuit for allegedly using anticompetitive practices such as prohibiting artists from performing at other shows in the months leading up to the popular event. The suit was filed in Oregon District Court on April 9. Soul’d Out Productions (“Soul’d Out”), the independent producer behind Soul’d Out Festival in Portland, Oregon claims that AEG uses its “strong-arming and leveraging tactics” to eliminate competition. For example, Plaintiff points to a “radius clause” (“Radius Clause”) in Coachella artists’ contracts which bars artists from performing at any other festival or musical event within a distance of roughly 1,300 miles for approximately five months preceding the festival. Soul’d Out Music Festival will take place April 18-22 in different venues around Portland. Coachella takes place over two weekends in Indio, California starting on April 13.

The suit points to AEG’s “substantial market power” which Plaintiff claims allows the entertainment company to “coerce artists into agreeing to these unlawful restrictions on trade.” In its complaint, Soul’d Out says that “numerous artists have declined to perform” at their festival, citing “the unlawful Radius Clause in their contracts with Coachella as the sole reason that they cannot do so.” For instance, Tank and Bangas, an American funk and soul music group confirmed they would perform at the Soul’d Out festival in September 2017. The group was also scheduled to perform at Coachella on April 13 and April 20. According to the complaint, “On January 29, 2018, Tank and the Bangas advised Plaintiff that they would no longer be able to perform, and cited the artists’ agreement with Coachella as the reason for withdrawal.”  And, Plaintiff faced a similar situation with popular R&B singer-songwriter, SZA, who declined Plaintiff’s offer to participate in the Soul’d Out Festival quoting the Radius Clause. According to Plaintiff, AEG allows exceptions to the Radius Clause where artists seek to perform at other venues owned, operated, controlled, or in concert with Defendants, or in which Defendants earn a portion of the profits from such events.

Plaintiff’s complaint alleges violations of antitrust, unlawful restraint of trade, unfair competition and tortious interference laws and seeks a declaratory judgment that the Radius Clause is unlawful, an injunction preventing AEG from enforcing the clause or taking other action to prevent artists from performing at the Soul’d Out festival, an award of treble damages for the antitrust violations and anticompetitive behavior and reimbursement for their legal fees and costs. According to Law360, Soul’d Out Productions co-founder, Nicholas Harris, said the goal of the lawsuit was to be able to recruit top-notch talent for its festival.

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