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Competition-limiting contract riders examined, Part 2

Imagine that a musical act you want to see is slated to appear next spring at the celebrated Coachella Valley Music and Arts Festival in the Southern California desert. Tickets are a bit steep for you, but you’ve been hearing some buzz that your favorite band might play at a smaller festival in an adjoining state a couple months later. Obviously, you’re buoyed by that.

Perhaps you shouldn’t be, because a rather arcane legal term known as a “contractual radius rider” might bar the band from appearing for some time before or following its Coachella performance.

In fact, principals with the CVMAF demand that its performing artists sign a clause that prohibits them playing at similar venues within five months and 1,300 miles of the festival.

Is that fair?

We noted in our April 27 blog post the understandable despair it is causing business rivals who, like the Coachella festival promoters, want to cash in on the lucrative festival market.

The CVMAF team says its riders do not unfairly restrain competition and that it has no plan whatever to cave into pressure to drop or amend them.

An Oregon-based rival is putting that to the test. It recently filed a federal lawsuit alleging that the contractual impositions violate relevant federal and state laws by unfairly hindering competition and hurting consumers.

The California court overseeing the case is expected to closely delve into state law on the matter that greatly limits would-be bars on competition. That law allows for only “narrow restraints.” The plaintiff will certainly argue that a five-month and 1,300-mile restriction is anything but narrow, and ask the court to rule that the CVMAF riders are unreasonably broad and unenforceable.

We will timely advise our readers across California of any material updates that emerge in the litigation.

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