In a move that could foreshadow more difficulties for the merger of Live Nation and Ticketmaster, a key British regulatory body has voiced opposition to the pending merger of the concert promotion titan and ticketing giant.
The U.K.’s Competition Commission issued a provisional ruling on Thursday that the union of the L.A.-based firms “could severely inhibit the entry of a major new competitor, CTS Eventim, into the U.K. ticketing market.”
The commission’s ruling echoes objections of witnesses who assailed the merger as anticompetitive at U.S. congressional hearings early this year.
Prior to the merger announcement in February, Bremen, Germany-based CTS agreed to provide ticketing for Live Nation’s British events, and it has enabled the U.S. promoter to operate a ticketing platform, which competes with Ticketmaster, in the U.S. since January.
A Live Nation-Ticketmaster alliance could erode CTS’ position in the U.K. market by cutting the number of tickets made available to the smaller firm, the commission said. “This could lead to higher net prices … and/or lower service quality or less innovation in the market,” the ruling stated.
Possible remedies proposed by the CC, which will render its final report Nov. 24, include divestiture of some of Live Nation’s and Ticketmaster’s U.K. operations or requiring Live Nation to use CTS or another company for U.K. ticket sales.
A joint statement from Live Nation and Ticketmaster noted the ruling’s specificity: “The CC has not found any adverse effects on competition affecting other ticketing agents, promoters and venue operators arising from the merger.”
The companies continued to extol the virtues of the prospective merger in challenging financial times for the music biz at large.
“The recording industry is a shell of its former self,” the statement said. “Where the recording industry was once the economic engine for the music business, it is live entertainment that is now the future of the music industry.
“We believe this merger will build a more efficient and effective company moving forward, and that working together we will be able to help achieve needed change that will strengthen a flagging music industry.”
U.K. body’s position could have a chilling effect on Stateside chances for the merger, now in the hands of the Justice Dept. One report this week said that Live Nation and Ticketmaster executives have returned to Washington in an effort to move forward approval of the transaction.
Senate antitrust hearings in February counterpoised upbeat testimony by Live Nation CEO Michael Rapino and Ticketmaster CEO Irving Azoff with claims of deal’s anticompetitive nature by promoters Jerry Mickelson of Chicago’s Jam Prods. and Seth Hurwitz of D.C.’s I.M.P. Prods., who go head-to-head with Live Nation in their markets while employing Ticketmaster’s services.
Committee chairman Sen. Herb Kohl (D-Wisc.) said at the time that the Live Nation and Ticketmaster executives’ rationale for the merger strains “our sense of common sense.” Congressional findings were moved to the Justice Dept. in July.
Justice is currently weighing whether the deal would stifle competition or push prices higher for consumers and is likely to make a decision within two months, according to Bloomberg News, which cited an unnamed source. A DOJ spokeswoman confirmed that the investigation was ongoing but had no further comment.
“I think the writing is on the wall that the deal is not going to happen without some fix,” said Mark Ostrau, an antitrust lawyer with Mountain View-based Fenwick & West.
(The Associated Press contributed to this report.)