The U.K. Office Of Fair Trading has referred the proposed Live Nation-Ticketmaster merger to the U.K.’s Competition Commission, which means there should be a ruling on it by the end of November.
The OFT is worried because it could lead to the new U.S. giant having too much of the market.
LN U.K. President Paul Latham wouldn’t comment beyond saying he’s still confident the company has a strong case.
In August 2006 the OFT took the same decision over LN-Gaiety’s purchase of roughly half of Academy Music Group.
The OFT has a duty to make a reference to the CC if it believes a merger may result in a substantial lessening of competition within any market in the United Kingdom.
Under the 2002 Enterprise Act, a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million; or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 percent share of supply in the U.K. (or a substantial part thereof) is created or enhanced.
The Competition Commission has a statutory commitment to give a ruling within 24 weeks, which would expire at the end of November. That period can be extended if it determines there are special reasons why the report cannot be published within that time.
Echoing the German stock market when the news of the proposed merger first broke, one of the OFT’s main concerns is that it will marginalise CTS Eventim’s position in the market.
“In referring the merger to the CC, the OFT believes that there is a realistic prospect of a substantial lessening of competition resulting from the proposed merger, because of the prospect that CTS will withdraw from the U.K. market,” said a note posted on the OFT Web site June 10.
“Even if CTS were to remain in the market, the test for reference would still be met because of the prospect that its competitive strength could be significantly reduced without the full benefit of its arrangement with Live Nation,” the note continued.
The OFT is also concerned the proposed merger raises a concern about whether Ticketmaster’s key position in the ticketing market could lead to the new company restricting competition in the promotion of live music events, such as through limiting access by rival promoters to ticket agent services.
“Live music is a fast growing industry, currently worth around £1.9 billion a year. We expected CTS’s entry, through its contract with Live Nation, to be an important new competitive dynamic in the U.K. ticketing market,” the OFT notice continued. “The proposed merger risks undermining this by potentially prompting the exit of what would likely have been a third large player from the U.K., or at least significantly stunting its effectiveness.”
Ticketmaster responded with the following statement: “Today’s referral … is a standard part of a full regulatory review of our transaction, and we are confident that after the Commission completes its work, they will conclude that it meets the criteria for final clearance.
“We look forward to demonstrating how the joining of Live Nation and Ticketmaster will bring about a better approach to live entertainment events, creating greater choice and access for fans and artists while providing much-needed growth to the highly competitive and dynamic entertainment industry.
“Live Nation and Ticketmaster will cooperate fully with the Competition Commission as it reviews the merits of our proposed merger.”