Voicing concerns that there may be competition issues involving the proposed merger between Ticketmaster and Live Nation, the UK Office of Fair Trading (OFT) is recommending the planned deal be investigated by the country’s Competition Commission (CC).

The concerns center on Live Nation’s relationship not only with Ticketmaster Entertainment, which has served as Live Nation’s ticketing company in the UK for several years, but also with German company CTS Eventim, which Live Nation signed as its ticketing partner when it decided to launch its own primary ticket selling operation.

Ticketmaster’s ticketing deal with Live Nation in the UK expires at the end of this year, unlike the deal between the two in the U.S. which expired in December 2008. CTS Eventim would essentially take over Live Nation’s ticketing at the end of the year, but if Live Nation merges with Ticketmaster, the two could potentially have a lock on primary ticketing in the UK and CTS Eventim could pull out.

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“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 UK market,” the OFT stated. “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.”

Ticketmaster and Live Nation hope to close on the deal in the second half of 2009, but the CC’s report is not expected until late November, according to officials. Whether that would hold up the deal is unknown.

“Today’s referral by the Office of Fair Trading to the Competition Commission 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,” john Vlautin, spokesperson for Live Nation, and Hannah Kampf, spokesperson for Ticketmaster, said in a joint statement. “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.”

Both companies also are currently cooperating with officials from the U.S. Department of Justice on a separate but similar investigation into potential antitrust issues surrounding the deal.

The OFT also said it was concerned about the possibility that a combined Ticketmaster and Live Nation could freeze out competition among music promoters by steering acts toward or away from various venues or “ticket agent services.”
In a statement, Ali Nikpay, OFT Senior Director, said the potential for live music fans to suffer under the deal is real. “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 UK ticketing market. The proposed merger risks undermining this by potentially prompting the exit of what would likely have been a third large player from the UK, or at least significantly stunting its effectiveness. It creates a realistic prospect that the merger will deny those attending live music events the benefits of more competition in the distribution of tickets, which could include lower overall prices.”

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Joe Cohen, founder and CEO of UK secondary ticket company Seatwave, cheered news of the investigation, though he is “not generally opposed” to the proposed deal. Cohen will be among the speakers next month at Ticket Summit Las Vegas, the annual ticket industry conference and trade show hosted by TicketNews’s parent company TicketNetwork.

“As we expected, the OFT has referred this merger to the uk competition commission. There’s real concern this merger could reverse the current trend towards a more open and competitive market in the UK,” Cohen told TicketNews, adding that he believes at the very least, Ticketmaster should be forced to divest its UK secondary ticket company Get Me In. “We hope the OFT ultimately supports consumers’ right to choose from a multitude of ticket buying options whether they be primary, secondary, VIP or corporate. The entire live entertainment industry will benefit from increasing consumer choice.”