In a serious blow to the planned deal, the UK Competition Commission (CC) today issued a stern opinion against the Ticketmaster/Live Nation merger, stressing...

In a serious blow to the planned deal, the UK Competition Commission (CC) today issued a stern opinion against the Ticketmaster/Live Nation merger, stressing it “could severely inhibit the entry of a major new competitor (CTS Eventim) into the UK ticketing market.”

While the preliminary findings do not necessarily mean the deal cannot move forward, the commission’s move casts a negative light on the merger just weeks before the U.S. Department of Justice could issue its own findings. CTS Eventim and Live Nation partnered to launch Live Nation’s ticketing operation earlier this year, but how CTS would fit into a combined Ticketmaster and Live Nation remains unclear.

“The merger with Ticketmaster means that Live Nation will have every incentive to inhibit a significant potential rival from entering the UK market and, given the significance to CTS of its agreement with Live Nation in deciding to enter the UK market, we believe that Live Nation would be able to do so,” Christopher Clarke, Deputy Chairman of the CC, said in a statement. “We believe that, if the merger proceeds, Live Nation will seek to limit its relationship with CTS, with the effect of putting CTS’s future prospects in the UK in considerable doubt.”

In addition to the possible affects to CTS and the primary ticket market in the UK, the CC also looked at whether the merger would “adversely affect ticketing agents other than CTS, promoters and venue owners,” but in those instances the CC’s preliminary findings were not as condemning.

“However, we concluded that it was unlikely that the merged company would have both the ability and incentive to harm them significantly, either by Live Nation restricting the availability of its tickets to other agents or by Ticketmaster refusing to sell tickets for other promoters and venues,” Clarke said.

In a prepared statement, Ticketmaster officials said they will continue to press forward with the merger despite the UK opinion:

Live Nation and Ticketmaster respect the Competition Commission for its analysis of the merger and have cooperated, and will continue to cooperate, fully during this ongoing process. Both our companies are committed to this merger and look forward to addressing any and all issues that the commission deems necessary.

But we must be clear about the challenges of the music industry, which is at a decisive crossroad. The recording industry is a shell of its former self. 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.

During the course of this merger process, Live Nation and Ticketmaster have listened to our fans, artists and other stakeholders. We’ve heard a range of views regarding the issues and challenges facing the live music industry. We firmly believe that our merger achieves an important and much needed public interest, and remain optimistic that it will ultimately be approved.

In the U.S., critics of the merger seized on the CC’s preliminary ruling, hailing it as righteous decision that the deal must not be allowed to continue.

“The British authorities came to the conclusion that to let these two companies join together would quell competition in the primary ticket sales marketplace and lead to higher ticket prices for consumers,” U.S. Rep. Bill Pascrell, Jr. said in a statement. Pascrell introduced the Better Oversight of Secondary Sales and Accountability in Concert Ticketing Act (BOSS ACT) this year, which seeks to regulate the ticketing industry on a national level. “Ticketmaster and Live Nation have much larger shares of the market on this side of the Atlantic. Therefore, the U.S. Department of Justice would have even more reason to prevent the merger of these two companies.”

Gary Adler, General Counsel to the National Association of Ticket Brokers, said the merger would hurt consumers no matter which side of the Atlantic Ocean. “The decision in the UK should serve as a model for U.S. antitrust enforcers. If the merger violates UK law, it certainly must violate the law in the U.S. where Ticketmaster is even more of a dominant force.”

Adler added, “The UK antitrust authorities recognized this merger would lead to higher prices and less choice for consumers. They found that combining these two corporate giants would create an effective stranglehold in the UK ticketing market – which is exactly what would happen if this merger is allowed here in the U.S.”