Britain’s Office of Fair Trading (OFT) is investigating Ambassador Theatre Group’s (ATG) recent acquisition of venues previously owned by Live Nation, with the aim of clarifying whether or not the deal may interfere with competition in the live events industry.

OFT has charged ATG with “initial undertakings,” forcing the company to run their newly acquired venues as a separate entity while the government investigation proceeds. The value of the deal was £90 million (more than $143 million in U.S. dollars) and brings the total number of ATG venues to 40. The agreement effectively makes ATG the most powerful theater concern in the country, holding a substantially greater number of theater seats outside of London than all of its competitors.

As part of the OFT’s current investigation, which in Britain is considered standard for an acquisition of this size and not necessarily in response to specific government concerns, the agency is inviting comments from industry personnel on their concerns regarding the deal’s potential effects. Respondents have until December 9 to submit their concerns to the Office, with a decision on possible referral to the Competition Commission due by January 27. Once in the Commission’s hands, the deal may be subject to various conditions before it can be finalized.

This action by the OFT comes on the heels of the Competition Commission’s preliminary findings on the proposed merger between Live Nation and Ticketmaster. In its statement, the Commission warned that the merger had the potential to reduce competition in the industry there, subsequently reducing fans’ ticket options and raising ticket prices. The Commission has delayed its final decision on the merger, initially scheduled for late November, to January of 2010.

In recent weeks, Key Brand Entertainment (KBE) brought a lawsuit against Live Nation over the deal with ATG, claiming that it was locked out of negotiations to buy the venues in question. KBE had held a prior agreement with Live Nation that only bids of more than 107.5 percent of KBE’s bid would be considered by the concert giant in the negotiations. The suit claims that Live Nation shared the details of KBE’s final bid with ATG, allowing ATG to exceed the company’s bid and ultimately win the venues.

Live Nation’s move to sell their UK theaters comprises part of their recent efforts to pay down debt and gain a better financial footing in preparation for the proposed merger with Ticketmaster. At this time, both companies have extended their estimated deadline for closing the deal from the end of this year to the first quarter of 2010, a delay likely influenced in part by the Competition Commission’s revised timeline for their decision on the merger.