The war of words between Live Nation Entertainment and German ticketing giant CTS Eventim reached a new level earlier this month with the filing...

The war of words between Live Nation Entertainment and German ticketing giant CTS Eventim reached a new level earlier this month with the filing of an arbitration complaint by CTS with the International Court of Arbitration of the International Chamber of Commerce (ICC).

Before merging with Ticketmaster earlier this year, Live Nation had contracted with CTS for CTS to help create and operate the ticketing system it was starting to compete with Ticketmaster.

Live Nation quietly launched the new system in December 2008, but soon after the launch the system started experiencing problems, and during a conference call in February of this year, Live Nation Entertainment President and CEO Michael Rapino blasted CTS and said the company was replacing it with Ticketmaster although it would continue to honor the payments to CTS under the terms of the 10-year contract.

News of the CTS arbitration filing emerged this week in a Securities and Exchange Commission (SEC) document submitted by Live Nation, which states that among other things CTS believes it has been short-changed in compensation and ticket allocations, particularly in the UK, as a result of the merger.

The UK component of the merger has been especially contentious between CTS and Live Nation, and is currently the subject of a second antitrust review by the country’s Competition Commission.

CTS filed the original arbitration complaint on April 5 of this year, and it argues that among other things Ticketmaster’s “sales and distribution of tickets following the completion of the Merger have resulted in various breaches” of the CTS/Live Nation contract. In addition, the merger and those alleged problems “breached the implied covenant of good faith and fair dealing” between the two sides. CTS is seeking unspecified damages.

The two sides agreed that the ICC would be the forum to resolve disputes, but as of the SEC filing on Tuesday, April 20, Live Nation had not yet replied to the complaint. Yet, in a statement in the SEC document, the company said it believes the claims are “without merit,” but admitted that a ruling in CTS’ favor could hurt Live Nation’s ticketing operation:

Although Live Nation believes that CTS’s claims are without merit and inconsistent with the terms of the CTS agreement and that it has various defenses and counterclaims, including, without limitation, claims that CTS has breached the CTS agreement by failing to provide a ticketing platform that meets the minimum contractual standards imposed by the terms of the CTS agreement, an ICC arbitration panel could find in favor of some or all of the claims asserted by CTS in its request for arbitration and award damages or other remedies which could require Live Nation to take actions and incur expenses that would limit the ability of Live Nation and Ticketmaster Entertainment to fully integrate their ticketing platforms successfully and realize the full operational efficiencies that the combined company might otherwise obtain through the Merger.

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By Alfred Branch Jr.

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