Live Nation has submitted a document detailing what it describes as "key legal flaws" in the provisional Competition Commission (CC) ruling that the proposed Live Nation and Ticketmaster merger will hinder competition in the market for live music ticket retailing.

The CC issued its provisional ruling on Oct. 8. It has now published various submissions on its Web site, ahead of the extended inquiry deadline of Jan. 19, 2010.

The provisional ruling related to a deal entered into between Live Nation and Germany's CTS Eventim before the merger agreement. There was concern that the entry of CTS Eventim into the U.K. ticketing market would be hindered by the merger; the provisional findings suggested that various remedies would have to be considered if the merger were to go ahead.

However, in its submissions Live Nation detailed "important factual and analytical errors" in the ruling as well as "two fundamental flaws in the Commission's legal analysis that are fatal to its provisional conclusions."

"The provisional findings acknowledge that Live Nation has no market power in promotions, with a share of only 15-20%, and it is an even smaller part of the available customer base with a share of 10%," said Live Nation's submission, noting that "nothing about the merger inhibits CTS's efforts to compete for them [other major customers] just as it did for Live Nation (nor for the rest of the 80-85% of the market not accounted for by Live Nation)."

"The fact that these customers may not currently express a desire to use CTS therefore reflects the normal competitive process, not 'foreclosure' from that process," the submission added.

Live Nation also said that the provisional findings "misinterpret" the meaning of "substantial lessening of competition."

"The provisional findings do not find that Live Nation or Ticketmaster has market power, whether unilaterally or via tacit coordination with their respective competitors," said Live Nation's submission. "The find instead that Ticketmaster, for example, must compete in particular against See Tickets (along with a large number of smaller players in market that also includes self-ticketing)."

It added that any finding that the merger would create or increase market power "was not and cannot be made in this case."

In its own submission, Ticketmaster stated that there would financial costs resulting from the divestment of its U.K. business that would "deprive the merger of some, or all, of the benefits and efficiencies that are projected to arise from the combination." It identified banking and legal fees and costs related to reconfiguring of its U.K. operations, as well as pointing out the "key operational hurdle" of its ticketing technology.

If the U.K. business was sold off, this would result in a "very complicated license agreement with Ticketmaster Entertainment, Inc to meet its technology needs" for the new owner of the U.K. business, according to the company. Instead, Ticketmaster said that a behavioral remedy would be a better option than a structural remedy, and it agreed with Live Nation's proposal to provide "guaranteed ticketing inventory to CTS's system and a guaranteed allocation [of tickets] to CTS's Web site."

However, U.K. consumers' association Which? welcomed the Competition Commission's provisional findings, stating that prohibition of the merger would be the "only effective and proportionate remedy."

"Ticketmaster is, at present, a required trading partner for other promoters/venues," said Which?'s principal economist John Holmes. "This position would be open to abuse post-merger, for example with discriminatory terms charged to promoters competing against Live Nation."

In its submission, independent ticket agent Piccadilly Ticket Line said it was "poised for rapid growth" following the introduction of new ticketing software. It proposed that the Competition Commission should prevent Ticketmaster from providing ticketing services to Live Nation in the U.K. and that Piccadilly Ticket Line "be given CC approval to take on these services."

The Office of Fair Trading referred the proposed merger to the Competition Commission in June 2009. The Commission is an independent public body, which investigates mergers, markets and the regulated industries.

The submissions to the inquiry so far are here.

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