The U.K.'s Competition Commission (CC) has made a provisional ruling that the proposed merger of Live Nation and Ticketmaster Entertainment will hinder competition in the market for live music ticket retailing, which could result in higher prices.

Both companies have responded by stating that the merger will in fact help "strengthen a flagging music industry."

The merger could "severely inhibit the entry of a major new competitor - CTS Eventim - into the U.K. ticketing market," the Competition Commission said in a statement today (Oct. 8). Yet CTS Eventim executives have previously expressed their confidence that they would not suffer as a result of any merger.

Rainer Appel, VP legal and business affairs, CTS Eventim, in Bremen, tells Billboard today: "We have taken note of the Competition Commission's advance decision. We are unable to comment on these or any other proceedings."

CTS Eventim, based in Bremen, Germany, is moving into the U.K. market as part of its pre-merger relationship with Live Nation and in March 2009 CEO Klaus-Peter Schulenberg insisted that the merger would have "no detrimental impact" on the 10-year partnership. The European promoter/ticketing operation runs ticketing for Live Nation in Sweden, Finland, Poland and the Netherlands and the agreement was in the process of extending into the Czech Republic, Hungary, United Kingdom and Norway. The deal also gave Live Nation a licence to use CTS Eventim's ticketing software in North America.

However, the Competition Commission has adjudged in its provisional ruling that CTS Eventim would have gained a foothold in the U.K. market under its deal with Live Nation, but that a merger could hinder this development. It has listed possible remedies including the divestment of the U.K. business of either Ticketmaster of Live Nation, and measures to ensure that CTS or another ticket agent can act as the retailer for many of Live Nation's tickets.

"The CC believes that, if the merger were to proceed, Live Nation would have the incentive to impede CTS's entry into the U.K. ticketing market, in particular by minimizing the supply of its tickets to CTS, and thereby frustrate CTS from becoming an additional effective competitor to Ticketmaster," said the Competition Commission statement. "This could lead to higher net prices (eg due to lower rebates to promoters and venues) and/or lower service quality and/or less innovation in the market than would otherwise be the case."

The Commission is an independent public body, which investigates mergers, markets and the regulated industries.

"CTS's agreement with Live Nation opened up the prospect of a major new competitor entering the market for live music ticket retailing in the U.K.," said Christopher Clarke, CC deputy chairman and chairman of the inquiry group, in a statement. "As the second-largest ticket agent in the world after Ticketmaster, with considerable experience and expertise in other countries, CTS's entry would have increased competition in ticket retailing to the benefit of customers - whether fans, promoters or venue owners.

"The merger with Ticketmaster means that Live Nation will have every incentive to inhibit a significant rival from entering the U.K. market and, given the significance to CTS of its agreement with Live Nation in deciding to enter the U.K. market, we believe that Live Nation would be able to do so. 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 U.K. in considerable doubt."

Following the announcement in the U.K., CTS Eventim's stock has risen by 9% from €30.02 ($44.24) yesterday to €32.81 ($48.35) today.

Live Nation and Ticket master have issued a joint statement.

"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," said the statement. "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."

The statement added: "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."

The consultation on the findings will run until Oct. 29 and a final report is expected by Nov. 24, following the CC's examination of the possible methods to address the loss of competition.

The Commission has not found any adverse effects on competition affecting other ticketing agents, promoters and venue operators that arise from the merger.

The provisional report is available at www.competition-commission.org.uk along with a notice of possible remedies. The merger is also being investigated by the U.S. Dept. of Justice and the CC is consulting with them.

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