A proposed buyout of U.K. venue operator Academy Music Holding could bring about a hike in venue rental costs and reduce competition in London, the government's anti-trust body has reported.

The Competition Commission explained its views Tuesday (Dec. 5) in an 83-page provisional report, which examined Britain's live music scene in detail. A summary of the CC's findings was announced Nov. 30.

The government's consumer watchdog the Office of Fair Trading referred the proposed acqusition to the CC. Hamsard, an investment vehicle jointly controlled by Live Nation (Music) U.K. and Gaiety Investments, the Irish music promotion company owned jointly by Denis Desmond and his wife Caroline Downey, had announced in August that it intended to buy a 51% stake in Academy Music, jointly held by U.K. investment fund companies RJD Partners and F&C Private Equity Trust.

The report provisionally concludes that the planned deal "may be expected to lead" to a "substantial lessening of competition" as a result of a loss of rivalry between five London venues -- the Hammersmith Apollo, Brixton Academy, the Astoria, the Shepherd's Bush Empire and the Forum.

CC chairman Diana Guy comments, "Under the planned acquisition, these five venues would all come under common control, removing the existing competition between them. We expect that this would lead to higher venue rentals as well as some loss of service quality."

In a statement issued on behalf of Hamsard, the live music firms say they are "firmly of the view that this transaction will not produce any such effects and that the information which Live Nation-Gaiety and its parents have provided to the Competition Commission to date demonstrate as much." Academy Music Holding did not respond to requests for comment.

A final decision from the CC is required by Feb. 2, 2007, after which time Live Nation and Gaiety can lodge an appeal.

A CC spokesman says a decision could go either way. "There is still the chance will we change our mind," the spokesman says, "but it doesn't happen very often."