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OFT refers proposed Ticketmaster/Live Nation merger to Competition Commission

67/09    10 June 2009

The OFT has today referred the proposed merger between Ticketmaster Entertainment Inc and Live Nation Inc to the Competition Commission (CC).

Both companies operate in the live music industry in the UK, but at different levels of the supply chain: Ticketmaster is a ticketing agent, whilst Live Nation is a promoter and venue operator for live music events. 

Live Nation has historically used Ticketmaster as its principal ticketing agent, but this agreement expires in December 2009. Prior to the proposed merger, Live Nation entered into an agreement with Europe's largest ticketing agent, CTS Eventim (CTS), whereby it would start providing ticketing services in the UK to Live Nation, effectively replacing Ticketmaster. 

In referring the merger to the CC, the OFT believes that there is a realistic prospect of a substantial lessening of competition resulting from the proposed merger, because of the prospect that CTS will withdraw from the UK market. Even if CTS were to remain in the market, the test for reference would still be met because of the prospect that its competitive strength could be significantly reduced without the full benefit of its arrangement with Live Nation. 

The proposed merger also raises a concern about whether Ticketmaster's key position in the ticketing market could lead to the new company restricting competition in the promotion of live music events, for example through limiting access by rival promoters to ticket agent services. The CC may wish to examine this issue in greater detail. Ali Nikpay, OFT Senior Director, said:

'Live music is a fast growing industry, currently worth around £1.9 billion a year. We expected CTS's entry, through its contract with Live Nation, to be an important new competitive dynamic in the UK ticketing market. The proposed merger risks undermining this by potentially prompting the exit of what would likely have been a third large player from the UK, or at least significantly stunting its effectiveness. It creates a realistic prospect that the merger will deny those attending live music events the benefits of more competition in the distribution of tickets, which could include lower overall prices.'

The CC is expected to report by 24 November 2009.

NOTES

1. The OFT examined the ticketing market in its 2005 study on Ticket Agents in the UK (OFT 762 pdf 447kb). In considering consumers' concerns that ticket agents charged high additional fees, that report focused on whether there was a distortion of competition between agents, in particular as a result of distribution agreements between agents and promoter or venues. Although the report did not find a lack of competition between ticket agents leading to higher prices to consumers, it did not consider the question of whether the ticketing market would be made more competitive through the entry of a significant new supplier. Whilst the OFT has therefore considered carefully the evidence from its 2005 report in this investigation, its findings in that context were in no way conclusive of the outcome of this merger investigation.

2. The Reference Test - The OFT has a duty to make a reference to the CC if it believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

3. Under the Enterprise Act 2002 a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million; or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced.

4. The CC may extend the 24-week period within which it is required to publish its report by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.

5. The text of this decision will be placed in the mergers section.

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