OFT inquiry threatens Live Nation 'megadeal'

The proposed $2.5bn (£1.5bn) merger between live music giants Ticketmaster Entertainment and Live Nation was yesterday thrown into doubt after it was referred for a second regulatory inquiry, this time in the UK.

The Office of Fair Trading (OFT) announced it had referred the US all -share deal to the Competition Commission, as both companies operate heavily in Britain. The US Justice Department has also launched an inquiry.

The OFT fears the industry would experience a "substantial lessening of competition resulting" if the two companies merge. Ali Nikpay, a senior director at the OFT, said there was "a realistic prospect that the merger will deny those attending live music events the benefits of more competition in the distribution of tickets". That could mean higher ticket prices, he added.

The live music industry is currently worth about £1.9bn a year. Ticketmaster dominates the ticketing industry, selling 141 million tickets in 2007, while Live Nation is the world's largest concert promoter, and has contracted artists including Madonna and Jay-Z.

Live Nation had signed a deal with Europe's largest ticketing agent CTS Eventim to replace Ticketmaster as its principal agent in December. The regulator feels the result of the merger would drive CTS from the UK market. Even if it stays, the OFT said, "its competitive strength could be significantly reduced without the full benefit of its arrangement with Live Nation".

Mr Nikpay said: "We expected CTS's entry, through its contract with Live Nation, to be an important new competitive dynamic in the UK ticketing market." He added the merger could undermine this by "prompting the exit of what would likely have been a third large player from the UK, or at least significantly stunting its effectiveness."

The regulator also aired concerns that the merged company could restrict competition in the promotion of live music events, such as limiting rival promoters to ticket agent services. The Competition Commission is expected to report by 24 November.

The deal has proved controversial in the US, with critics including Bruce Springsteen slamming it publicly.