TM-Live Nation Merger Hits Some (Ultimately Irrelevant) Snags

The U.K. Competition Commission ruled that the merger of Live Nation and Ticketmaster in the UK would be anti-competitive and is requiring that something be done before approving the merger.

Here’s a key tidbit:

Prior to the merger announcement, Live Nation, a concert promoter and venue operator whose acts include Bob Dylan, Coldplay and U2, had signed a deal with German company CTS Eventim AG (EVD.XE) to provide ticketing services for CTS’s live music events and venues in the U.K.

The regulator, describing CTS Eventim as a possible major new competitor in the U.K. ticket market, said it believes a merger with Ticketmaster would give Live Nation incentive to impede CTS’s entry into the U.K., in particular by minimizing the supply of tickets to CTS.

It said that could lead to higher ticket prices, worse customer service and less innovation in the market.

“‘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,’ said the Competition Commission’s deputy chairman and chairman of the inquiry group, Christopher Clarke.”

The commission went on to explain some possible “remedies” for the situation, only one of which is blocking the merger.  Also, the Commission indicated that it would coordinate with the U.S. Department of Justice on its decision, as they finalize their investigation into the merger.

And for those two reasons, I believe that this is not going to stop the merger.  I leave, for the moment, the issues of whether it should or shouldn’t or whether the anti-competitive claim has merit.  I don’t have the expertise to delve into the merits of the case.

But I do think the merger is now almost certain to go through.  In a sense, the commission, just like the DOJ and the U.S. Congress, believe that they shouldn’t disallow the merger, but regardless of that, they want to take their pound of flesh politically in exchange for letting it happen.

This could come, for example, in the form of TM having to dispose of its secondary market assets in the U.S. or of giving CTS Eventim (which, by the way, was going to be Live Nation’s ticketing service provider until the merger went through) a guaranteed share of the venues the combined company serves.

I find it interesting that the Competition Commission is so interested in protecting the interests of one specific company (CTS Eventim), which if in league with Ticketmaster and Live Nation, could hardly be seen as independent competition.

These two companies are basically the equivalent of magical pinata for politicians.  They can take a big whack whenever they want and get a prize, in the form of people applauding them for their “courage”.  If you were a politician, would you want to get rid of something like that?

Again, merits of the case aside, I re-assert my belief that this merger will be approved but with conditions.  This ruling makes me more, not less, confident of that.