Watchdog U-turn paves way for Ticketmaster mega-deal

The UK merger watchdog has executed a startling U-turn and dropped its opposition to the live entertainment "mega-merger" between Live Nation and Ticketmaster, saying "significant new evidence" had emerged.

The Competition Commission yesterday announced in a statement that it had decided to clear the proposed $2.5bn (£1.6bn) merger in the UK, concluding it would "not result in a substantial lessening of competition".

This marks a complete reversal of its preliminary findings in October, when it blocked the deal and warned that one of the companies may have to offload their UK business. Christopher Clarke, the Competition Commission's deputy chairman, said: "Our decision today differs from our provisional findings in October, which is unusual but not unique. The very purpose of publishing our provisional conclusions is to provide all parties with the opportunity to review them and to put forward new evidence or arguments."

A spokesman for the regulator added: "We have had about 70 mergers investigations since the Enterprise Act in 2002, and this will be the fourth one to be reversed. Each time it has been down to significant new evidence."

Two months earlier, the regulator feared the deal would drive up ticket prices and block new entrants into the market. Yet it received "significant new evidence and arguments", not only from the companies merging but from other industry participants, including CTS Eventim, the company that could have derailed the deal. A source close to the process said: "The commission was a bit surprised by the submissions received after the ruling, which indicated the market was more diverse than they had thought," before adding: "This is the most significant market to receive clearance for the deal to date."

Ticketmaster dominates the global ticketing industry, while Live Nation is the world's largest concert promoter and has contracted stars including Madonna and Jay-Z. While the companies are based in the US, they both have significant operations in Britain, and the Office of Fair Trading turned the investigation over to the Competition Commission in June.

The two companies welcomed the decision yesterday. Chris Edmonds, managing director of Ticketmaster UK, said it was "an important milestone in the regulatory review process, and brings the companies a step closer to creating a new kind of live entertainment business."

The commission's concerns focused on whether the deal would lead to Ticketmaster's largest global competitor, CTS Eventim, cancelling plans to enter the UK market. Before the mega-merger was announced, CTS had signed an agreement to provide Live Nation with ticketing software and services and would be handed a proportion of Live Nation venue tickets to sell.

The commission now believes the merger "will make little difference to the prospects of Eventim's success in the UK". It added the merger would not have affected Eventim's entry into the UK as Live Nation had never intended to support the company beyond its existing obligations anyway.

The regulator also concluded that where the merged group could use its position to harm competitors "it would not have the financial incentive to do so," adding it would be hit by "significant short-term losses in pursuit of very uncertain long-term gains". The companies argued the rise of direct ticket sales, especially over the internet, and a robust secondary market, meant competition wasn't threatened.

The companies responded angrily to the initial ruling earlier this year, claiming the commission's decision was undermined by "key legal flaws" and "factual errors".

Competition authorities across 20 countries have investigated the deal, although the most crucial to completing the merger is the inquiry run by the Department of Justice in the US, which is ongoing. The deal has proved controversial in the US and artists including Bruce Springsteen have been vocal in their opposition.

This comes a day after the Commission Appeal Tribunal threw the Competition Commission's judgement into BAA into doubt, citing one member of the panel's "apparent bias".