Ticket distributor Ticketmaster and concert promoter Live Nation have been hoping to merge. Britain's antitrust regulator objected today in a preliminary ruling. It believes the merger would severely limit competition and hurt consumers. I think it's right, and its decision is something of a no-brainer.
Let's break it down. Imagine you want to go see a concert. Since Live Nation has, by far, the strongest influence in the concert space, you will probably be going to one they promoted or produced. So to buy those tickets? Well, you probably have to go through Ticketmaster, since it has vast control over concert ticket distribution.
How cornered would they have the market? According to this CNN Money article from back in February about the proposed merger, their combined market share would be close to 80%. If that isn't a threshold for antitrust regulation, then I'm not sure what is.
Why would their pairing up matter? The British regulators say, via the New York Times:
Britain's Competition Commission, an independent public agency, said in a statement Thursday that "the merger could severely inhibit the entry of a major new competitor" and result in higher prices for consumers.
Exactly. It would pretty much close the market to others wanting to enter. Obviously, no Live Nation concert would ever use a distributor other than Ticketmaster. Meanwhile, anyone wanting to have a concert and utilize Ticketmaster's platform would probably be better off going through Live Nation. The result? Ticketmaster can have as high fees at it wants, and concertgoers wouldn't have any other option but to pay.
There are few markets out there that I see as unfriendly to consumers as event tickets. I've long been annoyed by Ticketmaster for their lackluster ability to handle excessive ticket demand, poor system for searching for tickets and excessive fees. The problem is that they have such a strangle hold on the market that a better company already has trouble entering. The infrastructure required to create a ticketing platform is very significant, and convincing event planners to use a new distribution service is difficult. This merger would virtually eliminate the possibility of competition in the concert space, making matters even worse for consumers.
Today's decision out of Great Britain was only provisional, but I would not expect the final decision to differ significantly, unless the firms make some serious concessions. The U.S. antitrust regulators have not yet ruled on the merger, but I'm hoping they have a similar opinion. Luckily, I have trouble imagining how they could come up with an alternative interpretation of the outcome this marriage would create.