AEG’s deal to take over the running of Wembley Arena has been referred to the Competition Commission after an initial investigation by the Office Of Fair Trading.
As previously reported, AEG won the rights to manage the Wembley Arena venue, previously held by Live Nation, late last year. But competitors immediately raised concerns about the new arrangement, mainly because AEG also operates London’s main other arena venue at The O2 complex, meaning the capital’s two most important venues for major entertainment events will be in the hands of the same company.
AEG also now runs the Hammersmith Apollo, of course, one of the bigger theatre venues for the music and comedy industries, and often seen as a ‘stepping stone’ for acts moving from theatre-sized venues to arenas for the first time. The OFT confirmed it was referring AEG’s Wembley contract to the Competition Commission on Friday “due to concerns the merger may substantially reduce competition in the live entertainment venue sector”.
Justifying the decision, the OFT’s Senior Director and Decision Maker in this case, Jackie Holland, told CMU: “The O2 Arena and Wembley Arena are the two largest indoor live entertainment venues in London. This merger would result in a major consolidation of the indoor spaces where large concerts, sports and other shows can be held in the capital and may result in higher costs for promoters to hire suitable venues, which ultimately may be passed on to consumers in the form of higher ticket prices. As such, we believe it is appropriate that the Competition Commission reviews this merger in detail to ensure that the interests of consumers are protected”.
The referral of the deal to the Commission doesn’t necessarily mean the competition regulator will find sufficient concerns to block the arrangement, or to force other remedies, although it has interfered in live entertainment acquisitions in London in the past, forcing Live Nation to offload some of its venues in 2007 when it acquired a sizable slice of the Academy Music Group. But either way, the Commission is likely to take until early September to rule, causing insecurities in the meantime.