Competition Commission provisionally clears AEG and Wembley Arena deal

WembleyArenaThe Competition Commission (CC) has revealed its initial findings into AEG’s proposed management of Wembley Arena.

AEG, which already manages The O2, Hammersmith Apollo and IndigO2, could manage the North London venue that was previously managed by Live Nation.

The CC has provisionally cleared AEG’s bid to manage Wembley Arena and will publish its full report and findings by September 5. The CC held the inquiry amid fears that AEG’s bid for Wembley would give the promoter an advantage in the capital, leading to higher ticket prices.

The CC has stated that a merger would not result in a “substantial lessening of competition” after it was feared that AEG would have too much control of large indoor music venues in London.

Martin Cave, CC deputy chairman and chairman of the AEG/Wembley Inquiry Group, commented: “We have focused our analysis on how the merger between AEG and Wembley will affect the ability of their competitors and potential competitors to compete as live venue operators in the UK. We found that while a promoter may have some influence over venue decision, the final choice of venue usually lies with the act and their agent. This is based on a number of quality factors, the main ones being capacity, availability, appearance, brand and reputation rather than hire price.

“AEG’s opportunity to increase venue prices would be limited given that other factors are more important and that any negotiation on price takes place after the venue has been confirmed. Where we have seen evidence of promoters switching venues, the decision was made on non-price reasons such as tickets not selling fast enough at the first choice venue.”

He continued: “We also considered whether AEG would or would not have an incentive to reduce the quality of the venue after the merger. We provisionally found that doing so could damage AEG both in financial terms and also in relation to its reputation at its other venues.

“We found that the market for sponsorship was at least UK wide and not limited to live entertainment venues and that competition for the provision of other services such as catering was limited to the immediate vicinity of each venue. As such, we did not consider that competition in either of these markets would be affected as a result of the merger.”

The CC has also stated that, while the merged entity might have the ability to use its position as a promoter, ticket and venue operator to harm its competitors in different parts of the supply chain, either by reducing the supply of its services or by supplying its services on worse terms, it would not have the financial incentive to do so. Specifically, the CC has found that, if the merged entity tried to harm its competitors in these ways, it would suffer significant short-term losses in pursuit of very uncertain long-term gains.