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M-18-067 LN-Gaiety MCD Public Determination

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M-18-067 LN-Gaiety MCD Public Determination DETERMINATION OF MERGER NOTIFICATION M/18/067 - LN- GAIETY/MCD PRODUCTIONS Dated 5 July 2019 Contents 1. Introduction ................................................................. 1 Introduction ........................................................................ 1 The Proposed Transaction ..................................................... 1 The Undertakings Involved .................................................... 1 Rationale for the Proposed Transaction ................................... 3 Preliminary Investigation (“Phase 1”) ...................................... 3 Contacts with the Undertakings Involved ................................. 3 Third Party Submissions ........................................................ 3 Market Enquiries .................................................................. 4 Phase 1 Determination .......................................................... 4 Full Investigation (“Phase 2”) ................................................ 4 Contacts with the undertakings involved ................................. 5 Third Party Submissions ........................................................ 5 Market Enquiries .................................................................. 5 Expert Economic Advice ........................................................ 5 Phase 2 Proposals ................................................................ 6 2. Industry Background – the supply of live music ................ 7 (i) Supply Chain for Live Music Events .................................... 7 Artists and their Managers ..................................................... 7 Promoters ........................................................................... 8 Live Music Festivals .............................................................. 9 Venues ............................................................................. 10 Ticketing Services Providers ................................................ 11 (ii) Sale of Tickets to Live Music Events ................................. 11 Services provided by Primary Ticketing Services Providers ...... 11 Ticketing Software Providers ................................................ 13 Ticket Resale Marketplaces .................................................. 14 Ticket Distribution Route ..................................................... 15 Ticket pricing for live music events ....................................... 15 (iii) Key Trends in the Supply of Live Music Events ................. 16 Merger Notification No. M/18/067 – LN-Gaiety/MCD Productions i 3. Relevant Product and Geographic Markets ...................... 21 Introduction ...................................................................... 21 Horizontal Overlap .............................................................. 21 Vertical Relationships .......................................................... 21 Relevant principles ............................................................. 21 (i) Supply of Live Music Festivals .......................................... 22 (ii) The provision of artist management services .................... 31 (iii) Promotion of Live Events ............................................... 31 (iv) Operation of Venues for Live Music Events ....................... 37 (v) Provision of Outsourced Primary Ticketing Services ........... 44 4. Market Structure ......................................................... 55 Introduction ...................................................................... 55 (i) Market Structure for the Supply of Live Pop Music Festivals in the island of Ireland ........................................................... 56 (ii) Market Structure for the Promotion of Live Music Events in the island of Ireland ........................................................... 60 (iii) Market Structure for the Supply of Indoor Venues for Live Events in the Island of Ireland ............................................. 63 (iv) Market Structure for the Provision of Outsourced Primary Ticketing Services for Live Events in the island of Ireland ........ 66 5. The relevant counterfactual .......................................... 81 6. Horizontal Effects ........................................................ 82 (a) Impact of the Proposed Transaction on market structure ... 82 (b) Closeness of competition ............................................... 85 (c) Competitive constraints from competitors......................... 89 (d) Barriers to entry and/or expansion .................................. 89 7. Vertical Effects ............................................................ 93 (i) The market for the Provision of Outsourced Primary Ticketing Services for Live Events in the island of Ireland ..................... 94 Theory of Harm 1: Customer Foreclosure of Existing and/or Potential Rivals of Ticketmaster............................................ 94 Theory of Harm 2: Foreclosure of existing and/or potential rivals of Ticketmaster by restricting ability to contract with third party venues ............................................................................ 101 Merger Notification No. M/18/067 – LN-Gaiety/MCD Productions ii (ii) The Promotion of Live Music Events in the island of Ireland ...................................................................................... 106 Theory of Harm 3: Foreclosure of Promoters in relation to Outsourced Primary Ticketing Services for Live Events in the island of Ireland ............................................................... 106 Theory of Harm 4: Foreclosure of Promoters in relation to indoor venues for live events ....................................................... 112 Theory of Harm 5: Foreclosure of Promoters of Live Music Events in the State through information sharing ............................. 115 8. Proposals to Address Competition Concerns .................. 120 9. Ancillary Restraints .................................................... 122 10. Determination ........................................................ 123 11. Live Nation and MCD’s Proposals ............................... 124 Merger Notification No. M/18/067 – LN-Gaiety/MCD Productions iii 1. INTRODUCTION Introduction 1.1 On 14 August 2018, in accordance with section 18(1)(a) of the Competition Act 2002, as amended (“the Act”), the Competition and Consumer Protection Commission (“the Commission”) received a notification (the “Merger Notification”) of a proposed transaction whereby LN-Gaiety Holdings Limited (“LN-Gaiety”), via its wholly-owned subsidiary LN-Gaiety Holdings Ireland Limited (“LNG Ireland”), would acquire sole control of MCD Productions Unlimited Company (“MCD”), from its parent company Gaiety Investments Unlimited Company (“Gaiety”) (“the Proposed Transaction”). LN-Gaiety is jointly controlled by Live Nation Entertainment, Inc. (“Live Nation”) (through its wholly-owned subsidiary Live Nation (Music) UK Limited (“LN-UK”)) and Ronmall Unlimited Company (“Ronmall”) through its subsidiary Gaiety. The Proposed Transaction 1.2 The Proposed Transaction is to be implemented pursuant to a share purchase agreement1, dated 20 October 2017 and subsequently amended on 31 July 20182, whereby LN-Gaiety, via LNG Ireland, agreed to acquire MCD from its current owner, Gaiety. The Proposed Transaction includes the acquisition of two live music festivals owned by MCD on the island of Ireland, namely Longitude and Vital (collectively the “MCD Festivals”). The Undertakings Involved The Acquirer – LN-Gaiety 1.3 LN-Gaiety is a UK-incorporated joint venture which is jointly controlled3 by Live Nation (through LN-UK) and Ronmall (through Gaiety) with shareholdings of []% and []% respectively. LN-Gaiety’s business activities are focused on the operation of a number of live music festivals and venues, primarily in the UK but including ownership of the Electric Picnic live music festival in the State. 1.4 For the financial year ending 31 December 2016, LN-Gaiety had a worldwide turnover of approximately €[], of which €[]was generated in the State. 1.5 Live Nation is a global live music entertainment company listed on the New York Stock Exchange.4 In 2017, Live Nation promoted 90 live music festivals and 29,500 live music events in over 40 countries. In addition, Live Nation operates 222 1 The share purchase agreement is agreed between Gaiety, [], and LNG Ireland. Gaiety is the ultimate parent company of MCD and []. 2 [] 3 LN-Gaiety is jointly managed by Gaiety and Live Nation with []. Mr Denis Desmond has fulfilled the role of Chairman of LN-Gaiety since 2005. 4 http:///www.nyse.com/quote/XNYS:LYV Merger Notification No. M/18/067 – LN-Gaiety/MCD Productions 1 venues in 12 countries, provides artist management services to over 500 artists and provides outsourced primary ticketing services through its ticketing business Ticketmaster Entertainment Inc. 1.6 In the State, Live Nation’s business activities comprise the following: the provision of outsourced primary ticketing services for live events through Ticketline Unlimited Company (“Ticketmaster”); and the operation of venues through its ownership of the 3Arena and its management of the Bord Gáis Energy Theatre, The Gaiety and Olympia theatres in Dublin. 1.7 For the financial year ending 31 December 2017, Live Nation had a worldwide turnover of approximately €6.8 billion, of which €[] was generated in the State The Target - MCD 1.8 MCD is an Irish-incorporated private unlimited company. MCD focuses predominantly on the promotion of live music
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