When two of the most powerful global players in the live music industry proposed a merger this year, a chorus of disapproval rang out from artists, promoters and fans.

Now the planned tie-up of Ticketmaster and Live Nation, combining the world’s largest ticketing company with the world’s biggest live concert promoter, has been referred to the British competition authorities.

The Office of Fair Trading (OFT) asked the Competition Commission yesterday to investigate the proposed merger after finding that it could reduce competition and deny music-goers the prospect of lower prices.

This follows a decision in March by the Justice Department in the United States, where both companies are based, to investigate the deal amid fears that a combined group could lead to a near-monopoly on large-scale concerts. Even Bruce Springsteen has warned on his website that the tie-up could create “a near-monopoly situation in music ticketing”.

Many American observers regard the deal as the first test case of the Obama Administration — but Irving Azoff, chief executive of Ticketmaster Entertainment, thinks that the critics just do not get it. He has defended the $2.5 billion (£1.5 billion) all-share deal, arguing that by bringing Ticketmaster’s ticketing and artist-management business together with Live Nation’s concert promotion and network of venues, the merged company could achieve huge cost savings. Some put the figure at $40 million. The deal, it is argued, should mean a better and faster service for fans.

Critics argue that two separate competition issues are at stake. Live music is a complex and fast-growing industry, worth about £1.9 billion a year, and the OFT is concerned that the deal might eliminate competition in ticket sales. Live Nation already uses Ticketmaster as its main agent, but the contract expires in December and it had agreed to switch to CTS, a European group.

Ali Nikpay, senior director at the OFT, said that the proposed merger risked undermining CTS’s entry into the British ticketing market. Even if CTS remained, the OFT believes that the deal would still have an impact on competition. “It creates a realistic prospect that the merger will deny those attending live music events the benefits of more competition in the distribution of tickets, which could include lower overall prices.”

There are also concerns that the vertical integration within one giant company of everything from T-shirt sales to venue management could squeeze out competition at every level and exclude independent players.

Harvey Goldsmith, the Live Aid promoter, hopes that the Competition Commission will kill the merger. “Do we really want one company controlling the tickets and the venues? They will be able to do and charge whatever they like,” he said.

Joe Cohen, of Seatwave, a secondary-ticketing website, is concerned about the ability of companies such as Ticketmaster to distort the market, where they also own ticket-resale sites. Fans are fed up with being told that tickets have sold out minutes after they go on sale, only to find that they are readily available on resale sites at much higher prices.

The Competition Commission will report by November 24. Artists, who are increasingly reliant on concerts for their income as fans opt for cheap musical downloads, will be watching.

Ticketmaster shares were down as much as 2 per cent at $7.41. Live Nation shares fell similarly to $5.38.

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