The UK Competition Commission has ruled against the controversial merger of ticketing giant Ticketmaster with the world's largest concert promoter Live Nation.
In a provisional ruling, it said it was concerned about the joining of the world's largest ticketing firm and the world's biggest concert promoter.
Such a deal would limit the development of competition in the market for sales of tickets to live music. As well as higher ticket prices, the Commission feared customer service could get worse, and there would be no innovation in the market.
The US Justice Department is also investigating the proposed merger, which was announced in February.
Both companies have said the merger would improve ticket price options, increase attendance at events and make ticket technology better.
Live Nation operates a number of large UK concert venues, as well as manages a string of high-profile artists.
The company signed the likes of Jay-Z and Madonna to deals that include touring, publishing and albums, as well as concert promotion deals with U2 and Shakira.
The watchdog’s main concern was based around an agreement that Live Nation had entered into with Europe's largest ticketing agent, CTS.
Live Nation signed an agreement with CTS for ticketing of its live music shows and venues in the UK, shortly before the merger with Ticketmaster was announced.
The Commission said the deal would have given CTS a way into the UK market. And it argued that if the merger went ahead, there was a danger of competition being reduced because Live Nation would "seek to limit" its relationship with CTS - limiting how many tickets it made available.
This could force up ticket prices, lead to poorer customer service and may have "the effect of putting CTS's future prospects in the UK in considerable doubt", it said.
Live Nation and Ticketmaster said they were committed to the merger going ahead and were confident it would eventually be approved.
"Where the recording industry was once the economic engine for the music business, it is live entertainment that is now the future of the music industry," the firms said, adding the deal would "help achieve needed change".
The watchdog will now consider ways in which its concerns could be addressed, before issuing its final report, due on November 24.
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