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Viagogo-StubHub in Peril as U.K. Watchdog Targets Tech M&A

Bloomberg logoBloomberg 10/22/2020 Stephanie Bodoni
a person walking down a sidewalk in front of a store: NEW YORK, NEW YORK - MAY 13: A person wears a protective face mask outside the StubHub offices in the Garment District during the coronavirus pandemic on May 13, 2020 in New York City. COVID-19 has spread to most countries around the world, claiming over 298,000 lives with over 4.4 million infections reported. (Photo by Noam Galai/Getty Images) © Photographer: Noam Galai/Getty Images North America NEW YORK, NEW YORK - MAY 13: A person wears a protective face mask outside the StubHub offices in the Garment District during the coronavirus pandemic on May 13, 2020 in New York City. COVID-19 has spread to most countries around the world, claiming over 298,000 lives with over 4.4 million infections reported. (Photo by Noam Galai/Getty Images)

(Bloomberg) -- Ticket marketplace Viagogo risks having to sell all or part of StubHub after an investigation by the U.K.’s competition watchdog found the completed $4.05 billion purchase of the former EBay Inc. unit will hurt consumers.

The Competition and Markets Authority started an in-depth probe of the deal in June amid antitrust concerns, reaching a provisional decision Thursday that fees for customers could increase and could affect the quality of services offered as well as innovation.

“The evidence we’ve seen so far consistently points in the same direction -- that Viagogo and StubHub have a market share of more than 90% combined and compete closely with each other,” Stuart McIntosh, chair of the CMA inquiry group, said in a statement.

With the U.K.’s departure from the European Union, the CMA is gearing up to take on a bigger role. The watchdog has increasingly voiced concerns about internet giants swallowing up smaller firms amid efforts to roll back the dominance of these companies. Earlier this month, the agency’s head, Andrea Coscelli, said the largest tech companies would face scrutiny for any transaction, no matter how small.

‘Comprehensive Solution’

Viagogo said in a statement it didn’t agree with the CMA’s view on how the merged company would change competition in the market for concert tickets and other live events.

The company said it will now work with the regulator “to deliver a comprehensive solution which addresses their concerns.”

The CMA’s view is that one of the businesses needs to be wholly or partially sold and a full divestment is “essentially a prohibition,” Verity Egerton-Doyle, a lawyer at Linklaters in London, said by phone.

Unlike the European Commission, Britain allows companies to close a deal before any investigation begins. Still, in February the U.K. regulator told StubHub and Viagogo to halt any integration while it scrutinized the deal, forcing the firms to report back every every two weeks to show the businesses operate separately.

‘Straitjacket’

“The effect of such an order is that it’s basically a complete straitjacket for the companies,” so that even a completed merger can’t really properly go ahead, said Egerton-Doyle.

Facebook Inc. has taken the CMA to court over a similar order in June that forced it to pause its integration with Giphy Inc. while the regulator weighs up whether the deal would give the social network too much information on its rivals’ operations.

“The CMA is among the most aggressive and interventionist authorities in the world,” said Egerton-Doyle. “They want to see themselves at the table with the top global antitrust authorities.”

“The way that the CMA is set up makes it uniquely positioned to review more deals than other authorities can and intervene more easily in them,” she said. “They’ve certainly made sure that from a business perspective, you ignore the CMA at your own peril.”

(Updates with lawyer comment from seventh paragraph)

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