The UK’s competition watchdog has provisionally blocked the $4.05bn merger of Viagogo and StubHub, citing concerns over “substantial lessening” of competition.

The Competition and Markets Authority (CMA) is concerned that the acquisition could lead to increases in fees for customers, including fans, who resell or buy secondary tickets to live events.

As part of its Phase 2 inquiry, the CMA also found that the merger could result in a “lower quality of service and reduced innovation in the sector.”

It noted that Viagogo and StubHub are close competitors in an already “very concentrated” market with no significant additional competitors, adding that they are the only two companies of material size in the UK’s secondary ticketing market with a combined market share of more than 90 per cent.

The watchdog said it has remained mindful of the significant impact that the coronavirus is currently having on the live events industry, but adds the evidence is that they would remain important competitors for the foreseeable future without the merger.

Stuart McIntosh, chair of the CMA inquiry group, said: “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 per cent combined and compete closely with each other. We are therefore concerned that their merger could lead to secondary ticketing customers facing higher fees and lower quality services. We’re now inviting comments on our provisional findings and possible remedies.”

The CMA has set out potential options for addressing its provisional concerns, which include requiring Viagogo to sell all or part of StubHub. This goes against its decision in July after rejecting a proposal by Viagogo to sell StubHub’s European entities.

After being notified about the investigation earlier this year, Viagogo was given five working days to address the CMA’s concerns about the merger potentially resulting in customers who buy and resell tickets “losing out as a result of higher prices and fewer options.”

During that time, Viagogo proposed the divestment to an upfront buyer of StubHub’s European and certain other international legal entities, which was rejected by the CMA, noting it generally prefers divestiture of complete businesses to ensure they can compete effectively on a stand-alone basis. It said that the proposition did not offer a “clear-cut solution” to competition concerns.

A Viagogo spokesperson told TheTicketingBusiness, said: “Our intention remains to provide event goers in the UK with the best possible service, and whilst we disagree with the provisional conclusion that the deal would reduce competition, we look forward to working with the CMA to deliver a comprehensive solution which addresses their concerns.”

The CMA has invited views on the provisional findings by November 5 and 12.

The investigation will conclude and decide on the future of the deal by December 9, 2020.

Viagogo provisionally completed its $4.05bn purchase of StubHub from parent company eBay in February. Around the same time the CMA ordered a halt to any integration between the companies until it completes its investigation into the merger.