By RYAN NAKASHIMA
Associated Press

LOS ANGELES - The proposed merger of concert promoter Live Nation Inc. and ticket-selling giant Ticketmaster Entertainment Inc. suffered a blow Thursday when British regulators said they would oppose the deal because it would stifle competition.

The U.K. Competition Commission said in a provisional ruling that the merger of the two California-based companies "could severely inhibit the entry of a major new competitor, CTS Eventim, into the U.K. ticketing market."

Before the merger plan was announced, CTS had agreed to provide ticketing services for Live Nation's music events in Britain. CTS also has enabled Live Nation to run its own ticketing platform, which currently competes with Ticketmaster, in the U.S. since January.

The commission said if the merger were to proceed, Live Nation would have an incentive to impede CTS's entry into the U.K. ticketing market by minimizing the number of tickets it gave CTS to sell.

"This could lead to higher net prices ... and/or lower service quality and/or less innovation in the market," it said.

The commission said it would consider possible remedies before issuing its final report by Nov. 24. Such remedies include prohibiting the merger, forcing Ticketmaster or Live Nation to sell some of their U.K. operations, or requiring Live Nation to use CTS or another company to sell tickets for Live Nation's U.K. events.

The commission set an Oct. 29 deadline for interested parties to comment.

In a joint response, Ticketmaster and Live Nation said their merger was necessary to help "strengthen a flagging music industry."

"We believe this merger will build a more efficient and effective company moving forward ... and remain optimistic that it will ultimately be approved," they said.

The National Association of Ticket Brokers, a Washington, D.C.-based lobbying group, hailed the ruling.

"The U.K. antitrust authorities recognized this merger would lead to higher prices and less choice for consumers," said Gary Adler, the association's general counsel, in a statement. "They found that combining these two corporate giants would create an effective stranglehold in the U.K. ticketing market - which is exactly what would happen if this merger is allowed here in the U.S."

Ticketmaster, based in West Hollywood, Calif., is the largest seller of tickets to live concerts and other entertainment events in the United States. It also owns an artist management company, Front Line Management, and a ticket-reselling company called TicketsNow.

Live Nation, based in Los Angeles, is the world's largest concert promoter. It also owns entertainment venues.

The U.S. Justice Department is also investigating the effects of combining the companies. And a chorus of lawmakers have raised concerns about the deal.

In July, 50 House members wrote to Assistant Attorney General Christine Varney, urging Justice officials to examine the merger "with great skepticism" because the combined company "would enjoy a virtual stranglehold over the live entertainment industry."

Robert Barr contributed to this report.