Is Universal-BMG A Done Deal?

International newswires are predicting the European Commission will give the nod to Universal buying BMG Music Publishing, but it’s no surprise that the indies don’t see it as a done deal.

Quoting "insiders" and sources who are "familiar with the matter," the electronic media is saying Vivendi’s offer to sell off some of its own publishing business will be enough for the EC to give the deal the green light.

If that turns out to be the case, it’s likely it still won’t be the end of the matter. Impala, the Brussels-based European independent music companies’ organization, is prepared to mount a legal challenge similar to the one that unhinged Bertelsmann’s deal to merge its recorded music business with Sony’s.

Whatever offers Universal has made to the EC regarding the hiving off of some of its own businesses – reportedly including the selling of Rondor and bits of the Zomba, 19 and BBC catalogs – the indies don’t think it’s enough.

"The parties offered us remedies very early in the process as a trade-off," said Impala deputy secretary general Helen Smith. "They wanted to avoid at all costs a full list of complaints against the merger due to the gravity of the Commission’s concerns. The question is whether or not the remedies go far enough.

"We are still in discussions with the Commission about this and no decision has been taken yet. If the Commission and the parties do not agree to remedies which solve the competition problems they will be exposed to further defeat in the European courts," she added.

Given the upheaval Impala created when it got the European Court of First Instance to overturn the Commission’s approval of the Sony-BMG merger, much against the predictions of most of the U.K. media and international newswires, Universal is likely to treat Smith’s words more like a promise than an empty threat.

The indies would no doubt be happy to see Universal sell or lease some of its catalog for licensing throughout the European Union. But they would be even happier if the new company, which would become the biggest publisher in the world, promised "behavioral remedies" and changed some business practices as well.

There was some controversy when a few members of AIM, the U.K.’s indie organization, objected to the arrangement on moral and constitutional grounds. But Impala did manage to get Warner to undertake "behavioral remedies" before agreeing to not oppose it making another bid for EMI.

The EC is due to rule on Universal’s euro 1.63 billion (US$2.21 billion) deal to buy BMG on May 17th.

If the indies decide they’re not happy with it, their legal challenge would likely be fast-tracked through the community’s judicial system to avoid the industry being left in limbo.

If the Sony-BMG merger is any guide, even fast-tracking through the system doesn’t guarantee a conclusion within a couple of years.