EMI Deal Faces Closer Scrutiny
Universal Music Group will likely have to wait several months before finding out if regulators will allow its $1.9 billion purchase of EMI’s recorded music business.
European newspaper reports are saying the world’s biggest music company has so far failed to offer sufficient concessions to stave off a full-blown inquiry into the deal by the European Commission.
In the U.S., the deal will be examined by the Federal Trade Commission.
Open Internet lobbyist Public Knowledge – which played a key role in blocking AT&T’s merger with T-Mobile – has already urged the FTC to take a closer look at the deal because it would thwart innovation, drive up prices and minimise choice.
IMPALA, the Brussels-based independent music companies’ organisation, believes the second phase of the investigation will confirm the EC’s initial worries that the merger would seriously impede competition in the music sector.
The deadline for the first phase of the inquiry is March 23. IMPALA is confident the second phase will also show that Universal already exerts undue influence over the development of online players, all of whom depend on the market leaders’ repertoire.
“Above all, the regulators will want to ensure more choice for artists and consumers, who also need to be protected from price increases,” said IMPALA executive chair Helen Smith. “They will also be keen to ensure that online services can develop free from excessive constraints, to help the sector overcome piracy and allow citizens access to music on fair and reasonable terms.”
Universal claims that digital music distribution, both legal and illegal, has changed the market radically and it insists this is a good reason for allowing the deal to go ahead.
Universal, EMI, Sony and Warner Music, the world’s major music companies, account for about 90 percent of sales of recorded music in the U.S.
Smith’s organisation has also claimed that the merger between Sony and EMI on the publishing side raises equally fundamental issues.
It says the complexities and dangers of excessive market power in the music publishing market are as pronounced as they are in recording, especially given EMI’s thriving position as the world’s No. 2.
Sony beat other bidders to secure EMI’s publishing for $2.2 billion.