Universal Questions EC’s Findings

Universal Music Group is questioning the European Commission’s view that by buying EMI it will create a company that couldn’t be constrained by “customers, competitors or piracy.”

Universal says that buying EMI wouldn’t allow it to become too powerful a player. Merging their record divisions would create a company controlling 40 percent of the market.

According to daily music and social media commentator Hypebot, UMG is holding private briefings with European journalists to convince them that a 40 percent share shouldn’t be an issue.

UMG is saying that piracy is now so rife that it’s not possible to dominate the market.

The company cites free music available everywhere on the Internet and the fact that Apple, Google and Amazon are the dominant players in digital sales.

Universal is also reportedly questioning what would happen to EMI without a UMG purchase.

It’s doubtful if that would concern the European commissioners. As it stands, the ownership of EMI would revert to U.S. banker Citigroup, which took control when former owner UK private equity firm Terra Firma couldn’t service the loans it needed to buy the company in 2007.

If Citi couldn’t resell it for the $1.9 billion that Universal has agreed to, then the world’s biggest music company would have to cover the shortfall.

That might benefit Warner Music Group, which has had its eye on EMI for years and is challenging it being sold to Universal.

The European Commission is expected to give its ruling on the Universal-EMI deal Aug. 8.