IMPALA Objects To Sony-EMI Deal

The independent music companies have been quick to object to the European Commission’s decision to allow a Sony-led consortium to buy EMI Music Publishing.

IMPALA, the European indies’ organisation, was ready with a statement as soon as the EC announced its ruling.
This was no surprise as IMPALA made clear that it objected to the $2.2 billion deal since last November, or within a few hours of it being announced.

Despite getting the green light from the EC, the Sony consortium – which is said to include the estate of Michael Jackson, Blackstone Group, Abu Dhabi’s Mubadala Development Co., Raine Group and music and film mogul David Geffen – is likely to be bothered by the Brussels-based organisation’s track record for stalling mega deals that would effectively reduce the number of majors.

It stalled Sony’s merger with Bertelsmann Music Group for four years, and was still questioning it when Sony bought out its German partner in 2008.

As that deal also required regulatory approval, the EC – and the European courts – were still engaged in examining the deal that brought Sony and BMG together, while at the same time looking at the deal that broke them apart.
With the Sony-EMI deal, the main objection is that the EC should have taken a longer and closer look at what effect it will have on the marketplace.

The EC extended the initial Phase 1 investigation because it had serious doubts about the merger.

Sony submitted an offer of remedies and then increased it to the point that it included selling off Virgin UK, Virgin Europe, Virgin U.S. and Famous Music UK.

That means letting go of work by Gary Barlow, Robbie Williams, Placebo, Lenny Kravitz, Ozzy Osbourne, Ben Harper, and The Kooks.

The EC referred to the proposed divestments as “valuable and attractive catalogues containing bestselling titles,” and approved the deal.

“I am therefore satisfied that the competitive dynamics in the online music publishing business will be maintained so as to ensure consumer choice and cultural diversity,” explained European commissioner Joaquin Almunia.

IMPALA and the other parties opposed to the deal appear to feel the EC should have at least taken the issue to a Phase 2 investigation, as it’s just done with Universal’s purchase of EMI’s recorded music business interests.

Sony and EMI’s combined publishing interests will still have a little more than 30 percent of the market, and the deal’s opponents are claiming that alone was enough to have warranted a more thorough investigation.

In the U.S., where the deal falls under the scrutiny of the Federal Trade Commission, the deal has apparently won the approval of the American musicians’ unions.

That’s at odds with the International Musicians Union, which has made it clear that it’s firmly opposed to it.