Universal Wiser Over EMI

Universal Music Group will be wiser over what it has to do to secure the $1.9 billion purchase of EMI’s recorded music business after receiving the European Union antitrust regulators’ objections to the deal.

At the beginning of June, EU competition commissioner Joaquin Almunia expressed concerns about the market power of the combined group, which would be almost twice the size of its nearest European rival.

“Ultimately, we will need to make sure that, in this already concentrated market, the company that would emerge from the deal would not be in a position to shape the future landscape in the digital music market to the detriment of users and artists,” Almunia explained, during a speech he made in Switzerland June 8.

“Competition authorities have the responsibility to monitor these market developments and allow all participants to play their part,” he said.

The rest of the European recorded music business’s objections to the deal will have been made clear to the EU by its main opponents, such as Warner Music Group and IMPALA, the independent music companies’ association.

The EU says it will rule on the deal Sept. 6, which should be time enough for Universal to offer a few sweeteners.

It’s likely they’ll include selling off various subsidiaries, including some of its huge recorded music catalogue, although so far there’s been no indication of which companies or labels it’s willing to shed.

“We are preparing a detailed response to the Commission’s statement which will address the concerns outlined in this procedural document. We will continue to work closely with the Commission and look forward to securing regulatory clearance,” Universal said in a statement.

In November, before Universal had even won the bidding war for EMI’s records business, IMPALA executive chair Helen Smith told the Financial Times that she doesn’t believe “any remedies would suffice” if the French-owned company came out on top.

In the U.S. the arguments for and against Universal buying EMI will likely be a little more public after June 21, when a U.S. Senate antitrust subcommittee will begin talking to parties representing both sides.

Universal chief exec Lucian Grainge, EMI chief Roger Faxon, and Live Nation executive chairman Irving Azoff will be among those saying the deal should be allowed.

Martin Mills, head of UK-based Beggars Group, and former Warner Music Group chairman Edgar Bronfman Jr. will explain why they think it should be stopped.

The senate antitrust subcommittee doesn’t actually have any formal influence over the outcome as the eventual decision will be made by the U.S. government’s federal antitrust regulators.