Brussels Challenges Universal-EMI Deal

The European Commission has handed Universal Music Group a 194-page document detailing its objections to its proposed $1.9 billion takeover of EMI’s recorded music business.

The EC’s been looking over the deal since February, while there’s been growing media speculation over what concessions the Vivendi-owned company would need to make to satisfy regulators.

Many European business papers are saying the monopolies authority is very concerned about the way a Universal-EMI could completely change the way supply and demand works within the music industry.

It’s also believed to have rejected Universal’s argument that the music industry needs the merger to help it battle piracy.

IMPALA, the European indies’ trade association, and others opposed to the deal are bothered that the takeover will hand the new company such a big slice of the market that it will be able to dictate terms with retailers and magazines, squeezing out artists on other labels.

They also say the deal would enable a combined Universal-EMI to use its domination to exert too much control over digital music services, such as Spotify and Deezer. The company has argued that Apple and Amazon’s bargaining power would prevent that, but that’s another argument the EC doesn’t appear to be buying.

The New York Post said the situation’s now so sensitive that Universal won’t sign off on an IFPI report on market share while it’s trying to get approval for the deal.

The June 27 press bash to launch “Investing In Music,” the International Federation of the Phonographic Industry’s latest report on the state of the global records business, was scrapped because IFPI chief Frances Moore got fed up with the major record companies arguing about whether it should be published.

The Post reckons Moore got so frustrated with the bickering between Universal on the one side and presumably Sony and Warner on the other that she sent out an email saying she wouldn’t have the IFPI acting as referee.

Universal allegedly refused to agree to publication unless some changes were made, which apparently would have a put a different spin on its market influence.

Universal now has days to respond to the European Commission’s objections and offer whatever concessions it can to overcome them. The final ruling on Universal’s intended acquisition of EMI’s recorded music business is expected Sept. 9.