IMPALA’s Second Citi Warning

Citigroup’s efforts to find a new owner for EMI have brought another regulatory warning from IMPALA, the Brussels-based independent music companies’ organisation.

The U.S. bank is believed to be in talks with Universal Music Group, Warner Music Group owner Access Industries and possibly Sony Corp regarding the future of EMI’s record business, but the indies look determined to fight any move that reduces the number of major music companies from four to three.

“I don’t believe any remedies would suffice,” IMPALA’s executive chair Helen Smith told Financial Times.

In February, when Citi took control of EMI because Guy Hands and his private investment vehicle Terra Firma couldn’t service the £3.2 billion it borrowed from the bank to buy the company, the indies’ organisation pointed out that the barriers to obtaining regulatory approval in the European Community are far higher than a few years ago.

“In the current regulatory climate, it is difficult to imagine the EC agreeing to further concentration,” Smith explained.
Selling EMI to Warner could still be the line of resistance. IMPALA recognises that in 2007, when the U.S. major last made a play for EMI, it acknowledged the importance of the independent sector and demonstrated its willingness to find far-reaching remedies.

One of the provisions involved Warner giving the indies a bundle of money to fund Merlin, the digital-licensing and anti-piracy group it had just launched.

The organisation has already asked the EC to investigate all possible options to intervene if Universal or Sony should win the bidding war for EMI.

IMPALA, which last year celebrated its 10th anniversary, has shown it’s up for a regulatory fight if it thinks its members’ interests are being marginalised.

It stalled the Sony-BMG merger in 2004 to such effect that four years later – when the Japanese company bought out its German partner – the European courts still hadn’t ruled on whether it should have been allowed to go ahead in the first place.