Yesterday we reported on Sony/ATV Music buying up EMI’s Publishing arm for $US 2.2 billion from prior owners, Citigroup, effectively making the largest music copyrights company in the world.
The move also reduced EMI to just its recorded music division, which Vivendi – who owns Universal Music Group – offered to buy for $US 1.9 billion. A deal that, if approved, would reduce the world’s major music companies, ‘T’he Big Four’ to just three. The deal is being administered by European and US regulators, and news today suggests that the EU watchdog is planning to launch an antitrust probe into the sale.
The Financial Times reports that European regulators have released a list of objections to Universal Music Group’s bid for EMI’s record labels, arguing that as the world’s largest music company, Universal already gains higher revenues and pricing from its distributors than rival companies. The European Commission argues that the acquisition of EMI would allow Universal to raise the prices of its digital music.
Similar concerns that Sony Music’s music’s acquisition of EMI Publishing would mean they could use their dominant market share to increase pricing regulations were cleared by the European Commission along with The US Federal Trade Commission, who indicated that publishing laws – unlike recording labels – were closely regulated in various countries.
The same EU commission however, has found issue with Vivendi and Universal’s $US 1.9 billion bid for EMI’s record label arm, with a report that suggests that Universal’s market share is greater than they are letting on in their self-assessment. Universal has excluded the music that it distributes for independent record labels – a significant share. The Commission also took issue with Universal’s size as one of the biggest record labels in the world, to win better terms and conditions for its lable artist – including securing more radio and tv airplay, as well as online distribution – essentially shutting out rival companies.
According to The Financial Times Universal are planning concessions to their purchase of EMI, a spokesperson claiming,
“We are preparing a detailed response to the Commission’s statement which will address the concerns outlined in this procedural document [and] will continue to work closely with the Commission and look forward to securing regulatory clearance.”
New negotiations between the EU Commission and Universal are being established in the coming days to address the watchdog’s concerns, including proposed discussions to ensure that the independent acts and labels they distribute would get the same financial terms of digital music services that Universal secures for its own label.
Vivendi and Universal are obviously desperate to buy EMI, and will likely comply with European regulators to ensure their purchase isn’t blocked. Vivendi’s chief executive, Jean-Bernard Lévy, even stepped down from his position last week citing “divergence of views on the strategic development of the group”. Most likely to do with the EMI bid.
He has since been replaced by Universal Music head, Lucian Grainge, who has reassured the company of their commitment to going ahead with the EMI deal.
