The European Commission has granted approval for the sale of the Parlophone Label Group to Warner Music, it was announced yesterday. When it acquired EMI last year, Universal Music was forced by competition regulators to sell the Parlophone Label Group - which includes the UK-based Parlophone frontline label and catalogue, some more British EMI archive, and EMI operations in various other European markets - and it was announced that Warner would buy it in February in a £478 million deal.
Beggars boss Martin Mills told Music Week: "This is good news for the market, and goes some way towards mitigating the concerns raised by Universal's EMI acquisition, which we are already seeing become reality. As the clearance says, the strengthening of both Warners and the independents, as a consequence of Warner's agreement with IMPALA and Merlin, should go some way to counter the power of Universal - and the existing duopoly of Universal and Sony - to unilaterally determine the shape of the marketplace. The consequent strengthening of the independent sector as a whole should be especially welcomed".
UMG have been given outline approval by EC regulators to buy up EMI's recorded music division - but the major will have to divest a number of key catalogues to meet competition requirements. Among the EMI assets to be sold are the Parlophone, Chrysalis and Mute labels and catalogues (minus The Beatles and Robbie Williams) and the EMI Classics division. A number of commentators, in particular independent labels, say that the move will give UMG unassailable market dominance alongside Sony, who since purchasing EMI's music publishing division, have a 30% plus market share in the business of songs. It is expected UMG will have a 38% plus share of the global market in recorded music and many fear that the major will use market dominance to either prioritise its own services such as Vevo, or insist on large upfront payments or equity stakes in new digital start ups which want to use music, as it did with Spotify (UMG own 4% of Spotify, EMI 1.9% and Sony 5.8%, and Sony and UMG jointly own Vevo with the Abu Dhabi investment company). The deal is still subject to US regulatory approval, which is expected next week. The Commission said that "the very significant commitments proposed by Universal will ensure that competition in the music industry is preserved and that European consumers continue to enjoy all its benefits". Pan-European indie labels trade body IMPALA did not agree, and said it would consider its options once the EC's full decision was published.
The European Commission's have agreed to provide UMG with a statement of key objections to Universal's bid to buy the EMI record company. The key concerns have been identified via the Commission's in depth investigation into the acquisition proposals. Although the statement of objections is a routine part of the EC's merger investigation process, it confirms that European regulators want some key issues to be addressed before the deal can be considered for approval. EU Competition Enforcer Joaquín Almunia said on Friday: "A company with a large and popular catalogue can have significant market power over digital platforms, which would have a keen interest to strike a deal with it. Ultimately, we will need to make sure that 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". Welcoming the concerns expressed so far by the Commission, Helen Smith of IMPALA, the pan-European trade body for the indie label sector and one of the most vocal opponents to the deal, said"We welcome this news and expect to see a strong statement of objections confirming the Commission's earlier findings that Universal is a danger in the physical and digital market because it cannot be adequately constrained by competitors, customers or piracy". The Commission hopes to make a ruling on the Universal/EMI deal by the 6th Sep. The Federal Trade Commission in the US is concurrently reviewing the merger, while the transaction is also due to be debated in US Congress by the Senate Judiciary Committee's antitrust subcommittee on the 21st June.
