UPDATE: EU Opens In-Depth Investigation Into Universal Buy Of EMI
March 23 2012 - 2:10PM
Dow Jones News
The European Commission's antitrust arm will look in detail at
the proposed acquisition by Vivendi SA's (VIVEF, VIV.FR) Universal
Music Group of EMI's recorded music business, under the second
phase of its merger review process, it said Friday.
"The commission's initial market investigation indicated that
the proposed transaction may raise competition concerns in the
wholesale of physical and digital recorded music in numerous member
states as well as in the European Economic Area as a whole,
particularly in light of the merged entity's high market shares and
increased market power," the commission said.
Universal, in a statement issued soon after the investigation
announcement, said that "Phase II was always expected; we recognise
that the Commission needs time to fully review this transaction"
and pledged to "continue to co-operate fully with them and look
forward to a successful resolution of the process."
The commission's competition arm now has 90 working days, until
Aug. 8, to look into the planned $1.9 billion transaction, which
would create a new entity with control of roughly 40% of the global
recorded music market, according to some estimates. EMI is home to
stars including Blur, Iron Maiden, The Beatles and Katy Perry.
The commission's vice president in charge of competition policy,
Joaquin Almunia, said: "The proposed acquisition could reduce
competition in the recorded music market to the detriment of
European consumers. The commission needs to make sure that
consumers continue to have access to a wide variety of music in
different physical and digital formats at competitive
conditions."
It can decide to allow the deal to go ahead, ask for Vivendi to
make concessions such as disposals, or block it completely, as it
did recently with Deutsche Boerse (DBOEF, DB1.XE) and NYSE
Euronext's (NYX) proposed merger.
The initial investigation has already led those opposed to voice
their concerns and lobby the commission.
Edgar Bronfman Jr., on his final day as chairman of Warner Music
Group in January, said the deal is "problematic" and that "Warner
is going to fight this tooth and nail." IMPALA, which represents
independent music labels, has said it wants an "outright no" to the
proposed tie-up, which would push up music prices.
Citigroup Inc. (C) agreed to split up and sell the legendary
U.K. music company in November, having previously seized the
company from former owner Terra Firma Capital. In a separate deal,
it will sell the music publishing business to a consortium led by
rival Sony/ATV for $2.2 billion.
-By Frances Robinson and Matina Stevis, Dow Jones Newswires;
+32499646573; frances.robinson@dowjones.com
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