EU Commission Releases Objections To UMG/EMI Deal
July 3, 2012 at 3:54 AM (PT)
YESTERDAY (NET NEWS 7/1), ALL ACCESS reported UNIVERSAL MUSIC had moved to reassure staff that VIVENDI still supports it and its bid for EMI's record labels after last week's sudden exit of the French parent company’s CEO.
But more trouble is brewing, as "EUROPE's top antitrust watchdog has set out a sweeping list of objections to UNIVERSAL MUSIC's £1.2 billion bid for EMI's record labels, putting pressure on the VIVENDI subsidiary to offer large concessions to save the deal from being blocked," reports THE FINANCIAL TIMES. "According to people who have seen a 'statement of objections' circulated by the EUROPEAN COMMISSION, it argues that UNIVERSAL, the world’s largest music company, already extracts materially higher prices from digital distributors than rivals, and that buying EMI would allow it to raise digital music prices."
A UNIVERSAL spokesperson released a statement saying, "We are preparing a detailed response to the Commission's statement which will address the concerns outlined in this procedural document. We will continue to work closely with the Commission and look forward to securing regulatory clearance."
Two weeks ago, the deal was scrutinized in WASHINGTON, D.C. ALL ACCESS reported (NET NEWS 6/22) that UNIVERSAL MUSIC GROUP's proposed $1.9 billion purchase of EMI MUSIC was defended in written and oral testimony by executives of the companies before a Senate antitrust committee, while drawing more fire from other labels and consumer groups.
The meeting's most pointed question came from WISCONSIN Democrat HERB KOHL, Chairman of the Senate Judiciary’s antitrust subcommittee, who asked "Is the music industry like other businesses, and thus subject to concerns about market concentration, or is it an anomaly in which nothing matters but hits?"
"In almost all industries, reducing the number of competitors from four to three expands the market power of the remaining companies and increases the risk of higher prices," KOHL asked. "Why shouldn't these same principles apply to the music business?"