Indies Question Sony/BMG Purchases Of UMG/EMI Spin-offs

Watching The Big Get Bigger

Independent label trade body IMPALA has asked the EUROPEAN COMMISSION to scrutinize Sony/ATV's purchase of EMI PUBLISHING and UNIVERSAL's acquisition of EMI MUSIC so they don't "strengthen the duopoly that exists between UNIVERSAL and SONY,' MUSICWEEK reports. Because of the deals, BMG is currently in line to acquire VIRGIN PUBLSHING and famous songs from SONY/ATV, and also get the MUTE RECORDS catalog from UMG; EC approval is needed for these transactions

But when it became public knowledge that SONY MUSIC and BMG are joining forces to bid for PARLOPHONE LABEL GROUP and other divestments from UNIVERSAL, red flags were raised at IMPALA. "These facts are expected to raise alarm bells with the European regulator, who is responsible for reviewing the sale processes and deciding whether these deals meet strict criteria set by the EC to ensure the divestments have the desired effect," IMPALA asserted. "Any irregularities could turn the procedure into a full blown investigation.

"UNIVERSAL and SONY were allowed to buy EMI on the basis that the divestments they make would compensate for the reduction in competition in an adequate way," the lobby continued. "Strict rules apply to make sure this happens. First, the purchaser must have no connections to the seller. Second, the seller must not benefit from the divestments or re-acquire any market influence over the assets. Third, the divestment must not raise any competition concerns (which rules out any SONY involvement in bids).  Any breach of these conditions or other irregularity, or any result which protects the position of SONY or UNIVERSAL, whether coordinated or otherwise, is forbidden and would be blocked by the EC."

"Our position from the start has been that music must not be allowed to become a 'two-horse race' and making sure the independents are able to compete effectively is crucial," IMPALA Exec. Chair HELEN SMITH said. "All interested companies should be treated equally as bidders for any assets to be sold off. Properly strengthening the independents should be part of the outcome. The divestment processes must not be conducted in a way that simply comforts the market leaders' view of how competition should, or should not, develop."

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