IMPALA challenges Universal’s creeping dominance and asks EC to examine sale of publishing assets

IMPALA Press Release, Brussels 8 October 2007

Impala has asked the EC to examine the publishing divestments ordered under the Universal/BMG merger and investigate its recent acquisition of at least eight independent companies across Europe.

It is concerned that independent cash buyers may be being excluded from bidding for assets such as Rondor UK, Zomba US and UK, as well as 19 Music, 19 Songs and BBC Music. These companies are up for sale as a condition of the Commission’s approval of the Universal/BMG merger in June. Any discrimination between potential bidders or any pre-determined plan to sell off the assets as one lot, for example to another major, would contravene the strict rules in the decision. Impala also believes that the Commission may have overvalued the significance of the assets to be sold.

At the same time, IMPALA has urged the Commission to put a stop to Universal's creeping dominance. Universal's current shopping spree of key independents across Europe includes Vale Music in Spain, ARS in Belgium, Magic in Poland, Lionheart in Sweden, Rounder Records, Sanctuary and now V2 in the UK.  This is a clear tactic to gain market power and further acquisitions are expected in key territories. Universal already controls over 50% of the world’s most popular music.

IMPALA has asked EC Commissioner Kroes to completely rethink her approach to music mergers and impose innovative remedies that will narrow the unacceptable gap between the majors and the independents, to re-dynamise the whole sector in the interests of music fans and artists as well as entrepreneurs. IMPALA points out that she has ignored the duopoly between Universal and SonyBMG. These two companies alone have over 50% of the market and 70% of the vital Top 100 in many key EU territories (EC’s own market share analysis in UniBMG).

Patrick Zelnik, IMPALA President and President of Naïve said:  Commissioner Kroes does not seem to be a friend of creative SMEs.  If Universal continues to buy up the independent sector at the rate of one a week, how many will be left when Commissioner Kroes retires? Music is more concentrated than energy. If she supports liberalisation she should understand that SME’s need to breathe.

Martin Mills, IMPALA Chairman and Chair of Beggars Group added: The  EC's conditional clearance of this purchase was intended to liberate a significant set of assets into the non dominant part of the music community - we must ensure that actually happens.

IMPALA was established in April 2000 to help independent music companies represent their own agenda and promote the expansion and competitiveness of independent music in the interest of cultural diversity.

99% of music companies are SMEs. The independents are world leaders in terms of R&D and discovering new music and artists. Despite this, they face increasingly complex barriers to trade and severe market access problems. Over 80% of the market and 95% of key radio and retail is concentrated in the hands of the majors. The gap between the majors and the independents is now so wide that not one independent has more than 1.5% across Europe.

IMPALA has over 3500 members including the top independents: !K7 (Germany), Beggars Group (UK), Bonnier Amigo (Sweden), CLS Kft (Hungary), CNR (NL), Cooking Vinyl (UK), Edel (Germany), Epitaph (US/NL), Gazell (Sweden), Menart doo (SIovenia), Musicvertrieb (Switzerland), Naïve (France), Odyssey (Ukraine), PIAS Group (Belgium), Playground (Sweden), Red Bullet (NL), Soyuz Music (Russia), SPV (Germany), Wagram (France), as well as national trade associations from the UK (AIM), France (UPFI), Germany (VUT), Spain (UFI), Italy (PMI), Denmark (DUP), Norway (FONO), Israel (PIL) and Sweden (SOM) and the Catalonian association APECAT.

For further queries, please see or contact IMPALA on T: + 32 2 503 31 38, IMPALA, Coudenberg 70, B-1000, Brussels.