Mergers - IMPALA predicts a rough ride in Europe from regulators and competitors
IMPALA Press Release - Brussels, 1 February 2011
As Citigroup buys EMI Music, IMPALA today confirmed that it would oppose any further concentration in the music market, highlighting that the barriers to obtaining regulatory approval in the EC are far higher than a few years ago.
The EC already gave warnings in its previous merger decisions about the power of the market leaders. It has also formally recognised that competition rules must level the playing field for the independents, who are essential to delivering real consumer choice and cultural diversity, and to the success of new onllne services.
Helen Smith, Executive Chair of IMPALA said “In the current regulatory climate, it is difficult to imagine the EC agreeing to further concentration. Even an attempt to combine EMI/Warner* would be blocked unless substantial remedies were put in place to counter the anti-competitive impact.
Some parties argue that the regulators would be sympathetic because of the economic climate, yet this ignores three vital facts. First, the regulatory landscape has completely changed. Second, all previous music mergers have proved that concentration is not the answer to the music sector’s ailments. Third, music SME’s are already suffering not only because of the crisis but also because market access is difficult due to excessive concentration. All the concerns that we expressed in previous merger cases have been validated."
About music mergers
*Current speculation - continues about the future of EMI especially now that Citigroup has bought the company raising expectations that a whole or partial sell off is on the cards. Three majors (Universal, Warner, and Sony), as well as other actors in the market, have been rumoured to be interested. In its assessment of the impact of the UniversalBMG merger in 2007, as well as in its previous assessments of SonyBMG, the EC issued warnings about the power of the market leaders in both publishing and recording. Any attempt by Sony or Universal to increase their market power would be rejected out of hand by the EC, with any other combination having to implement far reaching remedies to improve competition.
Results of previous mergers - contrary to the claims of the parties, competition has not improved. Concentration has compounded the overall decline of the sector and highlighted the inadequacies of the majors’ business models. Fewer artists are released and market share is taken away from the independents time and time again. The result is reduced competition and choice for both artists and consumers, as well as reduced cultural diversity.
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 interests of entrepreneurial and cultural diversity.
99% of Europe’s music companies are SMEs. Known as the “independents”, they are world leaders in terms of innovation and discovering new music and artists - they produce more than 80% of all new releases. SME’s also produce 80% of Europe’s jobs. Their potential is enormous but is hampered by complex barriers to trade and severe market access problems. The impact on diversity, consumer choice and pluralism is clear. Over 95% of what most people hear and see, whether on radio, retail or the internet, is concentrated in the hands of four multinationals, known as the majors.
Cultural and creative SMEs are now officially recognised by the EU as “the drivers of growth, job creation and innovation”. IMPALA expects the EC and its member countries to put in place key investment, digital and market access measures. Fostering Europe's economy of culture and diversity is one of the EU's top priorities in becoming the world's leading knowledge economy. Culture is a bigger earner than any of chemicals, automobiles or ICT manufacturing and provides more than 3% of Europe's jobs.
IMPALA has its own award schemes to help promote cultural diversity and new talent and highlight the artistic contribution of independent music. IMPALA award winning artists include Efterklang, Adele, Radiohead, Arctic Monkeys, Carla Bruni, Manu Chao, Corneille, Katie Melua, Franz Ferdinand, The Prodigy, Placebo and Ibrahim Ferrer (Buena Vista Social Club).