Independent music companies take a stance against UMG-Tencent deal

Brussels, 26th November 2019

IMPALA is gearing up to oppose Tencent’s buyout of a 10% stake of Universal Music Group with an option to add a further 10%. IMPALA is also concerned about who might buy the additional UMG stakes that are up for grabs.
 
IMPALA’s Executive Chair Helen Smith commented: “Even at a low level of shareholding, we believe the risk of harm for consumers and competitors from such a transaction would be a concern because of the impact in both the digital market and the music sector, with independents being squeezed further and artists also losing out.”

The impact of such a sale would change the whole music ecosystem, and smaller companies will be the first to lose out. UMG is the world's biggest music company and Tencent currently owns four out of five of the leading music apps and has an estimated 90% market share in the growing Chinese market for the retail of digital music, with strong presence in other key markets.

Helen Smith continued: “We also need to see how the plan to sell the rest of the UMG shares available plays out. There could be any number of outcomes.”

This type of creeping influence will not escape regulatory scrutiny. The fact that the Chinese competition watchdog is already looking into Tencent Music’s licensing deals with the majors underlines the importance regulators attach to ensuring fairplay, and other regulators have raised the alarm about the power of online services and media giants.
 
Helen Smith concluded: “We would expect regulators to also be concerned about the Spotify-Tencent link. We believe it would be difficult for Tencent and other companies with power in a vertical market to acquire influence over the world’s biggest set of repertoire.”

 

About IMPALA 

IMPALA was established in April 2000 to represent European independent music companies operating in both the recorded music and music publishing businesses. One of IMPALA's missions is to keep the music market as open and competitive as possible and it was instrumental in securing a in securing a key EU review of copyright legislation as regards online platforms the EU. IMPALA has an impressive record in competition cases in the music sector. The first EMI/Warner merger was withdrawn in 2001 following objections from the EU after IMPALA intervened, in its first year of existence. It also won a landmark judgment in 2006 in the Sony/BMG case, and when Sony acquired 30% of EMI publishing in 2012, it was at the cost of significant divestments. The biggest set of remedies proportionately ever in a merger case was secured later that year, when UMG was forced to sell two thirds of EMI records and had to accept ten years of scrutiny over the terms of its digital deals. When WMG bought Parlophone in 2013, IMPALA secured a hefty divestments package for its members. At the same time, divestments were also ordered in the sale of EMI's publishing businesses to Sony, a deal which started as a consortium and moved to sole Sony control in 2018, despite industry opposition. On top of mergers, IMPALA has also been involved in other anti-trust cases involving the music sector, such as the abuse complaint against YouTube in 2014 and the call for regulating unfair business practices by large online players. See the organisation's other key achievements in IMPALA's milestones.

All latest press

__________________________________________________________________________________

Intellectual property industries as key driver for EU economy