26/03/12: EC reveals reason for detailed Universal/EMI investigation - market power cannot be restrained by customers, competitors or piracy

 

IMPALA Press Release, 26th March 2012
Late Friday, the European Commission confirmed its decision to launch a detailed investigation into the acquisition of EMI recordings by Universal. This was expected, but the Commission's statement sets out its reasons for taking this decision - information previously not available.

The European regulator said that Universal's power seems unable to be sufficiently constrained by customers, competitors or piracy. This will be cause for concern for Universal who is counting on being able to argue the opposite.

The European regulator found that Universal would be almost twice the size of its nearest rival and said that high market shares and increased market power would cause competition problems in both the physical and the digital market.

Helen Smith, IMPALA Executive Chair said: "We agree with the Commission's findings so far that Universal's increased power cannot be constrained by competitors, customers or piracy. This matches the experience of our members on the ground. Competition problems exist in the physical as well as the digital market, as the Commission recognised. We welcome the robust confirmation that the EC will "make sure consumers continue to have access to a wide variety of music in different physical and digital formats at competitive conditions".

Universal agreed to a deal with EMI's previous owner CitiGroup where it accepted the whole regulatory risk in connection with its proposed acquisition of EMI, meaning it still has to pay the full price, even if the sale is blocked. Regulators on both sides of the Atlantic have stopped various mergers in the past few months.

The European regulator has set a date of 8th August to reach a final conclusion.


 

About IMPALA
IMPALA was established in April 2000 to represent European independent music companies. One of IMPALA's missions is to keep the music market as open and competitive as possible. IMPALA has an impressive record on 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 The first EMI/Warner merger was withdrawn in 2001 following objections from the EU after IMPALA intervened, in its first year of existence.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. 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. IMPALA has also submitted observations on Apple’s bid to acquire Shazam.  See the organisation's other key achievements in IMPALA's milestones.

 

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