Brussels, 21/09/2012 (Agence Europe) - On Friday 21 September, the European Commission accepted the pledges offered by Universal Music of France, a subsidiary of Vivendi, (see EUROPE 10681) for its buy-up of the recorded music business of the UK's EMI. The authorisation is subject to Universal selling off many of EMI's assets around the world, some of its record labels and other commitments.
After an investigation into the expected impact of the merger on the digital music industry, the Commission found that the deal notified on 17 February 2012 would have given Universal, which is already the world's biggest music company, too much power over the market and would have made it possible for the company to hike up the licensing conditions for digital platforms like I-Tunes and Napster that sell music on to consumers. This would have led to price increases and penalised innovative small platforms, explained Competition Commissioner Joaquim Almunia at a press conference. Universal's buy-up of EMI would reduce from four to three (Universal-EMI, Sony and Warner) the number of big record companies around the world, which is why the Commission is requiring Universal to keep below 40% of the music business in the EEA (although it is already above that in some member states) and for two-thirds of the businesses sold off to go to professional buyers that can set up a new music business. The remaining third should be sold to small record labels and music companies.
To meet the Commission's demands, Universal will sell off EMI businesses such as EMI Recording Limited, which holds the iconic Parlophone label (but Universal will keep the Beatles). The divestments also encompass EMI France (which holds the David Guetta catalogue), EMI's classical music labels, Mute (home to The Ramones and Jethro Tull), Chrysalis (home to Depeche Mode, Moby and Nick Cave & The Bad Seeds), various other labels and a large number of local EMI entities. The divestment package also includes Coop, a label licensing business selling artists such as Mumford and Sons, Garbage and Two Door Cinema Club. In addition, Universal has pledged to sell EMI's 50% stake in the popular Now! That's What I Call Music compilation joint venture and to continue licensing its repertoire for that compilation for the next ten years. Universal has committed not to include “Most Favoured Nation” (MFN) clauses in its favour in any new or renegotiated contract with digital customers in the EEA for ten years. MFN clauses oblige digital customers to extend any favourable term granted to Universal's competitors to Universal. This commitment will allow Universal's competitors to negotiate more freely with digital customers and further levels the playing field between these competitors and Universal.
Independent record label pressure group Impala has welcomed the conditions laid down by the Commission for the merger, but objects that they are not strong enough to genuinely influence Universal's market position. (FG/transl.fl)