Brussels, 19/06/2000 (Agence Europe) - The European Commission is opening a detailed inquiry into the merger between the largest world Internet access provider, America on Line (AOL), and the leader in music publishing, Time Warner. As in the case of the inquiry on the Time Warner/EMI merger opened last week (see EUROPE of 15 June, p.1³7), the Commission fears competition restrictions on the emerging business of music distribution via the Internet. It also plans to examine the impact of the operation on the Internet access market and on pay content. The Commission did not consider as sufficient the commitments taken by the group, which mainly proposed cutting the structural link with the fourth largest media company, Bertelsmann, within AOL Europe.
"The main competition issue raised by the merger is the vertical integration of Time Warner content with AOL on-line services. This matter is complicated by the fact that AOL has recently entered into a joint promotion, distribution and sales agreement with Bertelsmann, the German music recording, publishing and broadcasting group", notes the Commission in its press release. It notes that this vertical merger will allow AOL to "have preferential access to the leading source of music publishing rights and music repertorie in most Member States". This dominant position could allow it to "dictate the technical standards for delivering music over the Internet and monopolise the music player software".
The Commission also fears that AOL will hold a dominant position on the market for Internet access in the United States (where it hold 40% of the market) and in several Member States in order to make its mark in the provision of pay content such as films, television broadcasting, financial information, etc.
AOL and Time Warner have concluded the largest merger to date, for some $190 billion. The companies have among other things: 82,100 employed, 72 million subscribers to AOL or its messenger service, 120 million readers (Times, People, Fortune) and 13 million televiewers on cabled channels of time Warner (CNN, Cartoon NetWork, TNT, Warner Music, etc.).