Brussels, 22/05/2007 (Agence Europe) - On Tuesday, the European Commission approved under the EU Merger Regulation the proposed acquisition of the music publishing business of Bertelsmann Music Group (BMG) of Germany by the US-based Universal. Brussels found that the proposed merger, as initially notified, raised serious doubts as regards adverse effects on competition in the market for music publishing rights for online applications. However, the Commission's investigation found that these concerns would be removed by the remedies package proposed by the parties, concerning the divestiture of a number of publishing catalogues. In the light of these commitments, the Commission has concluded that the proposed operation would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.
The Commission's in-depth market investigation has shown that no competition concerns would arise from the merger where the copyrights are still administered by the collecting societies, who usually charge uniform tariffs for the complete administered repertoire. However, in the field of online rights, publishers have recently started to withdraw their respective rights for Anglo-American song repertoires from the traditional collecting societies system. They have started to transfer their rights to selected collecting societies acting as agents for individual publishers and granting EEA-wide licences. The market investigation has shown that, following these withdrawals, pricing power has shifted from the collecting societies to the publishers. The Commission's concern was that in this new environment Universal would, after the merger, be able to exert control over a large percentage of titles either via its (fully or partly owned) copyrights based on the song-writers' works, or via its rights based on the individual recordings. In a number of countries, Universal would even control more than half of the chart hits and thereby become a "must-have" product for all online and mobile music services. The Commission therefore had concerns that the merger would give Universal the ability and the incentive to increase prices for online rights as regards Anglo-American repertoires. In order to remove the Commission's concerns, Universal committed to divest a number of important catalogues, covering Anglo-American copyrights and contracts with authors. Although the competition concerns only relate to online rights, for reasons of viability the commitments cover the complete range of copyrights (i.e. also mechanical, performance, synchronisation and print rights). (ol)