The European Commission has opened an in-depth investigation under the EU Merger Regulation into the proposed acquisition of the recorded music business of EMI by Universal Music Group. The Commission’s initial market investigation indicated that the proposed transaction may raise competition concerns in the wholesale of physical and digital recorded music in numerous Member States as well as in the European Economic Area (EEA) as a whole, particularly in light of the merged entity’s high market shares and increased market power. The opening of an in-depth inquiry does not prejudge the final result of the investigation. The Commission now has 90 working days, until 8 August 2012, to take a final decision on whether the proposed transaction would significantly impede effective competition in the EEA.
Commission Vice President in charge of competition policy Joaquín Almunia said: “The proposed acquisition could reduce competition in the recorded music market to the detriment of European consumers. The Commission needs to make sure that consumers continue to have access to a wide variety of music in different physical and digital formats at competitive conditions.”
The Commission’s initial investigation showed, in particular, that the proposed transaction would lead to high combined market shares in the wholesale of physical and digital recorded music in the EEA and in numerous Member States and that, post merger, Universal would enjoy increased market power vis-à-vis its direct customers.
At this stage of the investigation, the new entity, which would be almost twice the size of the next largest player in the EEA, would not appear to be sufficiently constrained by the remaining competitors on the market, by its customers’ buyer power, and/or by the threat of illegal music consumption (so-called “piracy”).
The Commission will now investigate the proposed merger in-depth to determine whether these initial concerns are confirmed or not.
The transaction was notified to the Commission on 17 February 2012. Here to read more.
