The European Commission has published a full 84 page summary of its decision regards the acquisition by a Sony-led consortium of EMI Music Publishing. As previously reported, the deal was given the all clear by European regulators in April after Sony offered a number of concessions, ie selling off the Virgin and Famous UK song catalogues. The deal is still subject to regulatory approval in the US.
As assumed, a key factor in the regulators’ decision-making was the complicated ownership structure of the EMI publishing company post any deal. Although Sony’s existing publishing firm, Sony/ATV, will control EMI day-to-day, the EMI publishing business will remain a separate entity co-owned by Sony/ATV and a number of other investors. And as it is, of course, Sony Corp does not own Sony/ATV outright, it being a 50/50 joint venture with the Michael Jackson estate.
This is different than with the other big EMI deal, ie Universal’s bid to buy the EMI record company. Universal Music is one entity owned by one parent company, and it plans to absorb the EMI labels whole, creating one mega music firm. But with Sony’s bid, although Sony Corp will have an interest in the Sony Music record company, the Sony/ATV publishing firm and EMI Music Publishing, all three will remain autonomous, and the latter two will have other shareholders, a fact that has allayed some of the European regulator’s concerns regarding the group’s market dominance.
According to pan-European indie labels trade body IMPALA, which has opposed both the EMI sales, the EC’s report also concludes that online services and/or piracy will not, in their own right, constrain the “excessive market power” of big rights owners. This is important because one of Universal’s counter-arguments to claims by opponents that a combined Universal/EMI would have too much power over the digital music domain, is that the dominance of certain digital service providers and the threat of online piracy constrains the rights owners power over things like pricing.
Commenting on the report, IMPALA boss Helen Smith told CMU: “We welcome the decision’s confirmation that neither online customers nor piracy are capable of restraining excessive market power in music. It also acknowledges that online platforms are being asked to pay more for Anglo-American music than local music, which is exactly what we predicted”.
She continued: “Against that backdrop, the merger is bad news for publishers and writers, as well as for collecting societies and any label or online service which needs to be able to rely on fair terms. We believe the remedies do not go anywhere close to securing future competition. We now need to study the EC’s reasons in detail with our legal team to decide next steps”.