Perhaps unsurprisingly, pan-European indie labels trade body IMPALA has questioned Sony Music’s involvement in a bid to buy some of the EMI assets Universal is selling off as part of its agreement with European regulators regards its acquisition of the EMI record company.
As previously reported, Sony and BMG are bidding together to acquire much of the EMI European division that is being sold, including the UK-based Parlophone business. It is thought that if their joint bid was successful, the two companies would then split the acquired assets between them, rather than working together long term.
This would mean that the second biggest music company in the world, ie Sony Music, would become even bigger, just as the biggest, Universal, also grows in size as a result of the main EMI deal last year. Plus, of course, the Sony-controlled music publishing business, Sony/ATV, also grew last year by leading the consortium that successfully bid for the EMI music publishing company.
Therefore the sale of any EMI assets to Sony would not, IMPALA reckon, achieve the objectives anticipated by the European Commission when they forced Universal to commit to divest over half of EMI’s European assets as part of its takeover of the one-time British major music company. And to that end the trade body wants the EC to investigate the ongoing divestment process.
IMPALA said in a statement this morning: “Universal and Sony were allowed to buy EMI on the basis that the divestments they make would compensate for the reduction in competition in an adequate way. Strict rules apply to make sure this happens”.
It continued: “First, the purchaser must have no connections to the seller. Second, the seller must not benefit from the divestments or re-acquire any market influence over the assets. Third, the divestment must not raise any competition concerns (which rules out any Sony involvement in bids). Any breach of these conditions or other irregularity, or any result which protects the position of Sony or Universal, whether co-ordinated or otherwise, is forbidden and would be blocked by the EC”.
Meanwhile, IMPALA boss Helen Smith added: “Our position from the start has been that music must not be allowed to become a ‘two horse race’ and making sure the independents are able to compete effectively is crucial. All interested companies should be treated equally as bidders for any assets to be sold off. Properly strengthening the independents should be part of the outcome. The divestment processes must not be conducted in a way that simply comforts the market leaders’ view of how competition should, or should not, develop”.
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