Friday 27 April 2012, 13:03 | By

Pressure groups want US senate to consider Universal’s EMI bid

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Two pressure groups in the US have urged the Senate judiciary subcommittee that focuses on competition issues to review Universal Music’s bid to buy the EMI record companies.

As previously reported, web lobbying group Public Knowledge has already published its submission to the American Federal Trade Commission’s review of Universal’s EMI bid, airing very similar concerns about the proposal to those expressed by indie labels organisation IMPALA in Europe. But yesterday the group joined with the Consumer Federation Of America in calling for the merger of the Universal and EMI labels to be discussed on Capitol Hill too.

In a letter to Senators Herb Kohl and Michael S Lee, who sit on the relevant subcommittee within the US Congress’s Senate, the two groups re-set out most of the criticism about Universal’s deal that has been aired in other quarters, in particular that a combined Universal/EMI will command over 40% of the Anglo-American catalogue, and that that will give what is already the largest major music company too much power in digital negotiations, as well as over competitors and independents. Universal has already issued statements countering those claims.

But the letter also raises a new argument, citing the US Justice Department’s recent lawsuit against Apple and five major book publishers, who were are accused of colluding to fix prices in the e-book market. The letter asks, if five publishers which together have less than a 50% market share can pose a threat to competition in one market, what could one company with over a 40% market share do in the music space?

Universal was quick to respond to that point as well though, saying that price fixing rules and competition rules are two very different things, and that the ability for companies to collude on pricing has nothing to do with market share. The major told reporters: “CFA’s effort to compare this case to the government’s e-books case completely misunderstands the law. The e-books case is about an alleged illegal price-fixing conspiracy. Market shares don’t matter in a case like that it’s just as illegal for two tiny local bookstores to fix prices as it is for giant publishing companies”.

It added: “The law governing mergers is totally different, and most mergers, like this one, are ultimately found to be beneficial to competition and consumers”.

According to reports, relevant senators are now considering whether they should give time to discussing Universal’s grand EMI plan, though, even if they do, the FTC investigation will still seemingly be the important thing, even if any congressional debate on the matter makes for interesting viewing.

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