Universal’s bid to buy EMI is heading into a full second phase investigation at the European level, according to sources cited by the Financial Times. This will come as a surprise to more or less no one, given the complexities of the proposed deal, though the FT also claims that “the European Commission this week privately expressed its serious doubts over the impact on competition from the purchase of EMI”.
As much previously reported, the British music major is set to be split for sale by current owners, US-bank Citigroup, with Universal taking the record labels and a consortium led by Sony/ATV buying the music publishing assets. Both deals would increase the size and influence of what are already the two biggest music groups in the world, leading to opposition from both the independent sector and the two bidders’ smaller major label rival Warner Music. That opposition is significant because both deals require competition regulator approval from both the US’s FTC and the European Commission.
The European investigation into both is running a couple of months behind FTC efforts, with Universal and Sony only submitting their formal applications within the last month. In theory the EC could give either deal the all clear in a one phase one month investigation, but that never seemed likely. The FT confirms that interested parties have raised various concerns about the Universal deal with the EC, but that the major has so far chosen not to propose remedies to allay any fears in a bid to get a quick resolution. Presumably aware a second phase investigation was almost inevitable, it’s likely Universal didn’t want to start making any concessions to critics this early in the proceedings.
The EC will make an announcement about its intentions re the Universal deal on 23 Mar, and the Sony bid on 2 Apr. Both Universal and Sony, officially at least, remain convinced they will ultimately get approval for their deals without remedies, albeit after a rigorous second phase investigation that could run into the summer. But the indies and Warner still remain confident they can severely hinder the two mega majors’ expansion ambitions via the regulatory process.
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