If Universal Music‘s plans to purchase EMI‘s recorded music department, the above (Katy Perry & Nicki Minaj) might just become label mates, marking one of the ‘grandest’ acquisitions to take place in label history.
However, in what many a critic saw coming a mile away, the European Competition Commission has objected to the deal, sending Universal a list of issues it has with the proposition.
A proposition, which will see Universal own 40% of the industry’s recorded music market.
Back in April, the ECC approved the CitiGroup‘s $2.2 billion sale of EMI Music Publishing to Sony ATV after the company faced financial woes amounting to a debt totaling $4 billion.
However despite giving the green light to Sony’s deal, this week saw the ECC send a list of issues it has found with Universal’s bid, reportedly outlining the unfair threat it may pose to rival labels and digital outlets.
During a speech in Switzerland last week the commission’s Joaquin Almunia expressed:
Ultimately, we will need to make sure that, in this already concentrated market, the company that would emerge from the deal would not be in a position to shape the future landscape in the digital music market to the detriment of users and artists.
A company with a large and popular catalogue can have significant market power over digital platforms, which would have a keen interest to strike a deal with it. Competition authorities have the responsibility to monitor these market developments and allow all participants to play their part.
This, days before Universal CEO Lucien Grainge and EMI chief Roger Faxon will ‘duke it out’ with Beggars Group‘s Martin Mills, former Warner CEO Edgar Bronfman Jr, and Public Knowledge president Gigi Sohn in front of a US senate antitrust subcommittee.
The latter three being against the deal and the former in favor of it.
The EEC have until September 6th to come to a decision.
Our two cents:
Though the merger would be all kinds of beneficial for acts at either group on financial and international promo (Vivendi also owns France’s Le Grand Journal), it is worth asking what this really means for us- the consumer.
Yes, while greater finances might see album prices from the proposed label drop in turn, it would also be within the power to raise prices- forcing customers to either accept the cost or stop buying LP’s altogether.
This, being the last thing anyone wants.
However, seeing as the deal will more than likely have to comply with rules set by the ECC, we do see the argument for it.
So what do you think?
Is the merger a good idea?