Universal Music Group announced on Friday (February 17th) that it was seeking EU regulatory approval for it to buy the recorded music unit from the British music label, EMI.
A Universal official informed Music Week, that: “Universal Music Group confirms that it has submitted its filing to the European Commission for the acquisition of EMI’s recorded music business. We will work closely with the Commission and remain confident of securing clearance.”
The news comes two months after the company filed for the acquisition in the US where regulators are also reviewing the potential purchase.
Universal Music—which is owned by the French media group, Vivendi—is looking to buy the unit from EMI for $1.9 billion. The purchase would see the company boosting its worldwide market share. The deal is likely to face major regulatory scrutiny, however, due to the fact that if it were to go ahead Universal would control more than 40 per cent of the global market share. Indeed, in some European countries it would hold over 50 per cent of the market share in recorded music.
According to figures offered by Universal to investors in November, it currently holds a global market share of 26.5 per cent.Article continues below
IMPALA—the European trade organisation which represents independent music companies—welcomed the filing but are looking for the regulators to scotch Universal’s proposed purchase as well as Sony’s plans.
“Ultimately we expect this to lead to an outright rejection of both Uni/EMI and Sony/EMI mergers,” explained IMPALA’s Executive Chair, Helen Smith. “Keeping the online market as open as possible is essential for competition and for responding to piracy, as well as other market problems. Turning music into a two-horse race would hamper the natural development of the market and increase prices. No level of divestments or behavioural undertakings would prevent that from happening.”
One of Universal Music Group’s largest rivals, Warner Music Group, failed in a bidding war for EMI back in November.
EMI is currently owned by Citigroup after its previous owner, Terra Firma, defaulted on loans it owed Citigroup. Citigroup wishes to sell EMI to Universal.
Universal Music Group UK boss David Joseph informed Music Week that he could not see the purchase stifling the market: “Artists do not make decisions based on market share. They make decisions based on home and culture. I don't think there's an issue: market share does not equal market power.”
The European Commission has set a provisional deadline of March 23rd to make a decision in regards the Universal Music Group filing.