Tuesday, May 22, 2007
EU approves merger of Universal, BMG's music rights businesses (AFP)
EU regulators approved on Tuesday Universal Music's plans to take over the music publishing rights business of rival BMG after the two groups agreed to sell some choice assets.
The European Commission said it had "concluded that the proposed operation would not significantly impede effective competition" after the groups promised to sell rights catalogues, including stars like Britney Spears and Bryan Adams.
"Digital music has the potential to change the face of the music industry in Europe," Competition Commissioner Neelie Kroes said.
"I am satisfied that the significant remedies will keep these markets competitive and ensure that consumers will not be harmed by the merger," she added.
In early September, French media group Vivendi, which owns Universal, announced plans to acquire BMG Music Public Publishing, a unit of Bertelsmann of Germany, for 1.63 billion euros (2.19 billion dollars).
EU regulators have been keeping a close eye on the music sector recently with a consolidation wave in the industry increasingly concentrating market share in the hands of fewer companies.
The IMPALA association of independent recording and publishing firms welcomed the Commission's decision as a "clear message" that further consolidation would face tough scrutiny from regulators.
"We welcome the fact that this decision sends a clear message to all the majors that the 'halcyon' days of music mergers being simply waved through are well and truly over," IMPALA board member Michel Lambrot said.
In the Universal-BMG deal's original form, the Commission raised "serious doubts" about the impact on competition, forcing the companies to consider selling some assets so as to avoid a crushing market share.
EU regulators' blessing for the deal clears the way for the two companies to finalize their merger after already receiving backing from US and Australian authorities.
Universal president Zach Horowitz said the deal "will create a publishing business that is even better suited to serve our songwriters, composers and business partners in this challenging marketplace."
"We now look forward to closing the deal as quickly as possible so that we can focus on the successful integration of both companies," he added.
Music publishers manage the songwriters' rights, and not necessarily record companies or performers.