European Union to further investigate Universal Music’s purchase of EMI

By Daniel S Levine,
European Commission claims that if Universal Music buys EMI, it will be twice the size of its closest rival

The European Union will continue its investigation of Universal Music Group’s $1.9 billion plan to purchase of the recording division of the iconic EMI music label, home of artists like The Beatles and Coldplay. The EU’s antitrust regulators announced the plan on Friday to decide if Universal Music’s purchase would create one large label that would dominate the music industry in Europe.

According to Reuters, EU Competition Commissioner Joaquin Almunia said in a statement that the European Commission “...needs to make sure that consumers continue to have access to a wide variety of music in different physical and digital formats at competitive conditions.” The Commission announced Friday that it would extend its investigation to Aug. 8. At that time, it will decide whether to clear the purchase or not.

The Associated Press reports that the Commission claimed that, if Universal Music, which is owned by France’s Vivendi, is allowed to buy EMI, it would be "almost twice the size of the next largest player" in the European music market.

Universal Music issued a statement saying that the deeper investigation was expected, reports The New York Post. “Phase II was always expected; we recognize that the Commission needs time to fully review this transaction...We will continue to cooperate fully with them and look forward to a successful resolution of the process.”

Sources told Reuters that Universal never offered to make compromises during the initial investigation, but would make some during the second investigation. Meanwhile, lobbying group Impala, which represents independent labels, is trying to convince the Commission to stop the purchase. Warner Bros. Records, which also tried to buy EMI, reportedly told the Commission that it would be risky for Universal Music to make up so much of the music market.

Back in November, Citigroup decided to split EMI in half, selling the recorded music division to Universal Music for $1.9 billion and the publishing operation to Sony Music Corp. for $2.2 billion.

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