Newspaper article International Herald Tribune

E.U. Lists Objections to Sale of EMI Music ; Universal Told That Deal Would Make It Harder for New Artists to Be Heard

Newspaper article International Herald Tribune

E.U. Lists Objections to Sale of EMI Music ; Universal Told That Deal Would Make It Harder for New Artists to Be Heard

Article excerpt

A so-called statement of objections, said to be close to 200 pages in length, was sent to Universal and spelled out concerns over the market power of the combined company.

The European Commission has said that the proposed purchase of EMI Music by Universal Music Group would significantly harm competition in the recording industry, indicating that Universal might have to make substantial concessions in order to secure approval, according to several people briefed on the matter.

The commission sent a so-called statement of objections, said to be close to 200 pages in length, to Universal last month, spelling out concerns over the market power of a combined Universal and EMI. Universal, already the biggest music company, has agreed to buy the recording arm of EMI, the smallest of the four industry "majors," for $1.9 billion.

People who have seen the commission's complaint, which has not been published, said it was built on concerns outlined in previous statements about the bid, focusing on the digital music marketplace. The commission is said to have disputed Universal's reasoning in several areas, expressing concern that the combined companies would wield too much power over licensing music to would-be digital services.

Universal has maintained that piracy and the growth of legitimate digital businesses like Apple's iTunes have reduced the leverage of the record companies in negotiations with licensees. But the commission's staff, which drew up the statement of objections, was said to have questioned this argument. The commission also reportedly raised issues with Universal's calculations of market share.

Universal is due to respond to the statement of objections this week, and meetings between company executives and regulators are set to take place in Brussels next week.

In its response, Universal plans to offer remedies aimed at addressing the commission's concern that the deal could make it harder for new artists to secure recording deals, and for new digital services to get started, according to a person briefed on the matter. …

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