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European Commission - Press release
Mergers: Commission opens in-depth investigation into proposed acquisition of EMI recorded music business by Universal
Brussels, 23 March 2012 - Brussels, 23 March 2012 - The European Commission has opened an in-depth investigation under the EU Merger Regulation into the proposed acquisition of the recorded music business of EMI by Universal Music Group. The Commission's initial market investigation indicated that the proposed transaction may raise competition concerns in the wholesale of physical and digital recorded music in numerous Member States as well as in the European Economic Area (EEA) as a whole, particularly in light of the merged entity's high market shares and increased market power. The opening of an in-depth inquiry does not prejudge the final result of the investigation. The Commission now has 90 working days, until 8 August 2012, to take a final decision on whether the proposed transaction would significantly impede effective competition in the EEA.
Commission Vice President in charge of competition policy Joaquín Almunia said: “The proposed acquisition could reduce competition in the recorded music market to the detriment of European consumers. The 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’s initial investigation showed, in particular, that the proposed transaction would lead to high combined market shares in the wholesale of physical and digital recorded music in the EEA and in numerous Member States and that, post merger, Universal would enjoy increased market power vis-à-vis its direct customers.
At this stage of the investigation, the new entity, which would be almost twice the size of the next largest player in the EEA, would not appear to be sufficiently constrained by the remaining competitors on the market, by its customers' buyer power, and/or by the threat of illegal music consumption (so-called "piracy").
The Commission will now investigate the proposed merger in-depth to determine whether these initial concerns are confirmed or not.
The transaction was notified to the Commission on 17 February 2012.
Companies and products
Universal is the world's leading music recording company. It is active both in discovering, developing and promoting recording artists and in the wholesale of recorded music. It also has activities in other fields, such as online music retail, music publishing, artist management, merchandising, event management, and event venue services.
Universal is part of the Vivendi group. Vivendi is an international media company whose activities include telecommunications, the creation and distribution of content and TV channels, digital music retail and videogames.
EMI (recorded music) is active in discovering, developing and promoting recording artists and in the wholesale of recorded music. It also has activities in other fields, such as music retail, music publishing, artist management and merchandising.
Merger control rules and procedures
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The Commission clears the vast majority of mergers after a one-month review, but if it has competition concerns it must open an in-depth investigation (Phase II review). The opening of a full probe does not prejudge its outcome.
There are currently three other Phase II investigations. The first one concerns the proposed acquisition of control over the sugar trader ED&F MAN by the German sugar and molasses producer Südzucker (see IP/11/1327, deadline for a final decision is 22 May 2012). The second one concerns the planned acquisition of Synthes by Johnson and Johnson, both US companies active in the area of orthopaedic medical devices (see IP/11/1306, deadline is 26 April 2012). The third one concerns the planned acquisition of joint control over a branch of the Italian state-owned ferry group Tirrenia by Compagnia Italiana di Navigazione of Italy (see IP/12/29, deadline is currently suspended to allow the parties time to provide the necessary information for a comprehensive assessment of the project pursuant to Article 11(3) of the Merger Regulation).
More information on the case will be available at:
Antoine Colombani (+32 2 297 45 13)
Marisa Gonzalez Iglesias (+32 2 295 19 25)