Brussels, 15 May 2013
Mergers: Commission approves acquisition of Parlophone Label Group by the parent company of Warner Music Group
The European Commission has cleared under the EU Merger Regulation the proposed acquisition of the Parlophone Label Group ("PLG") by Access Industries Inc., the ultimate owner of Warner Music Group ("WMG"). The Commission's investigation confirmed that the proposed transaction would not raise competition concerns, in particular because following the acquisition, WMG will continue to face competition from the two remaining major music companies, namely Universal Music Group ("UMG") and Sony, as well as from independent music labels.
PLG comprises the majority of the EMI assets, including the iconic Parlophone label, which UMG committed to divest in order to obtain the Commission's clearance for its acquisition of EMI's recorded music business (see IP/12/999).
The Commission examined the competitive effects of the proposed acquisition in the markets for the wholesale of physical and digital recorded music in the European Economic Area (EEA) and in several Member States where both companies are active.
The Commission's investigation showed that WMG has limited market shares and that the increment in market share deriving from the proposed acquisition is rather limited in most of the affected territories. The investigation also showed that following the transaction, WMG will continue to face competition from the two other majors, as well as from independent music labels. The Commission therefore concluded that the proposed transaction would not have anti-competitive effects in any of the affected markets.
Moreover, a number of respondents to the market investigation pointed out that the proposed transaction may actually reinforce competition, as it may lead to an increase of the competitive pressure exercised by WMG on both UMG and Sony.
The Commission therefore concluded that the proposed acquisition did not raise competition concerns.
The Commission also notes the existence of an agreement between WMG and each of IMPALA and Merlin. Pursuant to this agreement, WMG, upon completion of the proposed transaction, will undertake a number of structural and financial measures, which, once implemented, would likely result in the strengthening of the independent music sector in the EEA. These measures include, for example, opportunities to buy, license or distribute certain WMG or PLG assets.
The transaction was notified to the Commission on 5 April 2013.
Companies and products
PLG comprises the companies PLG Holdco Limited (UK), EMI Music Belgium BVBA, EMI Czech Republic s.r.o., EMI Music Denmark AS, EMI Group Norway AS, EMI Music Poland s.p.z.o.o, EMI Group Portugal SGPS Lda, EMI Music Spain SL, EMI Music Sweden AB and EMI Music France SAS and is active internationally in the recorded music sector.
Access comprises a group of holding companies, ultimately held by Mr. Len Blavatnik, a US national. Access is active in natural resources, chemicals, telecommunications, media and real estate sectors. It is also the ultimate parent company of WMG. The latter is internationally active in the recorded music sector and the music publishing sector. Its activities include the marketing and sale of recorded music and the licensing of music publishing rights.
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 vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).