Universal Music Group is the successful bidder for EMI Music for £1.2bn. Good for Universal, they have got a lot for a knock down price, given the £6+bn. purchase price paid just a few years ago. So 4 majors are about to become 3, Universal by far the largest if this deal goes through - but wait a mo. this is not a done deal.
IMPALA expects sale of EMI to Universal to be blocked outright
Brussels – 11th November 2011
Following the announcement by Vivendi of the purchase of EMI recording by Universal, IMPALA confirmed it would oppose the sale before the regulators and expects them to move quickly to block the deal. Take a look at this:
IMPALA (Independent Music Companies Association) takes the view that the deal will not be accepted. It points out that the last time the European Commission looked at Universal, it ordered the company to sell off assets to cut it down to an acceptable size. Since that decision, Universal has grown, which makes it even less likely that the regulators would accept any new acquisitions. In addition, IMPALA has already asked the European Commission to investigate Universal’s tie-up with Live Nation,k which will see Universal take over releases by artists such as Madonna.
Helen Smith, Executive Chair of IMPALA, commented: “Given that Brussels has taken a previous decision that Universal should not be any bigger, we would expect the sale to Universal to be blocked outright, even if it offers to increase the divestments it is prepared to make. The same would apply to Sony if it buys EMI publishing. IMPALA will be discussing this in detail at its next board meeting in ten days time.”
The reason the EC forced divestments in its Universal-BMG decision was because it found that Universal controlled so much music it was bound to abuse its position, even with larger players such as Apple. Due to the multiplier effect market power has on players who are already dominant, even a very small increase would severely harm competition. IMPALA takes the view that this means even significant divestments are not an option. The same applies to Sony if the rumours that Sony is going to buy EMI publishing are true.