COMPETITION
Record labels

The Office Of Fair Trading chaps have published details on their approval of Universal Music’s acquisition of V2 in light of comments from the Association Of Independent Music who have said that the acquisition would stifle competition and narrow consumer choice. OFT says that while it accepts that Universal and V2 were in the same business – that of releasing and marketed recorded music – it does not feel the merger of the two companies’ recorded music operations would have any effect on the wider record industry because the increase in market share of Universal post-V2 purchase was too low to matter – 0.2%-1.4%. saying ” Post-merger, other majors and independents continue to operate as a strong competitive constraint to the merged entity. With the exception of a few third party concerns, which do not lead to any credible theory of harm, third parties generally agree that the increment to Universal’s share of supply is very low and that it will have a negligible (if any) effect on competition. Finally, on the basis of the available evidence, the OFT does not believe that the transaction will give rise to any portfolio effects. Consequently, the OFT does not believe that it is or may be the case that the merger has resulted or may be expected to result in a substantial lessening of competition within a market or markets in the UK.

http://oft.gov.uk/advice_and_resources/resource_base/Mergers_home/decisions/2007/Centenary2