BMG-Sony merger re-approved as AIM questions Universal’s label acquisitions

November 2007

Record labels

The European Commission have now formally re-approved their July 2004 merger approval of Sony and BMG’s record labels which was annulled in 2006 by the European Court of First Instance. The EC Competition Commissioner Neelie Kroess said that the “investigation represents one of the most thorough analyses of complex information ever undertaken by the Commission” adding that “It clearly shows that the merger would not raise competition concerns in any of the affected markets.” But in the same week UK independent labels trade body the Association of Independent Music, which is part of IMPALA, the European trade body which first complained about the Sony-BMG merger, responded to a request for information from the Office of Fair Trading (OFT) regarding Universal’s “creeping dominance” of the UK recorded music market. Having already complained about the Sony-BMG merger which put 80% of the recorded music market into the hands of just four companies (Universal, Sony-BMG, Warners and EMI), AIM are now citing Universal’s recent acquisition of two of the UK’s largest independents, V2 and Sanctuary Records as evidence of Universal’s “progressive expansion” which will “further marginalise the independent sector, serving to stifle competition and narrow consumer choice”.  Market consolidation means that only 20% of sales are now from indies, down from double that in the late 80’s. AIM says that the major’s dominance results in restricted access to market for smaller companies and that the tying up of radio play and music TV slots, retail space, online visibility, TV, radio and print advertising makes it harder for independents to compete and enables consumers to see and hear less music through these key channels. AIM also say that the pattern is replicated across Europe, where Belgian independent ARS Entertainment , Spain’s Vale Music and Sweden’s Lionheart E Group were all recently acquired by Universal. Universal called the comments by AIM “misleading,” stating that it had voluntarily filed its submission to the OFT back in September. And in Europe, European independent trade association Impala has asked the European Commission to examine the publishing divestments related to the Universal Publishing/BMG Music Publishing merger. The trade body is concerned that independent cash buyers will be excluded from bidding for publishing assets such as Rondor UK, Zomba US and UK, 19 Music and BBC Music.

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