Brussels approves major music merger
23.05.2007 - 14:29 CET By Helena Spongenberg
EUOBSERVER / BRUSSELS -
The European Commission has approved the €1.63 billion takeover of the German music publishing business of Bertelsmann Music Group (BMG) by Universal, making it the world's largest music publisher.The BMG catalogue includes artists such as Coldplay, Justin Timberlake, the Beach Boys and The Scorpions, as well as more classic artists such as Puccini and Ravel.
The Universal Music Group – which is based in the US but owned by the French company Vivendi - owns record labels or licensees in 77 countries but will sell off important catalogues in order to allow post-merger competition – a condition of the EU approval.By following this commitment, the commission said the transaction would not significantly hamper effective music competition in the European Union."Digital music has the potential to change the face of the music industry in Europe. I am satisfied that the significant remedies will keep these markets competitive and ensure that consumers will not be harmed by the merger," EU competition commissioner Neelie Kroes said in a statement on Tuesday (22 May).Anglo-American repertoire to be sold offUsually there are no competition concerns in mergers where the copyrights are still administered by collecting societies, who usually charge uniform royalties and distribute them to copyright holders, the commission said.But, in the field of online rights, music publishers have started to withdraw their respective rights for Anglo-American song repertoires from the traditional collecting societies system in Europe.Following these withdrawals, pricing power has shifted from the collecting societies to the publishers, the EU executive said, leading to concerns that the merger would give Universal the ability and the incentive to increase prices for online rights as regards Anglo-American repertoires.Universal therefore committed to sell off the European rights to music acts such as The Kaiser Chiefs, Justin Timberlake and R. Kelly.Warning from independent music labelsThe deal combines the world's number three and number four music publishing catalogues by market share, resulting in a combined 22 percent market share that would scrape ahead of current market leader, the UK's EMI Group."The merging of Universal Music Publishing Group with BMG Music will create a publishing business that is even better suited to serve our songwriters, composers and business partners in this challenging marketplace," the head of Universal, Zach Horowitz, said in a statement.But independent record label group IMPALA warned it would look into the possibility of a court action to reverse the EU approval as it did in 2004 when the group won a case forcing the commission to re-examine a merger between Sony and BMG music groups."The increased market power of Universal/BMG in publishing and recording raises serious concerns of both single and collective dominance and would have justified outright prohibition," IMPALA warned.
23.05.2007 - 14:29 CET By Helena Spongenberg
EUOBSERVER / BRUSSELS -
The European Commission has approved the €1.63 billion takeover of the German music publishing business of Bertelsmann Music Group (BMG) by Universal, making it the world's largest music publisher.The BMG catalogue includes artists such as Coldplay, Justin Timberlake, the Beach Boys and The Scorpions, as well as more classic artists such as Puccini and Ravel.
The Universal Music Group – which is based in the US but owned by the French company Vivendi - owns record labels or licensees in 77 countries but will sell off important catalogues in order to allow post-merger competition – a condition of the EU approval.By following this commitment, the commission said the transaction would not significantly hamper effective music competition in the European Union."Digital music has the potential to change the face of the music industry in Europe. I am satisfied that the significant remedies will keep these markets competitive and ensure that consumers will not be harmed by the merger," EU competition commissioner Neelie Kroes said in a statement on Tuesday (22 May).Anglo-American repertoire to be sold offUsually there are no competition concerns in mergers where the copyrights are still administered by collecting societies, who usually charge uniform royalties and distribute them to copyright holders, the commission said.But, in the field of online rights, music publishers have started to withdraw their respective rights for Anglo-American song repertoires from the traditional collecting societies system in Europe.Following these withdrawals, pricing power has shifted from the collecting societies to the publishers, the EU executive said, leading to concerns that the merger would give Universal the ability and the incentive to increase prices for online rights as regards Anglo-American repertoires.Universal therefore committed to sell off the European rights to music acts such as The Kaiser Chiefs, Justin Timberlake and R. Kelly.Warning from independent music labelsThe deal combines the world's number three and number four music publishing catalogues by market share, resulting in a combined 22 percent market share that would scrape ahead of current market leader, the UK's EMI Group."The merging of Universal Music Publishing Group with BMG Music will create a publishing business that is even better suited to serve our songwriters, composers and business partners in this challenging marketplace," the head of Universal, Zach Horowitz, said in a statement.But independent record label group IMPALA warned it would look into the possibility of a court action to reverse the EU approval as it did in 2004 when the group won a case forcing the commission to re-examine a merger between Sony and BMG music groups."The increased market power of Universal/BMG in publishing and recording raises serious concerns of both single and collective dominance and would have justified outright prohibition," IMPALA warned.
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