Pan-European independent music trade body IMPALA this weekend welcomed an announcement made by the European Commission on Friday confirming rumours that they were postponing making a decision regarding the proposed merger of the Universal and BMG music publishing companies pending further investigation.
As previously reported, Bertelsmann announced Universal was the preferred bidder to buy its BMG Music Publishing company earlier this year, but because the combined publishing operations of Universal and BMG will be a dominant force in the global publishing sector, as big or slightly bigger than current market leader EMI Music Publishing, the deal needs approval from the European Commission. Coming so soon after the much reported ruling in the European courts that the EC was wrong to allow the Sony BMG merger in the recorded music space back in 2004, there has been much speculation as to whether such approval would be forthcoming, although Universal have been confident from the start that concerns raised in the Sony BMG case do not translate to the publishing domain.
While Friday's announcement does not mean the deal will not now get approval, it does mean EC officials believe Universal and BMG's proposals do raise some concerns regarding competition in the music industry. In its statement, the Commission said: "[Our] initial market investigation indicates that the proposed merger would raise serious doubts as regards adverse effects on competition in the already concentrated music publishing market. [But] the decision to open an in-depth inquiry does not prejudge the final result of the investigation". The Commission's indepth investigations could take up to four and half months, with a decision now expected on 27 Apr.
Universal said on Friday that it remained confident the deal would get the green light, despite the extra investigations. In a statement the major said: "Although we understand why, in the current environment, the European Commission has sought more time for its review, we believe, as we have always done, that the merger will be approved. We look forward to working with the commission over the next few months to complete the process".
But IMPALA say the need for further investigation backs their viewpoint that the EC will ultimately refuse to allow the merger to go ahead. They said in a statement: "The independent music companies ... take the view that more concerns will be revealed [during the EC's further investigations] and that regulatory approval will not be obtained. This is consistent with the EC's findings in 2000, in the attempted EMI Warner merger, when it concluded that further concentration in music publishing could not be tolerated".
IMPALA President Patrick Zelnik added: "Our only request is for a level playing field and market access - exactly what competition rules are intended to guarantee. In other words, give European music space on the market, let the consumer decide and give European citizens a Europe to be proud of"
IMPALA Chairman, and Beggars boss Martin Mills, added: "One of our main concerns is the ability of the majors to leverage excessive market strength in recording and publishing as well as the crucial on-line market. We have also asked the EC to implement the SonyBMG judgement as a matter of urgency. These mergers are bad news for artists and music".