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26/03/12: EC reveals reason for detailed Universal/EMI investigation - market power cannot be restrained by customers, competitors or piracy

 

IMPALA Press Release, 26th March 2012
Late Friday, the European Commission confirmed its decision to launch a detailed investigation into the acquisition of EMI recordings by Universal. This was expected, but the Commission's statement sets out its reasons for taking this decision - information previously not available.

The European regulator said that Universal's power seems unable to be sufficiently constrained by customers, competitors or piracy. This will be cause for concern for Universal who is counting on being able to argue the opposite.

The European regulator found that Universal would be almost twice the size of its nearest rival and said that high market shares and increased market power would cause competition problems in both the physical and the digital market.

Helen Smith, IMPALA Executive Chair said: "We agree with the Commission's findings so far that Universal's increased power cannot be constrained by competitors, customers or piracy. This matches the experience of our members on the ground. Competition problems exist in the physical as well as the digital market, as the Commission recognised. We welcome the robust confirmation that the EC will "make sure consumers continue to have access to a wide variety of music in different physical and digital formats at competitive conditions".

Universal agreed to a deal with EMI's previous owner CitiGroup where it accepted the whole regulatory risk in connection with its proposed acquisition of EMI, meaning it still has to pay the full price, even if the sale is blocked. Regulators on both sides of the Atlantic have stopped various mergers in the past few months.

The European regulator has set a date of 8th August to reach a final conclusion.

About IMPALA

IMPALA was established in April 2000 to represent independent music companies. 99% of Europe’s music companies are SMEs. Known as the “independents”, they are world leaders in terms of innovation and discovering new music and artists - they produce more than 80% of all new releases. SME’s also produce 80% of Europe’s jobs. Their potential is enormous but is hampered by complex barriers to trade and severe market access problems. The impact on diversity, consumer choice and pluralism is clear. Over 95% of what most people hear and see, whether on radio, retail or the internet, is concentrated in the hands of four multinationals, known as the majors.
Cultural and creative SMEs are now officially recognised by the EU as “the drivers of growth, job creation and innovation”. IMPALA expects the EC and its member countries to put in place key investment, digital and market access measures. Fostering Europe's economy of culture and diversity is one of the EU's top priorities in becoming the world's leading knowledge economy. Culture is a bigger earner than any of chemicals, automobiles or ICT manufacturing and provides more than 3% of Europe's jobs. IMPALA has its own award schemes to help promote cultural diversity and new talent and highlight the artistic contribution of independent music. IMPALA award winning artists include Efterklang, Adele, Manu Chao, Radiohead, Agnes Obel, Caro Emerald and Sigur Ros.
 

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