Monday 19th March 2012
As press reports circulate of findings of "serious doubts" during Europe's initial market investigation into Universal's proposed acquisition of its thriving competitor EMI, IMPALA welcomed the prospect of a detailed second stage investigation. This is expected to commence when the phase one deadline expires on 23rd March. It is understood that customers and other actors raised the red flag, as well as competitors such as independent music companies.
IMPALA expects the second phase of the investigation to confirm the Commission's initial conclusion that the merger would seriously impede competition in the music sector. The preliminary market investigation is also expected to have shown that Universal already exerts undue influence over the development of online players, all of whom are in a weak negotiating position because of their dependence on the market leaders' repertoire, which the EC has already found to be "incontournable".
Helen Smith, Executive Chair at IMPALA, comments: "Above all, the regulators will want to ensure more choice for artists and consumers, who also need to be protected from price increases. They will also be keen to ensure that online services can develop free from excessive constraints, to help the sector overcome piracy and allow citizens access to music on fair and reasonable terms. They will also want to make sure that in the future, independent artists like Adele and many others continue to flourish as they always did".
Michel Lambot, Co-Founder of the PIAS Entertainment Group and Co-President of IMPALA adds: "Majors have always been a useful distribution system but most of the great performers and records have been the fruit of encounters between artists and entrepreneurs that were music lovers - Elvis Presley, The Jacksons, Bob Marley, U2, Edith Piaf, Jacques Brel, The Rolling Stones, Andrea Bocelli, Depeche Mode, Georg Solti, Adele have all been signed by the likes of Eddie Barclay, Richard Branson, Edward Lewis, Maurice Rosengarten, Chris Blackwell, Berry Gordy, Daniel Miller, Ladislao Sugar, Ahmed Ertegun, Richard Russell and numerous less known people that have helped create an incredible diversity of the musical offer. Most of these artists' repertoire is now in the hands of a few music conglomerates. The danger now is an even bigger reduction of conduit - two majors controlling an excessive part of the music market will not allow new cultural entrepreneurs to exist anymore. If we want to keep the 21st century music alive and give artists a way to express themselves, then the regulators needs to keep routes to the market open to the existing and future musical companies in order to keep a large choice to consumers, exciting new music and a healthy sector."
IMPALA has also underlined that the merger between Sony and EMI on the publishing side raises equally fundamental issues and should be treated together with Universal's proposal in the upcoming phase 2. The complexities and dangers of excessive market power in the music publishing market are as pronounced as they are in recording, especially given EMI's thriving position as the world's number two, with Sony fighting off competing bidders to be the buyer.
Universal's parent Vivendi had its credit rating recently put up for review due to the regulatory concerns raised by the proposed acquisition of its thriving competitor, EMI. Concerns were also raised about its past record regarding commitments in other competition cases.
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.