The approval process of Universal Music's acquisition of EMI's music division is entering another chapter as European Union regulators are preparing a list of concerns about the merger, according to EC Competition Commissioner Joaquin Almunia, who spoke this morning in Switzerland.
"We are getting ready to move to the next stage in our proceedings," Almunia said . "Ultimately, we will need to make sure that, in this already concentrated market, the company that would emerge from the deal would not be in a position to shape the future landscape in the digital music market to the detriment of users and artists."
The EU has a Sept. 6 deadline to rule on Universal-EMI bid. But objections raised across the music industry and by consumer groups to the proposed merger say the combined music group would result in the music company having a disproportionate share of the music business. Regulators in the EU say it would it would twice the size of the next largest label in Europe which could hurt competition and result in higher prices.
"The size of the catalogue is crucial in this market because if consumers cannot find what they are looking for, they can quickly jump to the next service," added Almunia. "This is where record companies get into the picture; a company with a large and popular catalogue can have significant market power over digital platforms, which would have a keen interest to strike a deal with it. Competition authorities have the responsibility to monitor these market developments and allow all participants to play their part."
Terms of approval would certainly include concessions from Universal, though what exactly that entails remains to be seen. So far Universal has not offered any concessions, according to a report from Reuters, and will not until the EC delivers its statement of objections, which it is expected to do today.
"A Statement of Objections is part of the European Commission's usual due process when considering mergers and is expected," UMG related in a statement this morning to Billboard.biz. "When we receive the Statement, we will prepare a detailed response to the Commission which will address the concerns outlined in this procedural document. We will continue to work closely with the Commission and look forward to securing regulatory clearance.