As widely anticipated, the European Commission's investigation into Universal's proposed acquisition of EMI's recorded-music division is to enter a secondary, more in-depth phase, it has been confirmed.
The announcement was made earlier today (March 23) following the completion of the Brussels-based European Commission's 'phase one' investigation into the proposed merger. Universal Music Group formally requested European Union regulators' approval to buy EMI's recorded-music division on February 20.
"The Commission's initial investigation showed, in particular, that the proposed transaction would lead to high combined market shares in the wholesale of physical and digital recorded music in the EEA [European Economic Area] and in numerous Member States and that, post merger, Universal would enjoy increased market power vis-à-vis its direct customers," reads a statement from the European Commission .
The European Commission (EC) went on to state that: "At this stage of the investigation, the new entity, which would be almost twice the size of the next largest player in the EEA, would not appear to be sufficiently constrained by the remaining competitors on the market, by its customers' buyer power, and/or by the threat of illegal music consumption (so-called "piracy")."
Following today's ruling, the EC now has 90 days, until August 8, to make a final decision on whether to give regulatory approval as submitted, or whether they would seek additional remedies or divestments from Universal.
The findings of the European Commission's 'phase one' investigation into the proposed sale of EMI Music Publishing to a Sony/ATV Music Publishing-led consortium is not due to be announced until April 2.
Commenting on the announcement, Joaquín Almunia, Commission VP in charge of competition policy said in a statement: "The proposed acquisition could reduce competition in the recorded music market to the detriment of European consumers."
"The Commission needs to make sure that consumers continue to have access to a wide variety of music in different physical and digital formats at competitive conditions," Almunia went on to say.
Following the announcement, Universal Music Group issued the following statement: "Phase II was always expected; we recognise that the Commission needs time to fully review this transaction. We will continue to co-operate fully with them and look forward to a successful resolution of the process."