EMI Sale Under Scrutiny: AIM Calls For UK Gov't Review; Warner Music Hires Anti-Trust Law Firm
EMI Sale Under Scrutiny: AIM Calls For UK Gov't Review; Warner Music Hires Anti-Trust Law Firm

AIM, the U.K.'s Trade Association for the Independent Music Industry, has called on the British government to stop the break-up and sale of EMI.

The association is asking its 800 member companies to send a pre-written letter to their local constituency Member of Parliament (MP) opposing the division and sale of the music major to Universal Music and Sony.

Calling the independent music sector the "true and acknowledged creative force in the music industry," the draft letter urges MPs to review and oppose the sale of EMI's recorded music operations to Universal Music and EMI Music Publishing to Sony on the grounds that it will increase market distortion.

EMI's Deals WIth Universal, Sony Face Inevitable -- But Different -- Regulatory Scrutiny

"This move will undoubtedly concentrate the global music market still further into the hands of two dominant major companies - Universal and Sony," the letter states. "That itself is enough to demand that the U.K. Government looks closely at, and opposes the proposed sale of the only U.K. major music company to the remaining gigantic multinational, whose monopolistic position has already been a cause of market decline."

The letter goes on to say that, "if the deals with Universal and Sony are allowed to go ahead Warner Music will effectively be relegated in size to a position where it can offer no real global competition, and the global music market will be in the control of just two huge companies -- one French and one Japanese."

Referencing IMPALA's vocal opposition to Universal/Sony's acquisition of EMI, as well as past European Commission investigations into competition regulations relating to the music industry, the letter goes on to state: "The basic principles of competition in cultural markets do not tolerate making either Sony or Universal more powerful."

It also goes on to quote Martin Mills, chairman of the Beggars Group, which owns and distributes a number of high-performing independent labels, including XL, 4AD, Matador and Rough Trade. Mills describes Universal's acquisition of EMI's recorded-music operation as "breath-taking arrogance."

"It's hard to imagine this acquisition being approved, given Universal's existing dominance in an over-concentrated market. Even greater dominance would be bad news for almost everyone involved in the art and business of music," Mills goes on to say.

The letter concludes by urging U.K. MPs "to raise this issue in Parliament" and "that the likely effects of these proposed sales on competition, retail, consumer choice and the growth of monopolistic power in the music industry are fully examined… That outcome, we strongly believe, cannot include this break-up and sale of EMI as proposed."

While AIM's letter is vociferous in its objections to EMI's break-up and sale, the impact that such a letter-writing campaign will have is not likely to cause any great worry at Universal Music Group or Sony.Corp. Even if a large number of British MPs did oppose the sale of EMI - and there has been little parliamentary objection in the two months since the transactions were announced - the U.K. government is not able to solely prevent the deal from taking place. The European Commission does have the power to stall the deal on competition grounds, but its primary concern will be to undertake a thorough investigation into the issues and the changed music industry landscape since its last probe into the Sony/BMG merger.

UMG declined to comment; a spokesperson for Sony and EMI could not be reached at press time.

Further opposition to the proposed EMI sale could, however, also be coming from Warner Music itself, which according to American Legal Times Blog, reports that the label has hired U.S. law firm Brownstein Hyatt Farber Schreck to lobby against the merger. According to the Legal Times Blog, Warner Music, which itself unsuccessfully bid for EMI's recorded music division, is looking to contest the Universal/EMI deal on anti-trust grounds. The firm recently worked on behalf of the Dish Network in contesting the proposed AT&T - T-Mobile USA merger.