The European Commission has put back by five weeks its deadline for ruling on Universal Music's €1.63 billion ($2.05 billion) bid to buy Bertelsmann's BMG Music Publishing.
The delay --- pushing the decision to June 1 -- came after Vivendi, Universal Music's parent, called for more time as it prepared to defend a merger that would create the world's biggest music publishing company.
In a statement, Universal said it had requested the extension, "To give the Commission sufficient time to consider properly the merits of the merger in what would otherwise be an overly aggressive timetable." It added, "We remain confident that the merger will be approved."
Industry sources say Universal was concerned about the how soon it could provide the vast quantity of data sought by the Commission, the European Union's anti-trust regulator. "It's not a problem, but it is a huge amount to gather," the source said.
The timeframe is unusually short: Universal won the auction to buy BMG Music Publishing in September last year and filed its bid with the Commission in November. But it was only on Dec. 8, 2006 that the Commission announced it would open an in-depth merger investigation, just as its officials were due to leave Brussels for their traditional two-week Christmas vacation. The probe itself has also seen a change, as the head of the Commission unit investigating the merger has just been replaced.
BMG Music Publishing and Universal Music Publishing each have around 11% of the market and have the world's third and fourth biggest music publishing catalogs, respectively. If approved, they will have a 22% combined market share (only in the EU), about two points more than the market leader, EMI.
EU clearance is the last regulatory hurdle for the takeover, which was cleared in November 2006 in the United States by the Federal Trade Commission. Commission officials say their investigation is concentrating on whether cutting the number of major publishers would push down fees for publishing rights or hurt conditions for European songwriters.
Vivendi beat off rivals EMI Group and Warner Music Group to purchase BMG Music Publishing whose archive of more than a million songs includes Coldplay, Britney Spears and Robbie Williams. BMG is expected to complement the Universal catalog, which includes artists like U2 and Elton John.
The delay comes just seven months after the Court of First Instance, the EU's second-highest court, annulled the BMG merger with Sony, saying the Commission had been wrong to approve it. However, the music publishing purchase should face fewer problems as it does not deal directly with consumers and, therefore, prices.