Sony Notifies European Commission Over EMI Music Publishing Takeover

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IMPALA predicts European regulators will offer "stiff competition" to a complete takeover by Sony.

Sony has completed its notification filing to the European Commission over its acquisition of EMI Music Publishing.

The regulator now has until 26 October (25 days from the date of submission) to make an initial assessment after which it can either grant approval or begin an in-depth phase two investigation into the proposed merger. If there are competition concerns, Sony can offer remedies thereby extending the phase one deadline by 10 working days.

Sony Corporation signed a deal in May to acquire a 60 percent share in EMI Music Publishing from a consortium led by the Mubadala Investment Company. The past year has also seen Sony complete the acquisition of the just under 10 percent share of EMI owned by the Michael Jackson Estate.

If approved by regulators, the deal would give Sony sole ownership of EMI, valued at $4.75 billion. That has led the Independent Music Companies Association (IMPALA) to lodge concerns with the European Commission (EC) over the transaction, which it claims would “disrupt competition and harm consumers in an already overly concentrated music market.”

When Sony acquired a minority 30 percent stake in EMI in 2012, the EC ruled that the merger would give Sony too much control and required it to make significant divestments, including selling the Rosetta catalog to BMG for around $90 million. It also required them to remain as two separate companies, although to the degree that mandate was fulfilled, EMI only employed a financial team to oversee the assets performance, for the Mubadala Capital and its partners in the 60 percent they owned. All other aspects of the operations between Sony/ATV and EMI were indeed merged.

2012 also saw the European Commission force Universal to sell a large number of assets, including Parlophone Records, when clearing its purchase of EMI. When Warner Music Group bought Parlophone Label Group the following year, Warner agreed to divest over $200 million in recorded music assets to the independent community as part of the conditions of the deal.

Given that the latest Sony/EMI merger would give Sony complete ownership of EMI Music Publishing, IMPALA’s executive chair Helen Smith predicts it is likely to be met by "stiff opposition" by European regulators.

"Sony’s power will be a particular concern in European countries where the EU already concluded in 2012 that Sony would control too much repertoire," said Smith in a statement opposing the deal.  

Of particular concern to IMPALA is the prospect of Sony’s catalog growing from over 2.1 million compositions to around 4.2 million, dramatically increasing its power and influence when negotiating deals with artists, labels and digital services.    

"The only solution is to block the deal now,” argued Smith, saying that drastic measures were needed "to avoid long term harm for consumers as well as other players in the music sector.” 

Sony declined to comment on IMPALA's concerns when reached.

Songwriters, streaming services, independent publishers, collecting societies and record companies would all be negatively impacted if the deal goes ahead, she warned.