The heads of both Universal Music Group and EMI are expected to appear before a U.S. Congressional hearing June 21 to argue for the proposed sale of EMI’s music catalog to Universal, Reuters reports. Both Lucian Grainge and Roger Faxon will act as witnesses in support of the sale before the Senate antitrust subcommittee, while Live Nation chairman Irving Azoff will also appear at the hearing to back the bid.
Warner Music Group board member and former chairman/CEO Edgar Bronfman Jr. will join Beggars Group chairman Martin Mills and Public Knowledge president Gigi Sohn in the group who testify against the deal.
The sale of EMI’s catalog to Universal has drummed up much controversy, with many independent retailers and labels and industry rivals noting that it would give Universal 40 percent of the recorded music market, a level which alarmed critics who claimed Universal would have too much power to dictate prices in the industry — and which got Congress’ attention. In May, Sen. Herb Kohl (D-WI) announced that the antitrust subcommittee would be holding these hearings, despite the fact that the committee has no formal influence over the eventual decision of the government’s federal antitrust regulators.
The deal is also facing regulatory scrutiny in the EU, where the competition commission is currently readying a statement of objections which is expected to outline some of the concessions Universal will need to make in order to allow the sale to go through. Universal released a statement to Billboard.biz on June 8, saying “when we receive the Statement, we will prepare a detailed response to the Commission which will address the concerns outlined in this procedural document.”
In April, the EU approved the sale of EMI Music Publishing to Sony/ATV Music Publishing in a separate deal.
Bronfman has long been a vocal opponent of the deal, telling All Things D’s Peter Kafka in February that the new company “would create what I call a super-major that would control not only the future of recorded music but the future of all digital media. I think it’s dangerous, I think it’s problematic and I think it’s got to be stopped.”
Public Knowledge also has been opposed, detailing in a report filed with the FTC that the company that would emerge from the approval of the deal would “have a strong incentive and increased ability to exercise market power, particularly in undermining, delaying or distorting new digital distribution business models.”
Yet in North America the merger has won the approval of the American Federations of Musicians as well as the Screen Actors Guild and the American Federation of Television and Radio Artists. According to the L.A. Times, Kim Roberts Hedgpeth, outgoing co-national executive director of SAG-AFTRA said the merger would both keep EMI from drifting into “oblivion” and save “jobs which “would be at risk should EMI wither further or be sold in pieces to fuel quick profits for capital investors.” Universal has also argued in the past that online piracy makes it impossible for any one record label to dominate the industry as many have stated.