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Universal/EMI approved in Australia, indie community speaks out

By | Published on Wednesday 19 September 2012


As competition regulators in Europe prepare to meet with European Union commissioners this week to present their final findings regards Universal’s plans to buy the EMI record company, the indie label community in Australia has hit out at the competition regulator there, which this week basically approved the deal without concessions.

Although the investigations by competition regulators in the US and the European Union have always been most crucial to Universal, regulators in several other markets have also considered the proposed merger of the Universal and EMI record labels. Regulators in Japan, Canada and New Zealand have already green-lighted the merger, and this week the Australian Competition And Consumer Commission confirmed it would not oppose the proposed acquisition either.

Responding to the ACCC’s ruling, Universal told CMU this morning: “We are pleased that the Australian Competition And Consumer Commission has cleared Universal Music’s proposed acquisition of EMI with no objections. This follows similar clearances in Japan, Canada and New Zealand. Our investment in EMI will create more opportunities for new and established artists, expand music output and consumer choice, and support new digital services. We welcome the Commission’s decision and are working closely with regulators in Europe and in the US to obtain further clearances”.

The Australian Independent Record Labels Association (AIR) was opposed to the Universal/EMI merger from the start, and now says that it feels its opinions, and those of other groups against the deal, were not sufficiently considered in the latter part of the ACCC’s investigation.

In a statement yesterday the Association’s Chairman David Vodicka said: “This is a deeply disappointing decision for the independent music sector, which disregards the practical effects of combining two already substantial music companies into a company that will control over 50% of the domestic music market. The result will be dominance of both media outlets and consumer spaces by Universal Music, stifling the development of new businesses that don’t adhere to Universal’s requirements, and ultimately less choice for consumers”.

It is thought that the US regulator, the Federal Trade Commission, may approve the EMI deal based on the concessions Universal has already committed to as part of the European regulatory process, which reportedly include the sale of some global catalogues. However, indie sector chiefs in Australia say those concessions in Europe do not justify the ACCC’s decision, partly because said concessions haven’t even been confirmed yet, and partly because they do not address issues unique to the Australian market.

AIR General Manager Nick O’Byrne told reporters: “Global remedies will not sufficiently address Universal’s market dominance through catalogue ownership, distribution and business practices specific to this territory. The ACCC needs to enforce territory specific concessions and divestments to ensure fair competition in Australia. What is even more galling is that the ACCC has not waited to see the outcome of merger reviews and potential divestments in Europe and the USA before making this announcement”.

As previously reported, the pan-European indie labels trade body IMPALA this week again called on European regulators to block the Universal/EMI merger outright, despite some indie label chiefs in Europe previously speaking in favour of the deal. Nevertheless, Universal, which has already paid nearly a billion pounds to previous EMI owners Citigroup for the record company, is hopeful that it can secure the crucial approval for its deal in both the US and Europe this month. Sizable divestments will then have to follow as part of its deal with European regulators, before the remainder of the EMI record company can properly be integrated with the Universal Music business.

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