As Citigroup Buys EMI Music, IMPALA Warns Against Further Consolidation
IMPALA predicts a rough ride in Europe from regulators and competitors for any onward sale to another major
EMI Group Ltd announced that Citigroup had acquired 100% of its share capital.
IMPALA confirmed that it would oppose any further concentration in the music market, highlighting that the barriers to obtaining regulatory approval in the EC are far higher than a few years ago.
The EC already gave warnings in its previous merger decisions about the power of the market leaders. It has also formally recognised that competition rules must level the playing field for the independents, who are essential to delivering real consumer choice and cultural diversity, and to the success of new onllne services.
Helen Smith, Executive Chair of IMPALA said "In the current regulatory climate, it is difficult to imagine the EC agreeing to further concentration. Even an attempt to combine EMI/Warner(*) would be blocked unless substantial remedies were put in place to counter the anti-competitive impact.
Some parties argue that the regulators would be sympathetic because of the economic climate, yet this ignores three vital facts. First, the regulatory landscape has completely changed. Second, all previous music mergers have proved that concentration is not the answer to the music sector's ailments. Third, music SME's are already suffering not only because of the crisis but also because market access is difficult due to excessive concentration. All the concerns that we expressed in previous merger cases have been validated."
(*) Current speculation continues about the future of EMI especially now that Citigroup has bought the company raising expectations that a whole or partial sell off is on the cards. Three majors (Universal, Warner, and Sony), as well as other actors in the market, have been rumoured to be interested. In its assessment of the impact of the UniversalBMG merger in 2007, as well as in its previous assessments of SonyBMG, the EC issued warnings about the power of the market leaders in both publishing and recording. Any attempt by Sony or Universal to increase their market power would be rejected out of hand by the EC, with any other combination having to implement far reaching remedies to improve competition.
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