Bloomberg News

Universal Faces In-Depth EU Probe Over EMI Music Acquisition

March 23, 2012

Vivendi SA’s (VIV) Universal Music Group faces an in-depth probe by European Union antitrust regulators into its plan to buy EMI Group’s recorded-music business amid concerns the deal may harm competition.

The European Commission extended its deadline to rule on the deal until Aug. 8, to examine it in greater detail, according to an e-mailed statement.

“The proposed acquisition could reduce competition in the recorded music market to the detriment of European consumers,” Competition Commissioner Joaquin Almunia said. The regulator “needs to make sure that consumers continue to have access to a wide variety of music in different physical and digital formats at competitive conditions.”

Citigroup Inc. (C) agreed in November to sell EMI Group’s recorded-music and publishing businesses in separate transactions for a combined $4.1 billion. Universal will buy EMI’s record labels, home to Katy Perry and Coldplay, for 1.2 billion pounds ($1.9 billion). A Sony Corp.-led group that includes billionaire David Geffen said it will pay $2.2 billion for the publishing unit.

“Phase II was always expected,” said Adam White, a spokesman for Universal. “We recognize that the commission needs time to fully review this transaction” and “we will continue to cooperate fully with them and look forward to a successful resolution of the process.”

A spokeswoman for Vivendi, owner of the world’s biggest music and video-game companies, couldn’t immediately be reached for comment. Shares of Vivendi closed 0.94 percent higher, at 14.03 euros, ahead of the release. They rose as much as 1.33 percent in Paris trading.

Unsuccessful Bidder

Warner Music Group, an unsuccessful bidder for EMI, will lobby in the U.S. and Europe against the sale of the company to Universal, retiring Chairman Edgar Bronfman Jr. has said.

The commission’s initial investigation into the merger showed that the combined firm would be “almost twice the size of the next largest player” on the EU market, the regulator said today.

Impala, a group of independent record labels, has said EU regulators should block both the Vivendi deal as well as Sony’s bid for the music publishing unit because they would increase prices and reduce competition in the music industry.

Impala challenged the EU’s 2004 approval for Sony and Bertelsmann AG (BTG) to create the Sony BMG record label at the EU courts, forcing a re-examination by regulators. The deal was eventually approved in 2007.

Universal may decide to make concessions to the commission during phase II of the merger review, according to a person familiar with the situation on March 19.

To contact the reporters on this story: Aoife White in Brussels at awhite62@bloomberg.net; Jim Brunsden in Brussels at jbrunsden@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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