Europe's top antitrust regulator signed off on the proposed $1.9 billion acquisition of EMI Music by Universal Music Group but attached stiff conditions to the deal.
Universal will have to shed some prominent EMI record labels, including Parlophone, which owns the catalogs of Coldplay, Pink Floyd, Duran Duran, and Lily Allen. Chrysalis, EMI France, EMI's classical labels, the label-licensing business Coop, and EMI's 50 percent investment in the compilation Now! That's What I Call Music will be divested under the European Union ruling. In addition, the combined Universal-EMI will prohibited from cutting special "most favored nation" deals with European digital distributors, which require that Universal get the benefit of any favorable pricing deals cut with rival labels.
Joaquín Almunia, the European Union's antitrust chief said, "The very significant commitments proposed by Universal will ensure that competition in the music industry is preserved and that European consumers continue to enjoy all its benefits."
Universal Music Group released a statement saying, "We are delighted UMG will retain over two-thirds of EMI on a global basis, contributing to the accretive nature of the deal." The deal secures for Universal contemporary artists, including Robbie Williams, Katy Perry and Norah Jones, as well as lucrative catalog rights to the Beatles, the Beach Boys, and Genesis, among others.
The Federal Trade Commission has yet to weigh in on the deal. Consumer groups and elected officials in the U.S. have raised alarms about the deal, which would reduce the number of major labels from four to three and give the combined Universal-EMI about a 40 percent share of recorded music sales.
Public Knowledge is among the groups that want to see tough divestitures as a condition of U.S. approval. "The FTC should either block the merger entirely or demand even stronger concessions appropriate for the U.S. market, such as ordering UMG to divest Capitol Records or the Island Def Jam Music Group," staff attorney Jodie Griffin said in a statement.
According to Almunia, the antitrust implications for the deal in Europe were "more evident." He told National Journal on Wednesday, "I think the conditions of the merger in the two markets are not the same."