EU to probe Universal-BMG music deal

12/08/2006 2:43 PM, AP


EU regulators on Friday opened an antitrust probe of Universal Music Group's plans to buy BMG Music Publishing for about $2.1 billion, saying the deal could damage "the already concentrated music publishing market."

Officials in Brussels announced they would issue a final decision on whether to block or allow the deal by April 27.

BMG — owned by German media company Bertelsmann AG — has the rights to more than a million songs by recording artists such as Nelly, Maroon 5 and Coldplay, as well as classic hits by the Beach Boys, Barry Manilow and other entertainers.

Vivendi SA's Universal Music Group is the world's largest music company.

EU approval was the last hurdle for the deal which was cleared by the Federal Trade Commission and the Justice Department in the United States last month.

The European Commission said its initial investigation raised "serious doubts" that the deal could erode fair competition in the music publishing market.

"Universal is the strongest player in music recording. After the proposed merger it would become also the largest music publisher in the European Economic Area," it said in a notice published on the Web site of the EU executive.

Regulators said their probe will focus on whether Universal's leading position and a shrinking number of players in the market would have "a negative impact" on fees for publishing rights or conditions for European song writers.

The same five companies — Universal, BMG, EMI, Warner and Sony — control most of recorded music and music publishing in Europe, they said.

EMI and Warner, a unit of Time Warner Inc., suspended takeover talks after an EU court ruled in July that regulators were wrong to clear a deal between the music units of Sony Corp (NYSE:SNE - news). and Bertelsmann AG.

That deal — reducing the number of music majors from five to four — must now be re-examined and analysts warned that it could raise the stakes for similar combinations. The Commission has already said that it had to watch the music sector closely to check that antitrust rules are not being broken.