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EMI-Universal deal cleared by European Commission EMI-Universal deal cleared by European Commission
(35 minutes later)
The European Commission has approved the takeover of UK music firm EMI by Universal Music, but it must sell some of the firm's most valuable labels.The European Commission has approved the takeover of UK music firm EMI by Universal Music, but it must sell some of the firm's most valuable labels.
The assets to be sold off include the Parlophone label, which is home to groups such as Coldplay and Blur. The assets to be sold off include the Parlophone label, home to artists such as Kylie Minogue and Blur.
In November, EMI agreed to sell its recorded music unit for £1.2bn ($1.9bn) to Universal. The proposed £1.2bn ($1.9bn) takeover of EMI was announced in November, prompting a competition investigation.
But the commission was concerned that the sale could reduce competition and launched an investigation. Although the commission said its ruling would allay competition fears, rivals music labels have condemned the move.
EMI, with a history dating back to 1897, is home to artists including the Beatles and Pink Floyd. The takeover still needs approval from the US Federal Trade Commission.
Universal is a unit of French media giant Vivendi. EMI, with a history dating back to 1897, is home to artists including the Beatles and Pink Floyd. Universal is a unit of French media giant Vivendi.
The Commission said the asset sales, which also include EMI's Chrysalis, Mute, and Classics labels, as well as Universal's Sanctuary and Co-op Music labels, would allay concerns about the combined group's market power. In EMI's 1960s heyday, it was one of four music companies that dominated the British charts. The others were Decca, Philips and Pye.
One by one, the others fell by the wayside, swallowed up by what is now Universal Music Group (UMG).
Now EMI's recorded music division looks set to follow suit, putting the last big UK record company into French hands.
However, the scale of the sell-off required by the European Commission is impressive.
It includes the catalogue of one of those proud 1960s labels, Pye - now part of Sanctuary, which Universal bought in 2007 and must now hive off again.
With other labels such as Mute also on the list, music by artists from the Kinks to Depeche Mode will now be changing hands.
The Commission's demand for assets sales also includes disposal of EMI's Chrysalis, Mute, and Classics labels, as well as Universal's Sanctuary and Co-op Music labels.
"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," EU competition commissioner Joaquin Almunia said in a statement."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," EU competition commissioner Joaquin Almunia said in a statement.
Citigroup is selling EMI, having bought it when buyout firm Terra Firma defaulted on loans owed to the US investment bank.Citigroup is selling EMI, having bought it when buyout firm Terra Firma defaulted on loans owed to the US investment bank.
The takeover still needs approval from the US Federal Trade Commission. Universal welcommed the commission's decision, saying: "Today's approval brings to an end an extensive EU regulatory review and the acquisition will benefit the artistic community and music industry."
Universal's rivals, including Warner Music and small independent labels, objected to the takeover, saying its dominance would squeeze out other players. The company said that after the asset sales, its catalogue would include the Beatles, Beach Boys, Genesis, Katy Perry, Emeli Sande and Robbie Williams.
A source close to Universal said the company had already received interest in the assets for sale from well-funded potential buyers.
'Universal's arrogance'
Smaller rival music labels reacted angrily to the commission's decision. Impala, which represents independent label across Europe, claimed that the commission's conclusions acknowledged that "Universal's power is a problem across the whole market".
Helen Smith, executive chair of Impala, said: "This decision has finally put a freeze on Universal's ability to expand further and sets a benchmark for constraining abusive behaviour across the whole market.
"Following the approval of the Sony/EMI merger, however, this decision nonetheless reinforces what is already a powerful duopoly. Contrary to the basic principles of competition in cultural markets, artists and consumers will ultimately pay the price."
Martin Mills, chairman of Beggars Group, said: "It's good to see that the Commission has seen this deal as such a threat to the market that it has demanded and received truly swingeing commitments to divestments.
"However, that should not conceal that fact that Universal's arrogance has paid off for them, that they have destroyed a significant competitor, and that even with these divestments their ability to dominate and control the market has reached even more unacceptable levels.
"Anyone trying to start a new digital service will be realising that very soon, and we will continue to look to the regulators to monitor ongoing behaviour."