As expected, Eurocrats are anxious to probe the mega-merger of Universal EMI, fearing the effect on digital music markets. The merger sees the world's largest record label (and the largest music publisher) Vivendi-owned Universal Music, take over the fourth-largest label EMI – with the EMI publishing business spun out to Sony.
Concessions offered by Universal last November do not appear to have satisfied the competition authorities.
"At this stage of the investigation, the new entity, which would be almost twice the size of the next largest player in the EEA, would not appear to be sufficiently constrained by the remaining competitors on the market, by its customers' buyer power, and/or by the threat of illegal music consumption (so-called "piracy")," the Commission noted in its announcement of a Phase II investigation. The Commission has until 8 August to report on whether to block the merger.
Unnamed sources at Universal have briefed journalists that the competitive threat of digital piracy means consolidation should be permitted. Critics have pointed out that the merged entity's 40+ per cent market share would make it the king-maker for digital music services – and that no service would then survive without Universal's catalogue.
Vivendi's empire includes Canal+ and mobile network SFR in addition to Activision, which produces both the Call of Duty and Modern Warfare franchises. London commuters with long memories will remember it also owned Connex rail until it was stripped of the franchise by regulators in 2000. ®