Sony/ATV may have completed its acquisition of EMI‘s publishing arm relatively smoothly, but Universal Music Group is set to have more questions to answer over its proposed acquisition of EMI’s recorded music business. The Financial Times reports that the European Commission has been circulating a ‘statement of objections’ to the deal, with digital concerns at its core.
The key objection, in the FT’s words: “Universal, the world’s largest music company, already extracts materially higher prices from digital distributors than rivals, and that buying EMI would allow it to raise digital music prices”. The EC may also be dismissing UMG’s counter-arguments about the power of Apple as a digital music retailer, and the impact on music sales of online piracy.
Universal says it is “preparing a detailed response to the Commission’s statement which will address the concerns outlined in this procedural document”. What’s important here is that UMG’s obligations to get the deal done are now highly likely to go well beyond disposing of specific catalogues and assets to win over the regulators.
Showing evidence of its willingness to license a range of innovative digital services shouldn’t be hard. The harder task will be providing convincing guarantees of future behaviour, particularly on the not-extracting-higher-prices point.