The world's biggest record company Universal won clearance Friday to take over EMI, home to the Beatles, but only on condition that it sell off rights to a string of top artists like David Guetta. European Commissioner Joaquin Almunia said Universal Music agreed to part company with some of the biggest-selling acts in the business including Coldplay, Pink Floyd, David Bowie and Cliff Richard, to get the deal approved.
The disposals represent about two-thirds of the current European business and include EMI's classical music labels as well as the EMI France catalogue, home to superstar Guetta. Separately, US authorities in Washington closed their review, clearing the purchase.
The Beatles are the best-selling band in history, with EMI putting all-time sales at more than a billion records and huge online revenues continuing. Universal acquires an array of talent in the deal, from Katy Perry and Robbie Williams "to icons like The Beatles, the Beach Boys, Genesis and Bob Seger," owner French group Vivendi said in a statement. The deal "will benefit the artistic community and music industry," it added.
Almunia, a Spaniard, who confessed to being a fan of Pink Floyd and another of the acts being sold off, Duran Duran, said the deal went beyond simple industry concerns given its cultural importance. "On cultural issues the Commission needs to be extremely careful," he said, highlighting concerns in particular over the future of the burgeoning digital music industry.
The Commission said the original deal raised concerns that Universal with EMI would have had too much power over the terms it sets for digital platforms such as Spotify and Apple's iTunes that distribute music direct to consumers. "Competition in the music business is crucial to preserve choice, cultural diversity and innovation," Almunia said in a statement earlier.
"In this investigation, we have paid close attention to digital innovation, which is changing the way that people listen to music." The original deal would have left only three major record companies, with Universal enjoying "excessive market power" over its direct customers.
Crucially, it would have "increased Universal's size in a way that would likely have enabled it to impose higher prices and more onerous licensing terms on digital music providers." As well as the majors, Universal also agreed to sell smaller labels such as Mute with The Ramones and Chrysalis with Depeche Mode, alongside EMI's 50 percent stake in the Now! That's What I Call Music compilation franchise. Universal also accepted restraints which will allow its competitors to "negotiate more freely with digital customers and further levels the playing field between these competitors and Universal."
Almunia told reporters that Universal would now likely have an average European market share of about 37 percent under the new terms. Some two-thirds of the assets sold should go to a single buyer, he said, in order to create a new competitor in a fast changing music industry.
Asked about The Beatles, who recorded on EMI's iconic Parlaphone label before setting up their own Apple operation, Almunia said their inclusion or not in the competition remedies lay only with Universal. Universal Music Group, owned by France's Vivendi, offered to buy EMI in November from US bank Citigroup for £1.2 billion (1.5 billion euros, $1.9 billion) who had seized the firm in February 2011 from indebted private equity owner Terra Firma.
The deal does not include EMI's music publishing unit whose sale the EU cleared in April to a group of investors led by Sony for $2.2 billion. In Washington, the US Federal Trade Commission closed its investigation, saying its staff "did not find sufficient evidence that the acquisition would substantially lessen competition in the market for the commercial distribution of recorded music."
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