Vivendi asks EC to OK publishing deal
EmptyBRUSSELS -- Vivendi, the owner of Universal Music Publishing Group, on Friday formally asked the European Commission to clear its €1.63 billion ($2.1 billion) takeover of BMG Music Publishing.
"We have today asked for formal clearance from the commission for the purchase, and we are confident that the deal will be approved," a Universal Music spokesman said.
Sources close to the deal said there is little reason for the commission -- the European Union's antitrust authority -- to raise any objections to the takeover. "It should be straightforward," one insider said. "It is essentially the merger of the No. 3 and No. 4 publishers. BMG and Universal each have around 11% of the market. If approved, they will have a 22% combined market share, about two points more than the market leader, EMI."
Vivendi beat off rivals EMI Music Publishing and Warner/Chappell Music in September to purchase BMG Music Publishing, whose archive of more than a million songs includes Coldplay, Britney Spears and Robbie Williams. BMG is expected to complement rather than overlap the Universal catalog that includes artists like U2 and Elton John.
Bertelsmann wants to use the cash from the sale of BMG Music Publishing to pay a €4.5 billion ($5.7 billion) bridge loan it used to buy back a 25.1% stake in the firm held by Belgian investor Groupe Bruxelles Lambert in July.
The move for commission approval comes just four months after the Court of First Instance, the EU's second-highest court, annulled the BMG merger with Sony when it upheld an Impala appeal that the commission had been wrong to approve it.
However, the music publishing purchase should face fewer problems as it does not deal directly with consumers and, therefore, prices. And since the combined entity is not expected to be more than a quarter of the overall market, there is little risk that it will impede effective competition in the market for music publishing in the EU.
Under EU regulations, a merger must be blocked if it creates a dominant position, as it would likely result in higher prices, less choice and innovation. Dominance, in its different forms, will remain the main scenario. The central question is whether enough competition remains after the merger to provide consumers with sufficient choice.
However, independent music group Impala -- which filed the case that led to the EU Court annulment of Sony merger with BMG in July -- has warned it will attempt the same with BMG's sale to Vivendi Universal.
Impala claims the sale will damage competition in recorded music, extend existing collective dominance in publishing and will ultimately fail to win regulatory approval. The deal also would strengthen existing collective dominance in publishing, and prejudice collecting societies and the online licensing and synchronization markets, according to Impala.