The AAI, which is a non-profit organsation with a self-described "centrist legal-economic ideology", submitted a written statement to the subcommittee on antitrust, competition policy and consumer rights.
It covered ground that has largely been trodden before, warning that the merger would create a "highly concentrated industry vulnerable to the kind of anticompetitive, welfare-diminishing abuses the antitrust laws were designed to prevent."
Billboard reports that the lack of a level playing field for independent labels is also a concern for the AAI as well as the potential for three dominant companies to collude against competitors thanks to the new balance of power.
"The mere perception that a single dominant firm, or three firms with market power consciously acting in parallel, can leverage access to an essential input inevitably would dissuade rational investors from innovating in platform and business models," says the AAI.
"Likewise, Sony and Warner would have no reason to sponsor new entry by licensing their respective catalogues to new platforms, because the new entrant could not possibly compete without Universal's catalogue.
"The two remaining labels would base all negotiations of licensing terms, or they would refuse to negotiate, depending entirely on what they know or suspect to be Universal's preferences, effectively awarding Universal a de facto gatekeeper role."
Inaccuracies have been flagged up in AAI's argument, however. As Billboard points out, the statement argues that four majors is sufficient for licensing to new digital services but used the example of EMI being the first to license MP3 downloads to Amazon.com in 2007. The AAI says that the other majors followed suit because they "usually cannot justify the foregone licensing revenue to their constituencies for very long."
However, Amazon's download store was not a new entrant at the time and no new service would be able to launch in the mainstream market with only one major.
Universal has responded to the AAI's assessment, emphasising that its deal with EMI will create more opportunities for the music market as a whole.
Source: Billboard
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