Independent music companies, via trade body IMPALA, have asked the EC to ensure that the sale of divestment assets from both Sony/ATV's purchase of EMI Publishing and Universal's acquisition of EMI Music do not "strengthen the duopoly that exists between Universal and Sony".
In late December, Sony/ATV picked BMG as the favoured bidder for its divestment of Virgin Publshing and Famous Songs, whilst Universal sold BMG the Mute Records catalogue. Both deals will now have to be approved by the EC.
Since then, it has come to light that Sony Music and BMG are joining forces to bid for the bulk of further divestments from Universal's £1.2bn purchase of EMI Music - including the Parlophone Label Group.
IMPALA believes "these facts are expected to raise alarm bells with the European regulator, who is responsible for reviewing the sale processes and deciding whether these deals meet strict criteria set by the EC to ensure the divestments have the desired effect. Any irregularities could turn the procedure into a full blown investigation.
It adds: "Universal and Sony were allowed to buy EMI on the basis that the divestments they make would compensate for the reduction in competition in an adequate way. Strict rules apply to make sure this happens. First, the purchaser must have no connections to the seller. Second, the seller must not benefit from the divestments or re-acquire any market influence over the assets. Third, the divestment must not raise any competition concerns (which rules out any Sony involvement in bids). Any breach of these conditions or other irregularity, or any result which protects the position of Sony or Universal, whether co-ordinated or otherwise, is forbidden and would be blocked by the EC."
Helen Smith, Executive Chair of IMPALA said: "Our position from the start has been that music must not be allowed to become a "two horse race" and making sure the independents are able to compete effectively is crucial. All interested companies should be treated equally as bidders for any assets to be sold off. Properly strengthening the independents should be part of the outcome. The divestment processes must not be conducted in a way that simply comforts the market leaders' view of how competition should, or should not, develop."