Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC Clears Acquisition of Parlophone by Warner Music’s Parent, (May 15, 2013)

The European Commission (EC) has approved the acquisition of Parlophone Label Group (PLG) by Access Industries, Inc., the parent company of Warner Music Group (WMG), concluding that the combination would not raise competition concerns.

PLG consists of the majority of the assets of EMI Recording. Universal Music Group (UMG) agreed to divest PLG when it acquired EMI’s recorded music business in 2012 in order to obtain EC approval of the transaction.

The EC’s investigation of Access’s acquisition of PLG demonstrated that the transaction would not have adverse competitive effects in the markets for the wholesale distribution of physical and digital recorded music in the European Economic Area (EEA) and in several Member States where both companies are active. According to the EC, WMG has relatively limited market shares, and the increment in market share would also be relatively limited in most markets.

Moreover, WMG would continue to face competition from UMG and Sony Music Entertainment, as well as smaller independent labels. The EC noted that "a number of respondents to the market investigation pointed out that the proposed transaction may actually reinforce competition, as it may lead to an increase of the competitive pressure exercised by WMG on both UMG and Sony."

In addition, the EC took into account WMG’s agreements with IMPALA, an association of independent labels, and Merlin Network, a "global rights agency" for independent labels, under which WMG agreed to make certain structural and financial changes following its acquisition of PLG that would provide increased opportunities to buy, license, or distribute certain WMG or PLG assets, among other changes.

Companies: Access Industries, Inc.; Warner Music Group; Parlophone Label Group

News: Antitrust