Sep 18, 2012

AIR slams ruling on Universal's purchase on EMI

AIR expresses its extreme disappointment with the ACCC’s (Australian Competition and Consumer Commission) decision not to oppose Universal Music Holding’s purchase of EMI Music for the territory of Australia.

Given that Universal and EMI’s combined market share in Australia is likely to exceed 50% of recorded music sales, AIR disputes every one of the ACCC’s arguments that the combined entities will not reduce competition in this territory. The merger is bad for the health of the Australian independent music sector and will result in decreased musical diversity and consumer choice.

AIR believes that the merger will see Universal’s market power exert undue influence on fledgling digital business models as well as control of access to market through media, digital retail and physical retail. It will also strengthen its control over a large proportion of worldwide digital distribution.

AIR is deeply concerned that Universal’s digital business practices will curtail innovation while resulting in increased equity in selected existing digital service platforms.

After some discussions earlier this year, AIR is disappointed that the ACCC has chosen to make its decision without further consultation with key parties opposing the merger. The fact that there has been no talk of local divestments or remedies is a worrying oversight.

Charles Caldas, CEO of Merlin, the global rights agency that represents the largest and most important set of independent labels rights, issued the following statement:

The ACCC's decision is incomprehensible to me, and marks a terrible day for Australian music consumers. If this transaction goes through unchallenged, we can only see those consumers facing less choice, higher prices, and less comprehensive digital offerings than they should be entitled to enjoy. Merlin sent extensive submissions to the ACCC, raising serious concerns about the impact of this transaction on the digital market, just as we did to the European authorities. Given the fact that the EC, based on those same arguments, came up with an extensive statement of objections to the merger, I am astounded that the ACCC has seemingly blindly waved this through, ignoring the interests of consumers in favour of the most dominant player in the market.

David Vodicka, Chairman of AIR and the independent label representative on boards of the PPCA and ARIA had this to say:

This is a deeply disappointing decision for the independent music sector, which disregards the practical effects of combining two already substantial music companies into a company that will control over 50% of the domestic music market. The result will be dominance of both media outlets and consumer spaces by Universal Music, stifling the development of new businesses that don’t adhere to Universal’s requirements, and ultimately less choice for consumers.

 Nick O’Byrne, General Manager of AIR states:

Global remedies will not sufficiently address Universal’s market dominance through catalogue ownership, distribution and business practices specific to this territory. The ACCC needs to enforce territory specific concessions and divestments to ensure fair competition in Australia. What is even more galling is that the ACCC has not waited to see the outcome of merger reviews and potential divestments in Europe and the USA before making this announcement.


The ACCC’s Assessment can be found here: http://www.accc.gov.au/content/index.phtml/itemId/1079265/fromItemId/751