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Commission approves Universal’s take over of BMG’s publishing business, with commitments - 12/06/07 Print E-mail

On May 22nd, 2007, the European Commission (EC) has approved the proposed acquisition of the music publishing business of Bertelsmann Music Group (BMG, Germany) by Universal (USA). Although the proposed merger raised doubts as regards possible adverse effects on competition on on-line music copyright, the EC judged that the merger is in line with the EU Merger Regulation since the remedies package proposed by the parties removes several concerns.

Universal, which is owned by the French Vivendi, is a leading player in the music recording and music publishing business and its proposal would be acquiring the worldwide music publishing activities of BMG. Whereas music recording concerns the right of the record company and the singer, music publishing relates the rights of songwriters, that is to say, authors. Collecting societies have traditionally collected copyright revenues on the behalf of songwriters and their publishers.

The EC market investigation showed that no competition concerns would arise from the merger if the copyrights were still administered by the collecting societies, which usually charge uniform tariffs for the complete administered repertoire. However, in the field of on-line rights, publishers have started to transfer their rights for Anglo-American song repertoires towards a few collecting societies acting as agents for individual publishers and granting European Economic Area (EEA) licenses.

The EC concern was that, after the merger, Universal would be able to exert control over a large percentage of titles through its copyrights (authors works and individual recording). Since in a number of countries Universal would have controlled more than half of the chart hits, the EC was afraid that the merger would have given Universal the ability and the incentive to increase prices for on-line rights as regards Anglo-American repertoires.

In order to remove the Commission’s concerns, Universal committed itself to give up a number of important catalogues, covering Anglo-American copyrights and contracts with authors. These catalogues include the EEA activities of Zomba UK and Zomba US, 19 Music, 19 Songs, BBC music publishing as well as Rondor UK and several successful authors, such as Kaiser Chiefs, Justin Timberlake and R. Kelly. For reasons of viability, the commitments cover the complete range of copyrights, not only on-line rights. Therefore, in the light of the quality of divested catalogues, the EC concluded that the commitments would get rid of concerns about possible competition distortions.     

Association of European independent publishers Impala is thinking of appealing against this decision before the European Court of Justice. In July 2006, this association had obtained the annulment of the Sony Music – BMG merger.

For further information on this merger, please click here.
For further information on EU Merger Regulation, please click here.
For further information on Impala, please click here.

 
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