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A2IM Hoping FTC Will Block UMG-EMI Deal
August 7, 2012

Yesterday it was reported that the heads of the U.S. Senate Judiciary Subcommittee on antitrust issues sent a letter to the Federal Trade Commission, voicing their concerns over the Universal Music Group acquisition of EMI. Additionally, in an email from A2IM to the FTC, the organization also voiced further concerns about UMG and its concessions to receive approval of the sale.

Billboard.biz report that A2IM President Rich Bengloff told the FTC that his organization hopes the Commission "will sue to block the merger. However, if the merger is not blocked we presume that there will be mandated divestitures and behavioral restrictions required by the FTC."

The A2IM is hoping that in the U.S., the FTC will ask UMG for even more restrictions and divestments than the European Committee regulators have. The current UMG divestment proposal does not offer any concessions in the States and is primarily focused on Europe.

According to Billboard, the A2IM email adds that there should be "behavioral restrictions on Universal or they will have the ability to control the market place, particularly on catalog sales and compilations." A2IM adds that "For the first time in history, for the first half of the year catalog album sales exceeded the sales of new releases (releases out 18 months or less) as reported by Nielsen/SoundScan. Universal often licenses tracks to their competitors for artist releases and compilation releases under a license of limited duration. If the EMI catalog, an extremely strong area for EMI historically, is added to the Universal catalog then the Universal/EMI merged catalog...will control 27 of the top 40 selling catalogs in the U.S." Bengloff and the A2IM believe that this potential power over back catalogs "is a major reason why the FTC should block the transaction."

In response to A2IM, a UMG spokesperson told Billboard, "Rich Bengloff clearly does not speak for the many Indie labels and artists who have come out publicly in support of the deal. There is growing recognition that Universal Music's investment in EMI will create more opportunities for new and established artists, expand music output and support new digital services. Barriers to entry have evaporated in today's digital environment and there are more ways than ever for labels and artists to get their music out to fans. We are working with regulators around the world and are confident of winning approval."

In other UMG-EMI news, the Los Angeles Times has published an editorial examining the deal and its implications. The editorial piece can be read here.




 
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Tias Schuster, OM/PD
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