Two Groups Ask For Senate Review Of UMG-EMI Deal
April 27, 2012

A pair of organizations are asking a Senate Judiciary subcommittee on antitrust issues to take a closer look at Universal Music Group's deal to acquire EMI's recorded music division. According to The New York Times, digital rights group Public Knowledge and the Consumer Federation of America have sent a nine-page letter to Senators Herb Kohl (D-WI# and Michael S. Lee #R-UT), listing their objections to the UMG-EMI deal.

The groups argue that the deal with give UMG such a large share of the recorded music business that it would stifle competition in digital music. The letter also compares the situation to the Justice Department’s recent lawsuit charging Apple and five major publishers with collusion when it comes to e-book pricing.

The letter asks, “If five companies with a market share of less than 50 percent pose a threat to nascent competition from digital distribution models, does one company with a market share above 40 percent pose a similar threat?”

In a statement acquired by the Times, Universal responded to the letter and countered its comparison to the e-book issue. The label said, "C.F.A.’s effort to compare this case to the government’s e-books case completely misunderstands the law. The e-books case is about an alleged illegal price-fixing conspiracy. Market shares don’t matter in a case like that — it’s just as illegal for two tiny local bookstores to fix prices as it is for giant publishing companies. The law governing mergers is totally different, and most mergers, like this one, are ultimately found to be beneficial to competition and consumers."

Senator Lee said in his own statement, "Technological advances have led to much evolution in the recorded music industry. This transaction deserves careful review to understand the myriad forces affecting competition among record labels and to ensure opportunities for innovation and new digital distribution models."

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Mark Adams
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