Indie Labels Attack Decision To Allow Universal’s EMI Purchase In Australia

The Australian Independent Record Labels Association [AIR] have stated their “extreme disappointment” today over the Australian Competition And Consumer Commission's [ACCC] decision to green light the Universal Music Group's acquisition of EMI Music's recorded music division in Australia.

The ACCC has followed the lead of New Zealand, Japanese and Canadian regulators by indicating they would not oppose the proposed merger on the grounds that, “the proposed acquisition would be unlikely to result in a substantial lessening of competition”.

AIR and their affiliates have today branded the decision “incomprehensible”.

The label body believes that the combined market share of a merged company would exceed 50 percent and oppose each point of the ACCC's ruling, saying specifically that Universal would, “Exert undue influence on fledgling digital business models as well as [control] access to market through media, digital retail and physical retail.”

CEO of global rights agency Merlin, Charles Caldas, said that it was 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.”

The deal, which will see Universal pay $1.9 billion for their major label counterpart, was announced last year and has come under a year-long process of regulation and scrutiny regarding anti-trust laws. The European Commission asked for a series of divestments initially – which prompted Radiohead and Pink Floyd members to say that artists should get control – but are expected to give it the green light very soon.

Nick O'Byrne, AIR's General Manager and incoming BIGSOUND Executive Programmer, admitted to theMusic.com.au today that, “There's no way we can challenge the ACCC's ruling. The only thing we can do is watch what happens with the European Commission's ruling, which should be announced tomorrow or next Wednesday. Universal have committed to some serious global catalogue divestments but that shouldn't be enough. They are yet to address issues regarding the control and increased equity in the digital market.”

He was as damning as Caldas in his general assessment, stating, “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.”

AIR's Chairman David Vodicka said that the decision, “Disregards the practical effects of combining two already substantial music companies into a company that will control over 50 percent 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.”

In their ruling the ACCC stated that EMI were not a “uniquely vigorous or maverick” competitor to Universal and as such the remaining majors Sony and Warner, as well as “many" indie labels "would remain in the market post-acquisition and would be likely to competitively constrain the merged firm.”

They also said that even with EMI, Universal would not be able to control digital distribution. They said that market is “Experiencing frequent and innovative entry and expansion and UMHL had a limited influence over which retailers are commercially viable and popular with end-consumers.”

UPDATE: Universal Music Australia have offered the following statement to theMusic.com.au.

"We are pleased that the Australian Competition and Consumer Commission has cleared Universal Music's proposed acquisition of EMI with no objections. This follows similar clearances in Japan, Canada and New Zealand. Our investment in EMI will create more opportunities for new and established artists, expand music output and consumer choice, and support new digital services. We welcome the Commission's decision and are working closely with regulators in Europe and in the US to obtain further clearances."