EC probes AOL deal

Time Warner merger gets four-month look

BRUSSELS — The European Commission has launched a full four-month anti-trust investigation into the proposed merger between America Online and Time Warner. The EC is concerned that the new company could achieve dominance over the market for the supply of content, especially music, over the Internet.

The commission, the executive arm of the European Union, singled out as a major threat to competition the fact that AOL would gain “preferential access to the leading source of music publishing rights and music repertoire in most member states.” It’s also worried that Netco would as a result be in a position to dictate the technical standards for delivering music over the Internet.

Delivery review

The commission also will investigate the impact of the merger on the market for the Internet delivery of other paid-for content such as films, TV programs and financial news.

Although it is rare for the commission to block mergers, it can often force the merging companies into making significant concessions.

An EU lawyer contacted by Daily Variety said AOL and Time Warner may agree to concessions, such as granting nondiscriminatory access to their technical services and infrastructure, “just because this is a very fast-moving and dynamic market and the two companies won’t want to suffer excessive delays.”

The attorney had criticism for the EC’s decision, however: “The commission should wait and see how this market develops, and only intervene when there is a palpable problem.” The commission “has been seduced by the arguments of Disney and Universal, who have transposed their U.S. arguments into Europe. I don’t think the merger has much resonance in Europe.”

Dropping alliance

The commission noted that AOL had offered to sever its link with European media giant Bertelsmann but said major competition problems still have to be addressed.

Last week, the commission launched a four-month investigation into the Warner Music/EMI merger, based on similar fears regarding the impact on competitiveness in the Internet content-delivery market.

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