EC wary of TW mergers; concerns over AOL, EMI

Possible veto may push companies to consider alternate agreements

The European Commission is taking a long, hard look at the AOL/Time Warner and Warner Music/EMI mergers and does not seem to like what it is seeing.

The chances are rising that one or both deals could either be stopped dead in their tracks by EC opposition or that the companies will have to agree to sizable concessions to win over the trust busters.

Reports from the EC indicate that the Warner Music/EMI merger, in particular, could receive a total veto, and suggest that AOL and Time Warner will have to agree to a range of open access requirements to win approval.

The EC is increasingly worried that the Warner Music/EMI merger would lead to domination of the global recorded music market by just four giant companies and would give Warner Music EMI a particular advantage in the market for the digital delivery of music thanks to the parallel AOL merger.

The EC is also reported to have major concerns over the dominance that Warner Music/EMI behemoth would enjoy in music publishing.

On AOL/Time Warner, the EC believes that is possible the new company, combining AOL’s Internet subscriber base with Time Warner content, could further strengthen AOL’s global lead in subscriber market share at the expense of its competitors.

Meanwhile, the antitrust review of the Vivendi Universal merger, which the EC put on hold in August until it received more information from the companies, has been restarted. The EC will decide by Oct. 2 whether to clear the deal or subject it to an in-depth four-month investigation.

The EC will issue its final judgment on the AOL/Time Warner and Warner Music/EMI mergers in early October.

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