BRUSSELS — EMI and Time Warner apparently have made some major commitments to the European Commission in a last-ditch effort to win antitrust approval for their $20 billion deal.
It is widely believed that in their final offer to the EC, EMI and Time Warner said they will sell off four record labels: Marconi in France, Dro in Spain, CMC in Denmark and Mimos in Greece.
The two companies will also dispose of four of their publishing catalogs — Virgin Songs, Magnet, Fazer and Nordiska — and restructure their European distribution and publishing businesses.
The companies hope their actions will meet EC concerns that Time Warner’s purchase of EMI would dramatically reduce competition in the global music publishing and recorded music markets.
Because the EC’s major objection is that the combination reduces the number of majors from five to four, any new labels on the market may have to go to smaller companies — if they can afford them.
The EC’s other major worry is that, in combination with the AOL/Time Warner merger, the music deal will make the merged entity too dominant in the market for downloading music from the Internet.
To address this issue, EMI and Time Warner are now rumored to have promised that they will not discriminate in favor of ISPs linked to AOL for a five-year period, and that their music will be available in a number of non-proprietary formats for a three-year period.
However, the EC historically dislikes “behavioral” remedies, which require post-deal monitoring.
The EC is “market testing” the concessions with competitors this week in order to judge reaction to the proposals.
Rival companies are expected to argue that the remedies do not go far enough and do not address core antitrust problems of the deal. A final decision from the EC is expected in early October.