A merger between two of the world’s largest music publishers is suddenly facing an obstacle, as the European Commission has said it will initiate a thorough examination of Universal Music’s acquisition of BMG Music Publishing.
Competition commissioner Neelie Kroes said the group will review the tie-up and issue a ruling on April 27.
Experts said that before then, it’s likely the companies will make concessions facilitating approval, possibly by selling certain assets.
UMG announced in September its intention to acquire BMG’s publishing unit for $2.17 billion in an attempt to better compete with rivals like EMI. The purchase would combine the third and fourth largest divisions into the biggest music publisher.
But move was met with protest from indie-music trade org the Impala Group and its vocal chief, Martin Mills.
Merger won Federal Trade Commission approval in the U.S. before running into a more activist-minded group of European regulators.
In its ruling, the EC seemed concerned not only about the power the combined publishing units would have but also by UMG’s general standing in the industry.
“Universal is the strongest player in music recording. After the proposed merger, it would become also the largest music publisher in the European Economic Area,” it said in a statement.
Impala earlier this year scored a coup when it convinced an EU court to annul the original Sony BMG merger — a move that, together with Friday’s ruling, has cast a chill on other potential music mergers.
For Bertelsmann, the sale of the BMG unit is key to the Teutonic conglom’s effort to finance the purchase of 25% of its shares from Belgium investor GBL.