The protracted sale of EMI Music’s label assets to Universal Music Group concluded on Friday, as the European Commission and the Federal Trade Commission both approved the deal within hours of each other.

Following 10 months of scrutiny and sometimes fractious debate, and UMG’s agreement to heavy divestments, EC regulators blessed the transaction — which will create a music entity of unprecedented size and reduce the number of major labels from four to three – and announced its approval early Friday.

In announcing approval, the EC said, “The Commission had concerns that the transaction, as initially notified, would have allowed Universal to significantly worsen the licensing terms it offers to digital platforms that sell music to consumers. To meet these concerns, Universal offered substantial commitments. In light of these commitments, the Commission concluded that the transaction would not raise competition concerns anymore.”

Later in the morning, the FTC said in letters to UMG and EMI that it had voted 5-0 to close its investigation of the acquisition without taking any action.

A Universal spokesperson said in a statement, “Our investment in EMI will create more opportunities for new and established artists, expand music output and consumer choice, and support new digital services. With a broad array of EMI artists like Katy Perry, The Beatles, Robbie Williams, Lady Antebellum and Norah Jones, we are well positioned to grow the company and offer music fans around the world more music and more choice than ever before.”

Cost of approval proved steep: A source with knowledge of the transaction confirmed that in order to get the $1.9 billion deal approved, UMG and EMI have agreed to divest assets that annually generate approximately 350 million Euros ($457 million) in revenue.

EC vp in charge of competition policy Joacquin Almunia said in a statement, “In this investigation, we have paid close attention to digital innovation, which is changing the way that people listen to music. The very significant commitments proposed by Universal will ensure that competition in the music industry is preserved and that European consumers continue to enjoy all its benefits.”

The EC gave the purchase a go-ahead after UMG and EMI agreed to extend a number of divestments planned for European territories – including the sell-off of EMI’s Parlophone, Chrysalis and Mute labels – on a worldwide basis. EMI subsidiaries in 10 territories were also offloaded.

The Parlophone divestment does not include the Beatles catalog, the crown jewel of EMI’s holdings. Contrary to one published report, the Queen catalog is not being sold. Chrysalis artist Robbie Williams will also remain with the company.

It was also agreed that EMI’s 50% stake in the “Now! That’s What I Call Music” franchise would be sold.

UMG had agreed to assume all regulatory risk in the deal, and paid seller Citigroup $1.6 billion of the purchase price for EMI in early September (Daily Variety, Sept. 11).

European approval ended the most contentious chapter of the acquisition drama, which began last November when Citigroup – which assumed control of EMI after a loan default by previous owner Terra Firma early last year – approved UMG’s bid for the labels.

A separate $2.2 billion bid for EMI Music Publishing by an investment consortium led by Sony/ATV Music cleared regulatory hurdles with relative ease (Daily Variety, July 2). But UMG’s buy of the EMI labels faced intense heat in Europe.

The Euro indie trade org Impala and the U.K.’s Assn. of Independent Music both assailed the splicing, claiming that the merged companies’ resultant market share of 40% or more in some territories would be anti-competitive.

Regulators paid heed to the objections, for in July UMG submitted a remedies package that offered wide-ranging divestments to assuage regulators’ concerns (Daily Variety, July 30). These concessions were in some cases subsequently broadened to encompass international territories.

Regulatory bodies in Australia, Canada, Japan and New Zealand had previously given the nod to the UMG-EMI union.

Even after the deal was finalized by the EC Friday, Impala continued to voice opposition. Executive chair Helen Smith said the decision “reinforces what is already a powerful duopoly. Contrary to the basic principles in cultural markets, artists and consumers will ultimately pay the price.”

Stateside, the sale was mulled in a hearing before the Senate judiciary committee’s antitrust subcommittee in June (Daily Variety, June 22). Following the hearing, senior members of the Senate subcommittee and the House subcommittee on intellectual property, competition and the Internet sent letters to the FTC, advising a careful weighing of the deal’s anti-competitive elements.

However, in a statement Friday, FTC Bureau of Competition director Richard A. Feinstein said, “Commission staff did not find sufficient evidence of head-to-head competition to conclude that the combination of Universal and EMI would substantially lessen competition.”

Several companies now stand to benefit from the mandated EMI divestitures. Hartwig Masuch, CEO of BMG Rights Management – the Bertelsmann-KKR joint venture that has snapped up a number of music publishing firms over the last two years –recently said the company would be interested in picking up some of the offloaded label assets.

The move would mark Bertelsmann’s return to the label biz. The company was formerly partnered with Sony Music in Sony BMG Music Entertainment. Sony acquired Bertelsmann’s 50% stake in the company in 2008.

It is likely that Warner Music Group – which would become a distant No. 3 among major music firms with the approval of the UMG-EMI deal – would seriously consider acquiring some of the cast-off EMI holdings. WMG, which was acquired for $3.3 billion by industrialist Len Blavatnik’s Access Industries last year, backed out of bidding on the EMI labels in the 11th hour.