The European Commission said on Friday that it had approved Sony Corporation of America’s move to take full control of EMI Music Publishing, saying the deal raises no competition concerns. The Commission said it had cleared the transaction without conditions.
Sony Corporation announced the deal, which would see it acquiring Mubadala Investment Company’s 60% equity interest in EMI, in May. Combined with its acquisition of the Michael Jackson Estate’s stake in the company, the proposed deal brings Sony’s stake in EMI to 100%. While the final purchase price to be paid by Sony for all of Mubadala’s equity interest in EMI Music Publishing is subject to customary closing adjustments, the total cash consideration Sony expects to pay to consolidate EMI Music Publishing is approximately $2.3 billion. Since 2012, EMI has been jointly owned and controlled by Sony Corporation of America and Mubadala.
“We are pleased to have received approval from the European Commission and look forward to successfully concluding this transaction,” a Sony spokesperson told Variety. Sources say the deal is expected to close by the end of the year.
The deal was approved over the strenuous objection of several European industry organizations, particularly independent-music coalition IMPALA, which was quick to criticize the decision on Friday. In a statement, the company said that the deal allows Sony to “double its catalogue of songs (from 2.16m to 4.21m compositions).”
Helen Smith, IMPALA’s Executive Chair, commented: “This goes against the regulator’s own precedents. In 2012, it ruled that divestments were required for Sony to become a minority shareholder. Now that Sony is acquiring 100% control of EMI, it is being given unconditional approval. This is inconsistent and simply doesn’t stack up. It is a poor advert for European merger control and sends an alarming message to independent businesses in all sectors, not just music.”
“Sony will have a near monopoly over the charts and the whole music value chain will lose out as a result. Songwriters, composers, independent labels and publishers, digital services, and of course music fans, will all be worse off. This decision has dealt a significant blow to innovation and cultural diversity in Europe. IMPALA will review this decision very carefully, and we expect others will too.”
In its statement, the EU said in part: “Since Sony already has joint control of EMI [music publishing], the transaction would not lead to any increase in market share in any of the markets where Sony and EMI are active. Therefore, the Commission focused its investigation on assessing whether Mubadala has acted as a constraint on Sony’s ability to leverage across both recording music and music publishing rights and, in particular, into the potential impact of the removal of this constraint on any hypothetical Sony strategy for EMI.
“As regards the provision of music publishing services to authors, the Commission concluded that, as Sony/ATV and EMI have not competed to sign new authors since 2012, and as Mubadala did not constrain Sony’s strategy before the merger, the merger would not raise competition concerns.”