The Commission observed that, in recorded music, the merger will
lead to an oligopoly of four firms (Time Warner/EMI, Universal
Music Group, which belongs to Seagram of Canada, Bertelsmann Music
Group and Sony Music) controlling some 80% of the European
market.
In a statement, the Commission said that there are strong
indications that Time Warner/EMI could become dominant in the
digital delivery of music via the Internet especially in view of
the merger between America Online (AOL) and Time Warner, which is
under separate investigation by the Commission.
The Commission acknowledged that digital delivery of music over
the internet is expected to grow in importance over the coming
years, and could become one of the drivers of the development of
internet services. Domination by the merged firm could be “to the
detriment of artists, composers and ultimately consumers,” said the
Commission.
How the Commission investigates mergers and acquisitions
The European Commission investigates mergers and acquisitions
according to a legally binding timetable. From the date the
Commission is fully informed of the details of a transaction
(so-called notification), it has a period of one month to make an
initial assessment. If the Commission comes to the conclusion that
there are serious doubts whether an operation is compatible with
the competition rules in the European common market, it initiates a
full investigation.
The Commission has then a further four months to investigate the
facts and to adopt the final decision whether or not to allow the
proposed transaction to proceed. The opening of a full
investigation is a procedural step without prejudice to the final
outcome of the case.
