European Union competition regulators are set to put pressure on Vivendi's Universal Music to offer concessions in its bid to buy smaller rival EMI's recorded music business, with a formal statement of their concerns, a senior European Commission official said on Friday.
The EU regulators have been conducting a full-scale investigation into the $1.9 billion bid, citing concerns about the combined group's potential high market share and increased market power.
"The next step is a statement of objections. We are now preparing a statement of objections," the official told reporters, asking not to be named because of the sensitivity of the matter.
The European Commission, which acts as EU regulator in such cases, has set a deadline of Sept. 6 to make a decision on the acquisition, which would combine Universal's stable ranging from Lady Gaga to Rihanna with EMI's catalogue which includes The Beatles, Pink Floyd and Katy Perry.
Sending the "statement of objections" or charge sheet to the companies would extend that by about four months.
The EU regulators have asked rivals and consumer groups if the deal would result in higher prices and shut out competitors. The U.S. Federal Trade Commission is also reviewing the proposed combination.
No one at Universal could immediately be reached for comment.
Citigroup Inc is selling EMI in two parts, having acquired it after its previous owner, private equity fund Terra Firma, defaulted on loans owed to the investment bank.
The European Commission gave its approval in April to a consortium led by Sony to buy EMI's separate music publishing business.
But EU Competition Commissioner Joaquin Almunia expressed his concerns on Friday about the size of a Universal and EMI combination.
"A company with a large and popular catalogue can have significant market power over digital platforms, which would have a keen interest to strike a deal with it," Almunia told the St Gallen International Competition Law Forum.
He said regulators were getting ready to move to the next stage in the proceedings.
"Ultimately, we will need to make sure that, in this already concentrated market, the company that would emerge from the deal would not be in a position to shape the future landscape in the digital music market to the detriment of users and artists," he said.
This article is copyrighted by Reuters
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