German media giant Bertelsmann and British music group EMI announced today that they had called off a planned merger of their music operations due to competition concerns by authorities in the US and the European Union.
'After a period of negotiations, Britain's EMI Group and Bertelsmann have decided not to continue their talks on merging their music businesses,' Bertelsmann said in a statement. 'Competition law demands from Brussels and Washington on a merger of EMI/Bertelsmann Music Group (BMG) led both companies to rule unanimously that a long review and approval process would have followed.'
Bertelsmann added that those demands would likely have threatened the viability of the merged unit.
In London, EMI said: 'Over the past five months, the two companies have conducted a rigorous assessment of alternative structures and antitrust remedies. It has not proved possible, in the present regulatory environment, to construct a combination which both creates significant value for shareholders and also has a high likelihood of approval from antitrust authorities in Europe and the USA.'
The European Commission has reportedly insisted that there should be five major music publishing groups, while US cartel authorities have raised similar concerns about concentration in the market. A tie-up between BMG and EMI would have meant that there were only four major music groups.
In order to persuade regulators, Bertelsmann and EMI might have had to sell some of their activities to one or a number of independent publishers in order to allow a fifth giant to emerge in the sector.
Preliminary plans for a merger betweeen EMI and the US giant Time Warner had already had to be abandoned as a result of the conditions laid down by the EU cartel authorities.
