MERGERS : COMMISSION TO EXAMINE WARNER'S ACQUISITION OF PARLOPHONE.

The purchase of the emblematic music label Parlophone by Warner Music Group, on 7 February, arose from one of the conditions set by the European Commission - prior to giving its go-ahead to the merger of the recorded music section of EMI and Universal, on 21 September. The divestment of this nugget, coveted by several potential acquirers, ended up going to Warner - which in turn is owned by billionaire Len Blavatnik - for 570 million and will allow Universal to close on its purchase of EMI.

It will only be definitive after the agreement has been examined by the Commission, before the end of the year.

To prevent Universal (subsidiary of Vivendi, of France) of having a dominant position and to limit the distortions of competition in the music sector in the EU, the EU executive had imposed the divestment of two-thirds of the turnover brought by EMI's catalogue in Europe, in particular its assets in the UK, France, Belgium, Scandinavia and the Iberian peninsula.

The Commission had also requested that the majority of assets divested should be divested to a single player, to strengthen a major label, and thus allow it to compete with Universal. Remaining assets mostly went to small labels.

SONY PIPPED AT THE POST

In order to "swipe" Parlophone, which represents major artists (or some of their albums) such as Coldplay, Blur, Tina Turner, and strengthen its position (which has jumped from 12% to 20% of market shares) Warner Music paid the price. It offered far more than the value of the label as estimated by experts (413 million), nearly half...