The European competition commission had expressed concerns that a combination of AOL, Time Warner and EMI could dominate the market for the digital distribution of music. AOL and Time Warner had already undertaken to not discriminate against rival service providers in on-line music distribution for a period of five years.
The commission has to make its formal decision on the Time Warner/AOL deal by 24th October, although reports suggest the decision is likely to be made at a meeting next week. It is possible for Warner Music and EMI to now submit a fresh proposal on different terms. The companies have already said they will continue discussions with each other, the European competition commission and other regulators in an attempt to regroup and get the deal through.
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.