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.
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.