Following on from recent reports of regulators clearing Universal’s $2 billion purchase of EMI in Europe, the Australian Independent Record Labels Association (AIR) has slammed the Australian Competition and Consumer Commission’s decision not to oppose Universal Music’s acquisition of the EMI group.
A statement released on AIR’s website yesterday expresses their disappointment with the ACCC, who have effectively approved Australia’s biggest record label to buy Australia’s fourth biggest. The combined might of Universal and EMI will result in control of more than 50% of the market and will result in decreased musical diversity and consumer choice.
AIR believes that the merger will see Universal’s market power exert undue influence on fledgling digital business models, as well as increased control of access to the digital and physical market through the media – creating a stranglehold that makes the already difficult market for independents an even bigger struggle.
While the ACCC has made its decision in close liaisons with international competition regulators, (including the New Zealand Commerce Commission, the European Commission and the Federal Trade Commission), throughout the investigation of the proposed acquisition, they failed to communicate with several key parties opposing the merger.
The worrying fact that there has been no talk of local divestment strategies or remedies is a further reason to be deeply concerned for the welfare of the Australian independent music industry.
AIR’s General Manger Nick O’Byrne states that not even global remedies will sufficiently address the Universal’s market dominance through catalogue ownership, distribution and business practices specific to Australia.
“The ACCC needs to enforce territory specific concessions and divestments to ensure fair competition in Australia,” O’Byrne says. “What is even more galling is that the ACCC has not waited to see the outcome of merger reviews and potential divestments in Europe and the USA before making this announcement.”
David Vodicka, the Chairman of AIR and the independent label representative on boards of the PPCA and ARIA further believes, “The result will be dominance of both media outlets and consumer spaces by Universal Music, stifling the development of new businesses that don’t adhere to Universal’s requirements, and ultimately less choice for consumers.”
Charles Cadas, CEO of global rights agency Merlin, who represents an important clique of independent labels, issued a statement saying: “The ACCC’s decision is incomprehensible to me, and marks a terrible day for Australian music consumers.”
“If this transaction goes through unchallenged,” says Cadas, “we can only see those consumers facing less choice, higher prices, and less comprehensive digital offerings than they should be entitled to enjoy.” The Merlin CEO adds that his agency sent submissions to the ACCC, as well as the European authorities, raising their serious concerns about the impact of the Universal/EMI transaction, but were largely ignored.
“Given the fact that the European Commission, based on those same arguments, came up with an extensive statement of objections to the merger, I am astounded that the ACCC has seemingly blindly waved this through, ignoring the interests of consumers in favour of the most dominant player in the market,” said Cadas.
The ACCC has yet to respond to the criticisms from AIR and its associates about their responsibility in challenging the merger, or conversely, their decisions for allowing it to pass without intervention, but have made their assessment of the merger available for public view on the Government’s web page.
Most disconcertingly, this news arrives just as AIR is celebrating the success of independent Australian music and arts with the announcement of its list of nominations for the 2012 Independent Music Awards.
The likes of Melbourne musical lothario Chet Faker, Brisbane pop mavericks Ball Park Music, and superstar MC 360 leading the list of nominees; alongside an impressive list of Australia’s most loved musicians, many who will be performing on the night and celebrating independent music.
In related news, AIR announced earlier in the month that along with regular presenting partner Jagermeister, that Virgin Australia would be taking flight with the awards ceremony. The airline joining the list of partners that includes music station Channel [V] and the support of DMG’s Nova radio network (recently bought up by media mogul Lachlan Murdoch) in rewarding the country’s highest achieving independent artists across all genres.
UPDATE 19th September @ 5pm: Universal Music Australia have issued an official response to The Music.
“We are pleased that the Australian Competition and Consumer Commission has cleared Universal Music’s proposed acquisition of EMI with no objections. This follows similar clearances in Japan, Canada and New Zealand.”
“Our investment in EMI will create more opportunities for new and established artists, expand music output and consumer choice, and support new digital services. We welcome the Commission’s decision and are working closely with regulators in Europe and in the US to obtain further clearances.”
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