The Commerce Commission has cleared Universal Music Holdings Limited, to acquire the recorded music businesses of EMI Group Global Limited, to the extent that the acquisition affects markets in New Zealand.

The Commission considered the effect of the acquisition on the markets in New Zealand for the:

  • Discovery and recording of artists
  • Promotion and distribution of recorded music
  • Wholesale supply of recorded music
  • Licensing of recorded music to third parties.

Commerce Commission Chair Mark Berry said the Commission is satisfied that the proposed acquisition is unlikely to substantially lessen competition in any of the affected markets.

The Commission is of the view that the merged entity would continue to face strong competition from other major record labels and independent record labels for the discovery and recording of artists, and the promotion and distribution of recorded music. In addition, in the markets for the wholesale supply of recorded music and the licensing or recorded music to third parties, the Commission considers that large retail customers would be able to prevent the merged entity from exercising any market power by restricting access to promotions or shelf space.

 A public version of the written reasons for the decision will be available soon on the Commission's website at www.comcom.govt.nz/clearances-register

Background

Both Universal and EMI are worldwide music recording and publishing companies involved in the promotion, development and distribution of recorded music by local and international artists.

The recorded music sector is the part of the music industry that makes a record and provides it to consumers. This can involve a number of different steps including the discovery, signing and development of artists, the manufacture and distribution of physical recordings, the wholesale supply of recordings (either in physical or digital form), and the retail sale of recordings.

Assessing an application for a merger or acquisition

When considering a proposed merger, the Commission must decide whether the competition that is lost in a market when two businesses merge is substantial. We will give clearance to a proposed merger only if we are satisfied that the merger is unlikely to have the effect of substantially lessening competition in a market. A fact sheet explaining how the Commission assesses a merger application is available for download.