On 11 January 2013, the European Commission published the non-confidential version of the commitments in the Universal Music Group / EMI merger. The case is noteworthy since the merger would bring together two of the four "major" record companies, with only three remaining. Furthermore, Universal agreed not to use the "Most Favoured Nation" clauses in its favour in any new or renegotiated contract for ten years.
Universal Music is part of the international media group Vivendi and is the largest music recording company in the world. EMI belongs to the top four companies in the recorded music business. On 17 February 2012, Universal notified the Commission of its intention to acquire the recorded business of EMI. On 23 March 2012, the Commission decided to open a Phase II investigation. In its Phase II investigation the Commission focussed on the markets for the wholesale of digital music where record companies license their music to digital retailers such as Apple, Amazon, Spotify and mobile network operators such as Vodafone.
The Commission found that the merger would likely result in increased licensing costs, particularly for smaller platforms that offer innovative ways for customers to buy and listen to digital music. The Commission was especially concerned that innovative digital platforms could be hampered in their ability to expand or launch new music offerings. This would ultimately lead to reduced consumer's choice for digital music, as well as cultural diversity in the European Economic Area ("EEA").
To address the Commission's competition concerns, Universal offered to divest significant assets. The divesture package includes, among others, EMI Recording Limited which features famous artists such as Coldplay, David Guetta and Pink Floyd. Furthermore, Universal agreed to divest EMI's 50 percent stake in the popular "Now! That's What I Call Music" compilation and to continue licensing its repertoire for that compilation over the next ten years. Universal also committed to not including the "Most Favoured Nation" clauses in its favour in any new or renegotiated contract with digital customers in the EEA for ten years. Such clauses oblige digital customers to extend any favourable term granted to Universal's competitors to Universal. As a result, competitors will be able to negotiate more freely with digital customers. The Commission believes that this commitment will help to reduce licensing costs.
As part of the remedies package, Universal has committed to sell the assets to purchasers that are either already active as a record company or have a proven track record in the music industry, which would exclude private equity and other bidders.
