European Commission approves the acquisition of EMI Music Publishing by Sony

The European Commission has approved the acquisition of EMI Music Publishing by Sony Corporation of America. The Commission found the deal raises no competition concerns. The transaction was notified to the Commission on 21 September 2018.

EMI Music Publishing (“EMI MP”), a music publishing company, is since 2012 jointly owned and controlled by Sony Corporation of America (“Sony”) and Mubadala Investment Company PJSC (“Mubadala”), an investment fund based in the United Arab Emirates. Under the proposed transaction, Sony would now acquire sole control and ownership over EMI MP.

Music publishers exploit the copyrights of authors by granting licenses to users of music. The most common music publishing rights are mechanical rights (e.g. for recorded music), performance rights (e.g. for concerts and TV and radio broadcasting), online rights (e.g. for online music downloading or streaming) and synchronization rights (e.g. for advertisements and film music).

According to the European Commission, since 2016, the fully owned and controlled music publishing subsidiary of Sony, Sony/ATV, has been the exclusive administrator of EMI MP’s entire catalog, whereas EMI MP itself plays no role in licensing its catalog to digital platforms, or in signing and retaining authors.

European Commission says Sony already has joint control of EMI MP, so the transaction would not lead to an increase in market share in any of the markets where Sony and EMI MP are active.

The Commission looked into whether, after the transaction, Sony could threaten not to license its rights – publishing or recording – in order to extract better terms from online platforms. However, the Commission found that the transaction would not materially increase Sony’s bargaining power vis-à-vis online platforms, in particular, because:

  • Any strategy to extract better terms from online platforms to the benefit of both music publishing and recorded music would have also been in the interest of Mubadala before the merger, and therefore the merger would not change the current situation.
  • The Commission found that authors could credibly threaten to switch away from Sony if it attempted to degrade the value of their publishing rights to the benefit of its recording division.
  • Even assuming that this type of strategy would be possible and valuable for Sony, the Commission found that, on the market for the licensing of online rights in the European Economic Area, the transaction would not give rise to competition concerns, as Sony’s position vis-à-vis digital music providers would not significantly increase compared to the current situation. In fact, as is already the case today, online platforms would continue to have access to both Sony’s and third parties’ repertoire to operate in the EEA.