EU backs Universal's BMG takeover

Universal Music's takeover of BMG Music Publishing has been given the go-ahead by European Union regulators.

But Brussels warned that its "serious doubts" about the deal's effect on online music was only tempered by the firms' plans to sell some song rights.

The 1.63bn euro ($2.1bn; £1.1bn) deal will create the world's largest music publishing company.

BMG Music Publishing owns rights to songs by artists such as Coldplay, Robbie Williams and Justin Timberlake.

It is being sold by German owner Bertelsmann to clear debts.

Universal Music's owner, French media group Vivendi has described the deal as "a unique opportunity to grow our music publishing business".

Sell-off

In order to gain EU approval for the deal Universal has pledged to sell a number of important song catalogues containing successful artists including the Kaiser Chiefs, Justin Timberlake and R Kelly.

Without the sale, Universal - the world's largest music group - would have controlled more than half of the chart hits in "a number of countries", the Commission added.

Impala, the trade group for independent labels, welcomed the news, saying the decision "sends a clear message to all the majors that mergers without concessions will not be permitted".

"The independents will now assess the decision in detail to determine whether the remedies are an effective check on the market power of UniversalBMG - now the world's biggest record company and music publisher,."

Tie-ups

Moves to consolidate the industry have increased, as the shift towards customers accessing music over the internet and through mobiles means firms selling physical music have suffered lower sales.

The EC is also currently reconsidering the Sony-BMG merger - which was agreed in 2004 - following widespread objections from Impala itself.

Elsewhere, EMI - which posted a 15% drop in sales to £1.8bn earlier this week - is in the spotlight after news it has agreed to a £3.2bn takeover from private equity firm Terra Firma.

However, analysts still believe the firm may become the subject of a takeover battle.

Rival music firm Warner has long been courting the firm, in the belief that a tie-up would strengthen their businesses by giving the larger firm a greater share of the market.

http://news.bbc.co.uk/1/hi/business/6680573.stm