2007/595/EC: Commission Decision of 22 May 2007 declaring a concentration compatible with the common market and the functioning of the EEA Agreement (Case COMP/M.4404 — UNIVERSAL/BMG Music Publishing) (notified under document number C(2007) 2160)
Date: 2007-05-22
Institutions: European Commission
Subjects: Internet, audiovisual industry, competition law, copyright, economic concentration, merger control, music

L 230/12

EN

Official Journal of the European Union

1.9.2007

(Acts adopted under the EC Treaty/Euratom Treaty whose publication is not obligatory)

II

DECISIONS

COMMISSION

COMMISSION DECISION

of 22 May 2007

declaring a concentration compatible with the common market and the functioning of the EEA
Agreement
(Case COMP/M.4404 — UNIVERSAL/BMG Music Publishing)

(notified under document number C(2007) 2160)

(Only the English version is authentic)

(2007/595/EC)

On 22 May 2007 the Commission adopted a Decision in a merger case under Council Regulation (EC)
No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (1), and in
particular Article 8(2) of that Regulation. A non-confidential version of the full Decision can be found
in the authentic language of the case and in the working languages of the Commission on the website of
the Directorate-General
address: http://ec.europa.eu/comm/
the
competition/index_en.html

for Competition,

following

at

(1)

(2)

(3)

SUMMARY OF THE DECISION

This case concerns a proposed concentration pursuant to
Article 4 of Regulation (EC) No 139/2004 (the Merger
Regulation), by which the undertaking Universal Music
(Universal, USA), belonging to the group
Group Inc.
Vivendi SA (Vivendi,
acquires within the
the Council Regulation
meaning of Article 3(1)(b) of
control of the whole of the undertaking BMG Music
Publishing Group (BMG, Germany
al.) which
currently forms part of the Bertelsmann group, by way
of purchase of shares and assets.

France),

et

Universal is a subsidiary of Vivendi which is an interna-
tional media company. Its worldwide activities include
music recording and publishing. Universal
is active in
music publishing through Universal Music Publishing
Group (UMPG).

BMG is part of
which is

the Bertelsmann group (Bertelsmann)
company. BMG

an international media

(1) OJ L 24, 29.1.2004, p. 1.

(4)

(5)

comprises the worldwide music publishing activities of
Bertelsmann.

rights

in Austria,

The market investigation has revealed that in the market
the Czech Republic,
for online
Germany, Poland, and the United Kingdom as well as
on EEA-wide level the concentration would, in terms of
serious doubts, significantly impede effective competition
through unilateral effects. The commitments proposed by
the parties are, however, suitable to remove the compe-
tition concerns.

1. The relevant product markets

the

exploitation of

Music publishing is
intellectual
property rights of authors (in the following, the term
‘authors’ will be used to cover both lyricists (text) and
composers (music)). Generally, authors transfer copy-
rights of
to music
publishers and receive from the latter payments of
advances and a share of the royalties generated by the
commercial exploitation of their works.

(publishing rights)

their works

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(6)

(7)

Music publishers exploit the rights received from authors
by granting licences to right users. The users pay royalties
for the use of these musical works. Depending on the
specific types of rights, the licences are granted to right
users either by the publishers directly or via collecting
societies.

(11)

In the markets for the provision of music publishing
services to authors the market investigation has shown
that authors will continue to have a sufficient number of
alternatives to the merged entity. The merger, therefore,
the
does not create competition concerns in any of
affected markets for music publishing services to authors.

The market investigation to define the relevant product
markets confirmed that as to the exploitation of music
publishing rights, different categories of rights need to be
distinguished, i.e. mechanical rights, performance rights,
synchronisation rights, print rights and online rights.
These categories of rights apply to different forms of
use of music, e.g. mechanical rights are needed for the
recording of CDs; performance rights need to be acquired
if music is played on the radio and in bars; synchroni-
sation rights are needed if music is used in films; print
rights allow the user to produce sheet music; and online
rights are necessary in order to sell music via the Internet
rights
and mobile
therefore constitute separate markets.

telephony. These

categories of

role

rights),

the market

shown that

the merger will not have

to the exploitation of music publishing
(12) With respect
rights
the
investigation has
merger is unlikely to create competition concerns in
the markets for mechanical, performance, synchroni-
sation and print rights. In those markets, where collecting
(mechanical and
societies play a predominant
performance
a
significant effect since the collecting societies take the
pricing decisions and grant licences on a non-discrimi-
natory basis to users. In the markets where the publishers
administer
involvement of
collecting societies (synchronisation and print rights),
the market investigation confirmed that the customers
will after the merger continue to have sufficient alter-
natives to the merged entity.
is therefore unlikely
that Universal will after the merger be able to increase
prices for performance, mechanical, synchronisation and
print rights.

rights without

the

the

It

(8) With respect

to the provision of music publishing
services to authors, the market investigation confirmed
that no further distinction has to be made since the
authors normally do not use different publishers for
the categories of rights.

(9)

(10)

2. The relevant geographic markets

investigation showed that

The market
the geographic
scope with respect to the market for the provision of
music publishing services to authors, and the markets
for the exploitation of performance, mechanical, synchro-
nisation, print and online rights appear to be national.
For online rights it is likely that an EEA-wide market will
develop in the future. The exact geographic scope of all
relevant product markets can be left open since the
conclusions of the analysis are the same, irrespective of
the geographic dimension of the markets.

3. Affected markets and competition analysis

for

the

The notified concentration affects the market
for the
provision of music publishing services to authors, and
the markets
exploitation of performance,
mechanical, synchronisation, print and online rights in
several countries in the EEA as well as on EEA-wide
level. The market
the
investigation has
concentration does not lead to competition concerns in
any of the affected markets except for those for online
rights.

shown that

(13)

(14)

repertoires

for online rights,

the publishers have
In the market
recently started to withdraw their respective rights for
Anglo-American
traditional
collecting societies system. They have started to transfer
their rights to selected collecting societies acting as agents
for the individual publisher — a possibility which has
been reaffirmed by a Commission Recommendation
issued in 2005.

from the

The market investigation has shown that, following the
withdrawal, the pricing power shifts from the collecting
In this new environment,
societies to the publishers.
Universal will after the merger be able to exert control
over a large percentage of titles either via its (fully or
partly-owned) copyrights in the authors’ works or via its
rights in the individual recordings. In Austria, the Czech
Republic, Germany, Poland, and the United Kingdom as
well as on EEA-wide level, Universal would even control
50 % or more of the chart hits and thereby become a
‘must-have’ product
for all online and mobile music
services whose possibilities to circumvent Universal will
be significantly reduced by the merger.

(15)

The Commission had therefore concerns that the merger
would give Universal the possibility and the incentive to
increase prices
in Anglo-American
repertoire.

for online rights

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Official Journal of the European Union

1.9.2007

(16)

(17)

Conclusion

It therefore can be concluded that the proposed concen-
tration in its notified form would likely to lead to a
significant impediment of effective competition in the
market for online rights in Austria, the Czech Republic,
Germany, Poland, and the United Kingdom as well as on
EEA-wide level.

4. Commitments offered by the Parties

In order to remove the Commission’s concerns, Universal
committed to divest a number of important catalogues
covering Anglo-American-copyrights and contracts with
authors. These catalogues include the EEA-activities of
Zomba UK, 19 Music, 19 Songs, BBC music publishing,
Rondor UK as well as an EEA-licence for the catalogue of
Zomba U.S. These catalogues contain many bestselling
titles and several successful authors such as The Kaiser
Chiefs, Justin Timberlake and R. Kelly. Even though the
concerns only relate to online rights,
for reasons of
viability the commitments have to cover the complete

(18)

(19)

copyrights (i.e. also mechanical, performance, synchroni-
sation and print rights).

5. Assessment of the commitments submitted

The parties
significantly improved the package of
remedies twice responding to the results of two market
tests. In the light of the quality of the finally proposed
the
catalogues,
commitments remove the competition concerns.

the Commission

concludes

that

It can therefore be concluded that, on the basis of the
commitments
the notified
submitted by the Parties,
concentration will not lead to a significant impediment
of effective competition in the common market or in a
substantial part of it on the market for online rights.
Hence, the proposed concentration was to be declared
common market pursuant
compatible with the
to
Articles 8(2), 10(2) of
the Merger Regulation and to
Article 57 of the EEA Agreement.