Groups Warn Congress of Dangers In Universal Music Group-EMI Merger
Groups Warn Congress of Dangers In Universal Music Group-EMI Merger
Groups Warn Congress of Dangers In Universal Music Group-EMI Merger

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    Consumer
    Federation of America (CFA) and Public Knowledge today told key lawmakers that
    the planned merger between Universal Music Group and EMI would give the
    combined company “the power to distort or even determine the fate of digital
    distribution models.”

    In a
    nine-page letter to the leaders of the Senate Antitrust Subcommittee, CFA and
    PK noted that the combined market share would have a market share of more than
    40 percent, far above the five companies targeted by the Justice Department in
    the agency’s recent suit against publishers alleging price-fixing for e-books.

    The
    Federal Trade Commission (FTC) is reviewing the Universal-EMI deal, the groups
    noted, adding:  “Even if the FTC
    does not believe that a 40+% market share alone gives a single company the
    power to determine the life or death for these emerging models, it certainly
    makes it very easy for that company to lead the effort to do so.  With a post-merger three-firm market share
    of 90%, and with one or two companies following the lead of the dominant firm,
    the market would be vulnerable to anticompetitive harm resulting from conscious
    parallelism.”

    By
    several measures of industry concentration, the proposed merger “exceeds the
    levels” which “potentially raise significant competitive concerns” and which
    “warrant scrutiny,” the groups said, noting that the merger would move the
    market for recorded music sales from “unconcentrated” to the “moderately
    concentrated range.”

    The
    letter also discussed music pricing, arguing that prices are still too high for
    consumers and disputing the notion put forward by the industry that price
    pressure from “piracy” would keep the new company from exercising market power.