European Commission OKs BMG/Zomba Deal

The European Commission has given the green light to Bertelsmann's proposed $3 billion acquisition of Zomba Music Group. The approval follows Zomba's announcement in June that it had exercised its "put" option with BMG, effectively requiring the German major to buy the remaining shares it did not own in Clive Calder's company (Bulletin, June 11). BMG has held a 25% stake in Zomba's publishing business since 1991; in 1996, BMG exercised a "call" option to acquire 20% of Zomba's recording business.

The EC, which received notification of the proposed deal on July 29, says the transaction would not violate competition rules in the markets for music recording, distribution, and music publishing. The linkup, says Brussels, would create "relatively small increases" of BMG's market share in recording and distribution but "will not significantly alter the competitive structure of the European music market."

With regards to music publishing, Brussels says the merger would result in only "small accretion in BMG's market shares, since Zomba has limited operations in this sector."

In recent years, Brussels regulators rejected a proposed merger between EMI and Warner Music Group (Bulletin, Oct. 6, 2000); BMG and EMI subsequently scrapped a proposed merger over concern of regulatory hurdles (Bulletin, May 2, 2001).

Brussels also says the merger would not radically alter Zomba's two chief markets, Germany and the U.K. In those territories, Universal remains market leader, and EMI's share is similar to that of the combined BMG and Zomba.