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Katy Perry Joins Kanye West: Regulators Approve Universal-EMI Deal

Universal faced fierce opposition from consumer groups and rival labels, especially Warner Music, which had aggressively pursued EMI as well

Kanye West, meet Norah Jones. Lady Gaga, meet Katy Perry.

Regulators in Europe, the United States and several other terriroties approved Universal Music Group’s acquisition of EMI on Friday, a deal uniting two of the four remaining major labels.

Vivendi SA, the French corporate owner of Universal, agreed to pay Citigroup $1.9 billion for EMI last October, and has already paid a majority of that sum.

Universal knew when it made the deal that it would be subject to rigorous competition inquiries, particularly in Europe.

Also Read: Universal's $1.9B EMI Deal: In a Digital World, Market Share Counts For Less

Universal, home to artists such as West, Gaga, Eminem, Rihanna and Justin Bieber, already holds more than 25 percent market share, the most of any label. EMI, with artists like Perry, Coldplay and David Guetta, boasts around 9 percent.

Traditional market share matters less in a music industry transformed by iTunes, Spotify, Grooveshark and piracy, but regulators still demanded concessions on Universal’s part.

It must divest hundreds of millions of dollars in assets, including EMI’s Parlophone label, home to artists such as Guetta, Coldplay, the Gorillaz and Kylie Minogue.

Though EMI’s roster of active artists is not as strong as the three larger labels — Universal, Sony and Warner — its catalog is the true gem in the deal. Again, regulators insisted on some divestitures.

Universal will get to keep the Beatles and the Beach Boys catalogs, but those of Pink Floyd and David Bowie must be sold off.

“Competition in the music business is crucial to preserve choice, cultural diversity and innovation. In this investigation, we have paid close attention to digital innovation, which is changing the way that people listen to music,” Joaquin Almunia, the European Commission’s vice president in charge of competition policy, said in a statement.

“The very significant commitments proposed by Universal will ensure that competition in the music industry is preserved and that European consumers continue to enjoy all its benefits.”

Universal faced fierce opposition from consumer groups and rival labels. Warner Music, which had aggressively pursued EMI as well, was particularly vocal in its objections.

Former Warner chairman and CEO Edgar Bronfman Jr. said in January that the deal would create a market-killing “super major” and appeared before a Senate panel in June to oppose the deal.

However, Universal was able to convince regulators that though the deal makes the biggest label even larger, it is not inimical to healthy competition. The assets to be sold represent 30 percent of EMI’s revenue, but only 10 percent of the combined companies.

“We are pleased that the Federal Trade Commission has cleared Universal Music’s acquisition of EMI with no conditions,” a UMG spokesman said in a statement. “Our investment in EMI will create more opportunities for new and established artists, expand music output and consumer choice, and support new digital services.

"With a broad array of EMI artists like Katy Perry, the Beatles, Robbie Williams, Lady Antebellum and Norah Jones, we are well positioned to grow the company and offer music fans around the world more music and more choice than ever before.”