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EU to probe music deal
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June 15, 2000: 3:21 a.m. ET
Regulator fears Time Warner/EMI may dominate recorded music market
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LONDON (CNNfn) - European regulators will carry out a full investigation of the proposed $20 billion combination of EMI and Time Warner's music business, fearing the deal might reduce competition in the market for recorded music and music over the Internet.
The European Commission, the Brussels-based executive arm of the European Union, announced late Wednesday that it would extend its initial enquiries into the combination. A full investigation gives the Commission four months to probe the implications of a deal.
In January the two firms unveiled plans to unite their music operations in a joint venture. The Commission's competition directorate expressed concerns that the deal would mean 80 percent of the music market in Europe would be controlled by just four companies: Time Warner/EMI, Seagram's Universal Music, Bertelsmann Music Group and Sony Music.
The regulator also warned that the new firm would be by far the world's largest music publisher, and might become dominant in this field.
The Commission's third worry was that Time Warner/EMI might dominate the digital delivery of music, via the Internet. The Commission specifically referred to Time Warner's pending merger with Internet company America Online (AOL: Research, Estimates). The Commission is investigating that merger separately, and has until June 19 to decide whether to deepen its enquiry.
EMI has a roster of artists that includes The Beatles, Spice Girls and Garth Brooks, while Warner Music's artistic lineup includes Cher and REM.
In a statement the Commission said it had received complaints about the impact of the EMI deal from "a number of customers, competitors, trade associations and consumer associations".
After a transaction is announced the Commission has a month to decide whether it warrants further investigation. The Commission has the right to veto deals - for example Volvo's attempted acquisition of fellow truck maker Scania earlier this year - or impose conditions such as the sale of various units before allowing a merger to proceed.
Time Warner stock closed at 77, up 1-3/4 Wednesday in New York, while EMI (EMI) shares rose 19.5 pence to 650 pence in London trade. 
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