INDIES VOICE CONCERNS
OVER MERGERS

Independent music companies have called on the European Commission to impose strict conditions on proposed mergers like the AOL-Time Warner deal, in order to ensure the digital delivery market for music is not controlled by a small number of big players.

"The acquisition and concentration of large music catalog by a few dominant delivery operators poses a threat to consumers' choice and the economic viability of independent production and distribution," said Michel Lambot, chairman of Impala, the independent music companies' association.

The EC is currently reviewing the AOL-Time Warner merger as well as the Warner Music Group-EMI deal. It is also expected to voice opinion on Vivendi's purchase of Seagram.

But independent music companies including the U.K.'s Beggars Banquet and Dutch Roadrunner, fear the consolidation in the industry could lead to a few big players dictating the terms for online music distribution at a global level.

In Impala's submission to the commission, the association says the big players "will be able to destroy or affect the value of music by exercising predatory pricing or by using music as a loss leader to attract new subscribers thus undermining the market value of music."

"Music is the battleground for all digital content distribution and as we move into broadband it will impact on how video and broadcast are delivered," Impala said.

The independents say the Internet gives them a chance to compete with the major record labels on distribution as it reduces transaction costs. "It represents a fantastic democratization of opportunity," the companies say. But this could be at risk if a few mega-companies are allowed to develop and have the effect of "foreclosing the market and eliminating competition," they say.

Impala is not calling on the Commission to block the mergers, but to impose strict undertakings on the companies as the price of clearance.