EC USES THE "O" WORD

Under the EC's Merger Regulation, the extension is up to four months.

In a statement in response to the extension, EMI said it "always anticipated the possibility that the European Commission would want more time to consider the proposed joint venture than the initial one-month review would allow." EMI said it would continue to work with the commission towards clearance, and it is confident that the combination will be approved and that any concerns raised by the commission will be addressed.

"The recorded music and music publishing businesses are highly competitive, where success is solely dependent upon whether consumers like your music—not how big you are," said Roger Paxson, Executive VP, EMI, who estimated that the joint venture would have less than 30% of the Euro recorded-music market and less than 15% of the Euro publishing market.

Sensing possible trouble on the publishing end of the deal, EMI said neither it nor WMG, individually or together, can determine the price for over 90% of their revenues, since collecting societies, not music publishers, set royalties and ensure fair access to all potential users.

The EC's decision to initiate a four-month investigation of the merger comes after several trade associations, including the Swedish Society of Popular Music Composers, raised concerns that the deal would make it difficult for small record companies to sign up and distribute new artists.

"The focus of the Commission's investigation is likely to be on recorded music and music publishing, as well as digital delivery of music via the Internet," said a two-page written statement released by the Merger Task Force. "The merger will lead to an oligopoly of four firms controlling some 80% of the market concerned in the European Economic Area," the document states.