Universal’s proposed acquisition of EMI creates “an unfair method of...
Universal’s proposed acquisition of EMI creates “an unfair method of competition” that constitutes “an unreasonable restraint on trade,” because it will “substantially lessen competition” and “likely enhance market power,” two consumer groups said Thursday. In a joint “detailed” report filed…
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with the FTC, the Consumer Federation of America and Public Knowledge said the proposed combination creates a highly concentrated market by eliminating one of the only four major record labels. The deal “results in an increase in concentration across every major product market,” including current and catalogue CDs, digital albums and digital singles, that’s “five times the level that the DOJ/FTC identify as cases of concern,” they said. “In simple terms, the post-merger firm would have a strong incentive and increased ability to exercise market power to undermine, delay, and distort new digital distribution business models, in a market that has been a tight oligopoly for over a decade,” said Mark Cooper, CFA’s director of research and co-author of the report. “The FTC must take steps to prevent the severe harm to competition and consumers.” The report rejects Universal’s claims that piracy will prevent the abuse of market power, citing “consumer purchasing behavior, estimates of elasticities of demand by academics, and marketing research conducted by the music industry.” The report says the industry has “chronically and grossly overestimated the role of copyright infringement in the development of digital distribution."