◎英國競爭與市場管理局 (CMA) 宣布，Sony Music對經銷商 AWAL 的收購“引發了競爭擔憂”。在宣布以 4.3 億美元收購 Kobalt之後，CMA 在今年早些時候啟動第一階段調查，結果已經公佈。高級總監 (Colin Raftery)擔心這筆交易可能會減少該行業的競爭，可能會使英國許多音樂藝人的交易惡化，並導致整個行業的創新減少。
◎CMA 認為交易的鄰接權部分沒有任何問題。不過，它的聲明為其對Sony Music收購 AWAL 的擔憂提供了更多背景。CMA調查發現的證據顯示，如果交易沒有進行，Sony和 AWAL 將來也可以相互競爭”。“AWAL 有能力在未來幾年進一步發展其業務。還有證據顯示，Sony打算擴大 The Orchard 的產品範圍，更關注新興的小藝術家群體，這將使其與 AWAL 展開更多競爭。”CMA 還表示，競爭本可以讓藝人“改善與分銷商的交易條款，有可能讓他們保留更多的收入份額，並擁有更多的音樂權利”。
◎Sony現在有五天時間對 CMA 做出回應，如果這些回應不能讓監管機構滿意，它將對該交易展開更深入的“第二階段”調查。Sony Music回應， CMA 的這一決定令人困惑，堅信這筆交易無疑是有利於競爭的，對 AWAL 的投資是持續增長和未來成功的關鍵”。“審查過這筆交易的所有其他監管機構都同意公司的觀點並迅速批准了它。公司將繼續與 CMA 密切合作，以解決他們可能遇到的任何問題。
The UK’s Competition and Markets Authority (CMA) has announced that Sony Music’s acquisition of distributor AWAL “raises competition concerns”, and has given the major label a five-day deadline to head off a full investigation of the merger.
The CMA opened a ‘phase one’ investigation earlier this year, after the $430m acquisition from Kobalt – which also included the latter’s neighbouring rights division – was announced. The findings were published today.
“We’re concerned that this deal could reduce competition in the industry, potentially worsening the deals on the table for many music artists in the UK, and leading to less innovation across the industry,” said senior director Colin Raftery.
The CMA did not see any problems with the neighbouring rights part of the deal. Its announcement offers more context for its concerns about Sony Music buying AWAL though.
“As part of its investigation, the CMA found evidence that – if the deal had not gone ahead – Sony and AWAL could also have competed more strongly with each other in future,” it claimed.
“AWAL was well-placed to grow its business even further in the coming years. There is also evidence that Sony intended to expand The Orchard’s offering, focussing more on the emerging pool of smaller artists, which would have led it to compete more with AWAL.
There are some hard figures available on that growth. In its financial year ended 30 June 2020 – the last one for which figures were published by previous owner Kobalt – AWAL’s revenues were $149.5m, up from $111.5m in the previous year.
Was it competing strongly with Sony Music in the UK? In market share terms, one would have to say not, although the better direct comparison would be to SME’s The Orchard subsidiary.
The CMA also suggested that the competition could have seen artists “improving the terms of their deals with distributors, potentially allowing them to keep a larger share of their earnings and to have more ownership of their music rights”.
Sony now has five days to respond to the CMA, and if those responses do not satisfy the regulator, it will launch a deeper ‘phase two’ investigation of the deal.
“This decision by the CMA is perplexing and based on an incorrect understanding of AWAL’s position in the UK. We strongly believe this transaction is unambiguously pro-competitive and that our investment in AWAL is key to its continued growth, and future success,” said Sony Music in a statement sent to Music Ally this afternoon.
“Every other regulatory body that has reviewed this transaction has agreed with our view and approved it quickly. We will continue to work closely with the CMA to resolve any questions they might have.”
The Sony Music / AWAL merger may end up being cleared, but the CMA’s phase one findings will nevertheless send shockwaves through the British music industry.
Why? Well, consider the recent report of the UK’s parliamentary inquiry into the economics of music streaming. One of its recommendations was that the CMA should investigate “the economic impact of the majors’ dominance”.
During that inquiry, Sony Music’s UK boss Jason Iley talked about the importance of competition from distributors when defending his company – and major labels more widely – against accusations of market dominance.
“If an artist does not want to sign to Sony, they have a choice, and if they wish to earn more of that revenue, they can sign to a distribution company,” he said when giving evidence. A few weeks later, the AWAL deal was announced.
The inquiry report recommended a referral to the CMA for an investigation, but that has not yet happened.
However, the regulator’s initial decision on the Sony Music / AWAL merger, and specifically talk of “worse terms for artists and less innovation in the music sector”, are a pointer that any wider probe into the major music companies may not go well for them.
Keen between-the-line readers will note that the fifth point in the notes to editors of the CMA’s decision today explicitly refers to the inquiry: “In July, the House of Commons Select Committee on Digital, Culture, Media and Sport published a report raising concerns about the strong position of the major music groups and its impact on artist remuneration.”
Let’s not get ahead of ourselves though. We await Sony Music’s response to the phase one decision, after which the CMA will then have its own five-day deadline to decide whether to “accept any offer” made by the major label, or refer the case to a phase two investigation.