Universal set to spin off label to meet EU rules in EMI takeover

UNIVERSAL Music is planning to sell British label Virgin Records in order to comply with EU regulations following the music publisher’s £1.2bn deal to buy record label EMI.

Virgin, which has been owned by EMI since Sir Richard Branson sold the record company for £560m in 1992, is included in the takeover agreement, but competition concerns have forced Universal to spin off the label.

The European Commission said Universal’s purchase of EMI threatens to “reduce competition in the recorded music market”.

Universal, the world’s biggest record label, would control 40 per cent of the European music market in Europe if the deal goes through, a level considered anti-competitive.

The business, owned by French media conglomerate Vivendi, won the bid for EMI last year but last week Brussels warned that a takeover could be vetoed if a solution is not offered.

Universal will present its proposals later this week before the EU makes its decision on 8 August.

The label needs the deal to go through because it has already agreed to pay £1.2bn to EMI’s owner Citigroup, whether or not the purchase is approved.

If the acquisition is scuppered and EMI is sold for less to another bidder, Universal will have to make up the difference.

Virgin Records was formed by Branson in 1972, and now operates as Virgin Music in many countries including France, Germany and Britain. Artists on the label include Joss Stone and Bryan Ferry.

Universal did not comment.