CMA says Sony’s $430m purchase of independent label AWAL raises competition concerns
The UK’s competition watchdog has today said the US recording giant Sony’s purchase of independent record label AWAL could lead to worse terms for musicians.
Sony bought the company, which represents artists such as Jungle, Banks, Nick Cave and the Bad Seeds, and Deadmaus for $430m back in May.
At the time, the Competition and Markets Authority (CMA) said it would investigate the deal.
Today it said that if the deal had not gone ahead Sony and AWAL could “have competed more strongly with each other in future”.
“This competition between Sony and AWAL could have benefited artists by 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.
“The CMA is therefore concerned that the loss of an innovative competitor like AWAL could, despite continued presence of the other major labels, lead to worse terms for artists and less innovation in the music sector”, it added in a statement.
Sony said the CMA had misunderstood AWAL’s market position in the UK, and called the decision “perplexing”.
Sony is one of three major labels that currently dominate the UK’s recording scene, it found in its investigation.
It also already owns independent label The Orchard, which the CMA said it was planning to expand in the coming years which could have competed with AWAL.
Sony is now required to address the CMA’s concerns within 5 working days. If it is unable to do so, the deal will be referred for an in-depth Phase 2 investigation.
Colin Raftery, senior director at the CMA, said: “The music industry forms an important part of the UK’s flourishing entertainment sector, and it’s essential that distributors continue to compete to find new and creative ways of working with artists.
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.”
In a statement, Sony said: “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.
“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.”