House Subcommittee Wades Into the Universal-EMI Deal

By BEN SISARIO

The Universal Music Group's proposed $1.9 billion takeover of EMI Music, already under close scrutiny by regulators in the United States and Europe, is facing additional pressure from a subcommittee in the House of Representatives.

On Tuesday, the top Republican and Democrat on the House Judiciary Subcommittee on Intellectual Property, Competition and the Internet sent a letter to executives at Universal and two other major labels, asking pointed questions about how the merger would affect competition in the music industry.

Universal is already the world's largest record company, with about a 30 percent share of the global market for recorded music. If it absorbs EMI's labels, it would have at least 40 percent, and up to 50 percent in some markets in Europe. Opponents of the deal say that such a share would, among other things, give Universal too much power to set prices and terms for digital-music services.

To all ay the concerns of the European Union, Universal has offered to sell as much as two-thirds of EMI's holdings in Europe, but it has not made any such concessions in the United States or elsewhere.

The House letter, signed by Robert W. Goodlatte, a Republican from Virginia who is chairman of the subcommittee, and Melvin L. Watt, a Democrat from North Carolina who is the ranking minority member, takes a tack similar to one taken at a Senate subcommittee hearing in June, asking whether the music industry “has unique characteristics that may increase or reduce concerns” about the merger; how competition and innovation in digital music would be affected by the deal; and whether piracy and “powerful buyers, like Apple” would constrain Universal's added power.

In a statement, Universal said: “We welcome the opportunity to answer any questions that the subcommittee may have. The global music market has been in decline for over a dec ade and it needs well invested music companies to continue to create and nurture artistic talent alongside a strong and growing independent sector if it is to thrive.”

The letter was sent to Universal, EMI and the Warner Music Group, which has opposed the deal because it would result in what Warner's former chief executive, Edgar M. Bronfman Jr., has called a “super-major.” A copy of the letter was provided to The Times by a spokeswoman for Mr. Goodlatte.

Like the Senate panel, the House committee has no power to block the merger. But its involvement puts pressure on Universal and on the Federal Trade Commission, which is reviewing the merger.

Earlier this month, the heads of the Senate subcommittee on antitrust issues - Herb Kohl, a Democrat of Wisconsin, the chairman, and Michael S. Lee, a Republican of Utah who is the ranking minority member - wrote to the F.T.C., saying that the deal “presents significant competition issues” and asking the age ncy to examine it closely.

The Universal-EMI merger has already been approved without concessions in New Zealand and Japan, and last week it was also given the thumbs-up by regulators in Canada.

Ben Sisario writes about the music industry. Follow @sisario on Twitter.