Competition watchdog green lights Sony Music’s £328m snap up of AWAL
The UK competition watchdog has cleared Sony Music’s $430m (£328m) acquisition of emerging music distributor AWAL.
Sony is one of the three major record labels active in the UK today, along with Warner and Universal Music Group.
In addition to its main label offering, Sony Music Entertainment, Sony also owns The Orchard, which typically covers promotion, marketing and distribution of music , also known as A&L.
Meanwhile, AWAL offers an alternative to traditional music deals by providing both A&L services and a ‘DIY platform’ that allows artists to upload their own music for distribution.
The CMA’s inquiry focused on the two main areas in which the firms’ businesses overlap. It assessed the extent to which The Orchard and AWAL may be expected to compete to provide services.
It also looked at how closely Sony and AWAL may be expected to compete to sign successful artists, and those with the potential to become successful, where higher levels of support and investment are provided.
The CMA found that, while not currently competing closely due to their different areas of focus, Sony’s The Orchard may have become a stronger rival to AWAL in the supply of artist services in future.
However, there are many other providers who will continue to compete effectively with both firms – including independent A&L companies, the A&L branches of the other major labels (like Warner’s ADA and Universal Music Group’s Virgin) and independent labels.
In terms of its rivalry with Sony, AWAL is still a relatively small player when it comes to signing artists who require higher levels of support and investment.
Despite trying to expand its offering, AWAL was expected to continue to compete with Sony only on a limited basis.
In the course of its investigation, the CMA also found that many other firms have begun providing similar services which can be expected to make up for the limited loss of competition from AWAL.
Sony Music said in a statement: “We welcome the decision by the CMA to clear Sony Music’s acquisition of AWAL and Neighbouring Rights, allowing us to focus on offering the best service for their artists, in an intensely competitive market with multiple competitors and many offerings. This is the start of an exciting new venture for SME, AWAL and Neighbouring Rights, and ensures we can continue to deliver real benefits for artists globally as the music industry continues to evolve.”
Margot Daly, Chair of the independent CMA Inquiry Group, said:
We launched this inquiry as we wanted to be sure that this deal wouldn’t lead to worse outcomes for artists and fans. The music industry is vital to the UK economy and effective competition ensures that it works for everybody.
Having carefully assessed the merger we found that it is not likely to affect competition in a way that will reduce the choice or quality of recorded music available or increase prices.