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EU lets Universal gobble up EMI, but it must spit out certain chunks

Also must hurl forth Cliff Richard, Coldplay and Kylie

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The European Commission has finally allowed Universal's acquisition of EMI Music to proceed. Universal Music, the world's largest record company, must shed some acquisitions as part of the deal.

And so, Universal has agreed to jettison Parlophone, which is home to a list of stars including David Bowie, Pink Floyd, Duran Duran, David Guetta, Lily Allen, Coldplay, Kylie Minogue and, this won't be easy, Cliff Richard. The Mute label will also be divested. More importantly for the digital music sector, Universal has agreed not to insert a "most favoured nation" clause in any new or renegotiated contract with a digital music service for ten years.

Universal, owned by Paris-based media goliath Vivendi, must also get shot of EMI's classical labels, its French labels, and EMI's 50 per cent stake in Now! That's What I Call Music.

European Commissioner Joaquin Almunia said the new Universal would have a 37 per cent market share in Europe.

Indie trade group Impala welcomed what it called "truly swingeing commitments" by Universal, but said it "reinforced a powerful duopoly".

Beggars Group chairman Martin Mills added: "Even with these divestments their ability to dominate and control the market has reached even more unacceptable levels. Anyone trying to start a new digital service will be realising that very soon, and we will continue to look to the regulators to monitor ongoing behaviour.

"We will consider our options with our lawyers as soon as the full decision is published. In the meantime, it is vital that the divestments process balances the market and maximises competitive forces to the duopoly."

So it might not be over until it's over. In 2006, Impala successfully challenged a decision by the commish to approve the Sony-BMG merger in the European Court of First Instance - and overturned the decision. This time the commissioner took rather more time examining competition issues than former competition head Mario Monti. ®

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