Last week, the UK’s Competition and Markets Authority (CMA) issued preliminary approval to Sony Music’s roughly $430 million buyout of AWAL. Now, indie labels are speaking out against the decision and the overarching transaction.
Kobalt first agreed to sell AWAL (as well as Kobalt Neighboring Rights) to Sony Music Entertainment (SME) last February, and the CMA in September expressed “significant” concerns with the massive acquisition. (That same month, the competition watchdog officially concluded an investigation into Viagogo’s $4.05 billion StubHub purchase.)
And as mentioned at the outset, the CMA three days ago appeared to give the almost half-billion-dollar transaction the green light, specifying that it represents a “relevant merger situation” and won’t result in a “substantial lessening of competition.”
However, this government entity also indicated that third parties would have until March 4th to comment on the provisional findings, with a final decision on the sale set to arrive by Thursday, March 17th. Association of Independent Music (AIM) CEO Paul Pacifico was one of multiple representatives of indie labels who took aim at the CMA’s decision.
“Whilst the CMA has ruled that AWAL’s acquisition is not enough to substantially reduce competition by itself, it is part of a pattern that threatens to gradually erode competition and diversity in UK music if independent entrepreneurs continue without much-needed access to capital,” said the UK Music director Pacifico.
“Sony arguing that even a hugely successful independent like AWAL would have struggled to maintain its position alone highlights the sector’s need for better support to scale-up. Without pathways for growth for independent entrepreneurs, we can expect to see a gradual erosion of competition across the sector, damaging innovation, diversity and leading to less favourable conditions for artists,” he finished.
And in a statement of her own, longtime Independent Music Companies Association (IMPALA) executive chair Helen Smith weighed in: “It’s a provisional set of findings, so we will comment in time for the CMA’s deadline of 4 March, with their final decision due later in March. We remain concerned that this acquisition will have a negative effect on competition and of course for artists, independent music companies and consumers.
“We will read the CMA’s arguments with care and will consult our members again to get their views on the specific rationale applied by the regulator, so we can provide as useful input as possible. The case also highlights the need for the independent sector to have options when it comes to accessing finance,” concluded the former AIM director of legal and business affairs.
Needless to say, the coming weeks will reveal precisely how hard UK indie labels intend to fight against the $430 million or so sale, which would effectively bring artists like New Jersey’s The Happy Fits and Perth-based Spacey Jane under the SME banner.
In April of 2021, Sony Music dropped $250 million to acquire Brazil’s Som Livre, before taking a $100 million stake in NetEase’s Cloud Village streaming service in November. December then brought Warner Music’s over $400 million purchase of 300 Entertainment.