The Competition & Markets Authority (CMA) has referred the acquisition by Sony Music Entertainment of AWAL and Kobalt Neighbouring Rights for an in-depth investigation.
Last week, the CMA announced its findings that the deal raised competition concerns.
To avoid a phase two investigation, Sony was obliged to address the CMA’s concerns within five working days. Today’s announcement of an in-depth investigation means that the major has opted not to suggest remedies at this stage.
The independent inquiry panel will now conduct an in-depth investigation to assess if the merger has resulted in a substantial lessening of competition.
“AWAL is an important emerging player, widely recognised for its innovative business model,” said the CMA in last week’s statement. “It is one of the few suppliers outside the major labels that has succeeded in gaining a meaningful foothold in the market and has grown significantly in recent years.”
In a statement responding to last week’s findings, Sony Music Entertainment 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.”
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