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EU Approves Universal's Purchase Of EMI

(c) Sky News 2012

Kylie Minogue, David Bowie and other prestigious artists are set to leave EMI after Universal (Frankfurt: 859669 - news) 's £1.2bn takeover was approved on condition it sells several of the recording company's labels.

Among the assets that must go is the Parlophone label, which is home to Pink Floyd, Coldplay, Lily Allen and Blur.

Universal, which is led by Londoner Lucian Grainge, must also sell a number of other assets including Mute, home to The Ramones, as well as Chrysalis (Berlin: 5CY.BE - news) , home to Depeche Mode and Moby, and its 50% stake in the Now! That's What I Call Music compilation joint venture.

The group is expected to raise between £200m and £240m from the sale of Parlophone and other smaller labels.

But Universal, which already has Rihanna and Jay-Z on its books, will retain more than two thirds of EMI on a global basis, keeping EMI artists such as Katy Perry, Robbie Williams, The Beatles and the Beach Boys, which is much more than previously thought.

The merger, which has already been given the green light in several countries, including Japan (EUREX: FMJP.EX - news) and Canada, still requires US approval.

A statement from the group said: "We remain true to our vision - to invest in talent and grow the company to offer consumers more music and more choice, while furthering our support for new digital services and entrepreneurs."

When announcing the probe in March, the European Commission warned that the deal "could reduce competition in the recorded music market to the detriment of European consumers."

The Commission said it was worried the new company would not face enough competition on prices or even illegal downloading.

It found the proposed transaction would have increased Universal's size in a way that would likely have enabled it to impose higher prices and more onerous licensing terms on digital music providers.

EC vice-president in charge of competition policy Joaquin Almunia, said: "Competition in the music business is crucial to preserve choice, cultural diversity and innovation.

"In this investigation, we have paid close attention to digital innovation, which is changing the way that people listen to music.

"The very significant commitments proposed by Universal will ensure that competition in the music industry is preserved and that European consumers continue to enjoy all its benefits."

EMI, which also owns Virgin Records, EMI Records and the Abbey Road studios, was seized by its main creditor Citigroup (NYSE: C - news) in February 2011 from private equity owner Terra Firma.