The UK's Competition & Markets Authority (CMA) has disclosed that it was investigating the recent sale to Sony Music Entertainment by Kobalt of its independent distribution service AWAL, alongside its neighbouring rights collections arm Kobalt Neighbouring Rights.
The news came as SME announced that it had completed the $430 million acquisition of AWAL/KNR. The CMA indicated in a statement that it is "investigating the completed acquisition by Sony Music Entertainment of the AWAL and Kobalt Neighbouring Rights businesses from Kobalt Music Group Limited. On 17 May 2021, the CMA has served an initial enforcement order under section 72(2) of the Enterprise Act 2002 in relation to the completed acquisition."
SME acknowledged the investigation, stating: “Prior to the closing of the acquisition, the UK Competition And Markets Authority initiated a review of the transaction. SME continues to work closely with the CMA to secure a positive outcome later this year.”
The strengthening of SME in the area of independent music distribution, a sector where it already operates The Orchard, under which AWAL will be integrated, has raised concern from the indie sector.
Paul Pacifico, CEO of the UK’s Association Of Independent Music, said the investigation will be a way to assert the real power of major companies in the field of indie distribution. “Over the last several years we have seen an incremental shift towards a music market in which a few dominant players have disproportionate influence," he said. "Each increment counts, and it is crucial to the future health of the market to ensure that all players can take part on a meritocratic basis."
IMPALA, the European body for the indie sector, has also reacted positively to the investigation. “We welcome the investigation into this acquisition as it leads to further concentration in the music market and is part of an ongoing wider move by Sony to acquire significant independent players in key markets," said Brussels-based IMPALA Executive Chair Helen Smith. "We expect the investigation to cover both the physical and also digital markets, and the impact on competitors, digital services, artists and fans, who will all lose out."
> SME said that AWAL and Neighbouring Rights will become "a new division within SME’s suite of independent artist and label services offerings and will be enhanced by the technology and network of SME’s independent music distribution company, The Orchard." SME also confirmed that Lonny Olinick would remain CEO of AWAL.
The news came as SME announced that it had completed the $430 million acquisition of AWAL/KNR. The CMA indicated in a statement that it is "investigating the completed acquisition by Sony Music Entertainment of the AWAL and Kobalt Neighbouring Rights businesses from Kobalt Music Group Limited. On 17 May 2021, the CMA has served an initial enforcement order under section 72(2) of the Enterprise Act 2002 in relation to the completed acquisition."
No additional details were given by the competition regulator.
Secure a positive outcome
SME acknowledged the investigation, stating: “Prior to the closing of the acquisition, the UK Competition And Markets Authority initiated a review of the transaction. SME continues to work closely with the CMA to secure a positive outcome later this year.”
The strengthening of SME in the area of independent music distribution, a sector where it already operates The Orchard, under which AWAL will be integrated, has raised concern from the indie sector.
Paul Pacifico, CEO of the UK’s Association Of Independent Music, said the investigation will be a way to assert the real power of major companies in the field of indie distribution. “Over the last several years we have seen an incremental shift towards a music market in which a few dominant players have disproportionate influence," he said. "Each increment counts, and it is crucial to the future health of the market to ensure that all players can take part on a meritocratic basis."
Assess the impact on competitors
IMPALA, the European body for the indie sector, has also reacted positively to the investigation. “We welcome the investigation into this acquisition as it leads to further concentration in the music market and is part of an ongoing wider move by Sony to acquire significant independent players in key markets," said Brussels-based IMPALA Executive Chair Helen Smith. "We expect the investigation to cover both the physical and also digital markets, and the impact on competitors, digital services, artists and fans, who will all lose out."
> SME said that AWAL and Neighbouring Rights will become "a new division within SME’s suite of independent artist and label services offerings and will be enhanced by the technology and network of SME’s independent music distribution company, The Orchard." SME also confirmed that Lonny Olinick would remain CEO of AWAL.
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