Anticipated acquisition by Centenary Music Holdings Limited of the Sanctuary Group plc

Affected market: Music recording, music publishing

No. ME/3103/07

Please note that the full text of the decision can be downloaded by using the link on the right. What follows are extracts regarding the parties, the transaction, jurisdiction, third party views, assessment and decision.

The OFT's decision on reference under Section 33(1) given on 20 July 2007. Full text of decision published 16 August 2007.

Please note that square brackets indicate figures or text which have been deleted or replaced with a range at the request of the parties for reasons of commercial confidentiality.

PARTIES

Centenary Music Holdings Limited (Centenary) is wholly owned by Universal Music Group (Universal) which is in turn 100 per cent controlled by Vivendi SA (Vivendi). Centenary is an international media company and its world-wide activities include music recording and publishing. Universal is active in music publishing through Universal Music Publishing Group (UMPG).

The Sanctuary Group plc (Sanctuary) undertakes a wide variety of merchandising and music activities. Sanctuary's UK turnover for the year ended 30 September 2006 was £ 54.9 million.
 
TRANSACTION

Centenary proposes to acquire the entire issued and to be issued, share capital of Sanctuary. This anticipated transaction was notified by way of merger notice, on 19 June 2007. The statutory deadline expires 31 July 2007.

JURISDICTION

As a result of this transaction Centenary and Sanctuary will cease to be distinct. The transaction satisfies the share of supply test under section 23 of the Enterprise Act (the Act) as the parties' combined share of supply in the UK for music publishing and recorded music exceeds the 25 per cent threshold. The OFT therefore believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation.

This transaction has also been notified to the competent authorities in Australia, the USA, Austria, Germany and Spain and has been approved in all of these jurisdictions.

THIRD PARTY VIEWS

While some third parties submitted that Universal was a major player in music publishing and recorded music, most respondents thought that the parties' activities were largely complementary and that the transaction would have very little (if any) effect on competition.

ASSESSMENT

The parties overlap in the supply of music publishing and music recording in the UK. Their joint post-merger shares, depending on the segment considered range from [20-30] per cent to [45-55] per cent. However, all increments resulting from the transaction amount to less than 2 per cent.
 
Post-merger other majors and independents will continue to constrain the merger entity. The increment to share of supply is considered to be very modest and third parties confirm that it will have little (if any) effect on competition.

Consequently, the OFT does not believe that it is or may be the case that the merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.

DECISION

This merger will therefore not be referred to the Competition Commission under section 33(1) of the Act.

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