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Sony Corp. on Thursday, April 19, secured European Union antitrust approval for its $2.2 billion purchase of EMI Group Ltd.'s music publishing business after agreeing to sell global publishing rights to four music catalogs including works by Ozzy Osbourne and Robbie Williams.The conditional approval was expected and was granted after the Japanese electronics and media giant agreed to give up publishing rights to works included in the Virgin UK, Virgin Europe, Virgin US and Famous Music Catalog. The catalogs include several best-selling titles and the rights to works by Gary Barlow, Lenny Kravitz and Ben Harper, among others.
Sony also promised to divest the worldwide rights to the recent and future musical works of 12 contemporary Anglo-American songwriters, some of whom have future delivery obligations to the companies.
Sony is making the acquisition through Sony Corp. of America, which has teamed up with the estate of Michael Jackson, Abu Dhabi's Mubadala Development Co. PJSC, Blackstone Group LP's GSO Capital Partners LP and music and film producer David Geffen to purchase EMI Music Publishing from Citigroup Inc. in a deal agreed in November.
EU regulators found in their initial investigation that the deal as notified raised "serious doubts" concerning the ability of the merged company to control the online licensing of Anglo-American chart hits in Europe. Without any concessions, the combined company would have fully or partially owned publishing rights of more than half of the chart hits in the U.K. and Ireland.
The Commission is satisfied that the concessions offered will safeguard competition.
"Sony and Mubadala have offered to divest valuable and attractive catalogs containing best-selling titles as well as the works of successful and promising artists," EU Competition Commissioner Joaquín Almunia said in a statement.
He added: "I am therefore satisfied that the competitive dynamics in the online musical publishing business will be maintained so as to ensure consumer choice and cultural diversity."
Brussels-based trade group Impala, which represents 4,000 of music's major nonlabels and had urged regulators to block the Sony-EMI deal, criticized the ruling. "This is bad news for Europe's publishers and writers, as well as for collecting societies and any label or online service which needs to be able to rely on fair terms to use music," Impala executive chairwoman Helen Smith said.
The same group challenged the European Commission's 2004 approval allowing Sony and Bertelsmann AG to create the Sony BMG record label, leading to a re-examination by regulators after a negative court decision. The deal was ultimately approved in 2007.
The Sony-EMI deal was always seen as potentially less problematic from a competition standpoint than the November agreement to sell EMI's recorded music business to Vivendi SA's Universal Music Group for £1.2 billion ($1.9 billion). The EC is studying that deal in an in-depth probe, which has an Aug. 9 deadline.
Citigroup put the two EMI divisions on the auction block last year after seizing the record label from Guy Hands' Terra Firma Capital Partners Ltd., which had defaulted on its loans.
The combined price of the two deals exceeds the $3 billion to $3.5 billion in proceeds Citigroup had originally targeted when it announced in June that it would consider bids for the London-based music company.
Sony took legal advice on the EU and international aspects of the deal from a Cleary Gottlieb Steen & Hamilton LLP team led by Nicholas Levy and Thomas Graf and including Paul Gilbert, Richard Pepper, David Little, Esther Kelly and Ricardo Zimbron.

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