Music industry

British watchdog concerned about Sony takeover of Little Simz label | The music industry

Britain’s competition watchdog has raised concerns over Sony Music Entertainment’s $430m (£312m) deal to buy AWAL, the artist services company that released music artists such as Little Simz, Nick Cave and the Bad Seeds and Billie Eilish’s brother and collaborator, Finneas.

The Competition and Markets Authority (CMA) said distribution of recorded music in the UK was dominated by three big groups – Universal Music, Sony Music and Warner Music – and the deal could lead to worse chords for musicians. If the deal had not gone through, AWAL could have continued to be an important alternative competitor, the AMC said.

Independent artist and label service providers, such as AWAL, offer streamlined support and a “do-it-yourself platform” for musicians that allows artists to retain ownership of their music and a higher percentage of royalties.

“We fear this deal will reduce competition in the industry, potentially putting deals on the table for many artists in the UK and leading to less innovation in the industry,” said Colin Raftery, Senior Director mergers at the CMA. “The music industry is an important part of the UK’s thriving entertainment sector, and it’s vital that distributors continue to compete to find new and creative ways to work with artists.”

The CMA, which gave Sony five working days to come up with legally binding proposals to fix its competition concerns or automatically face a full investigation, announced it was reviewing the deal in May, a day after Sony has completed the takeover.

The competition watchdog said Sony intended to expand its own subsidiary, The Orchard, which focuses on emerging and smaller artists, which would have meant it would compete more directly with AWAL.

“This competition between Sony and AWAL could have benefited artists by improving the terms of their agreements with distributors, potentially allowing them to retain a greater share of their revenue and have greater ownership over their music rights,” said said the CMA.

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Sony Music Entertainment said it was “perplexed” by the CMA’s findings and that the deal had been approved by regulators in other markets.

“This decision by the CMA is puzzling and based on a misunderstanding of AWAL’s position in the UK,” an SME spokesperson said.

“We strongly believe that this transaction is unambiguously pro-competitive and that our investment in AWAL is key to its continued growth and future success. All of the other regulators who reviewed this transaction shared our view and quickly approved it. We will continue to work closely with the CMA to resolve any questions they may have.