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EMI Purchase Expands Music Distribution, Grainge Says

Universal Music Group’s chief executive officer said its bid for EMI Group’s recorded music business would expand digital distribution of songs. Opponents of the deal said the combination would lead to fewer consumer choices.

Universal, owned by Vivendi SA, wants to boost EMI’s sales by finding new methods of selling its music on the Internet, said Lucian Grainge, Universal’s chairman and chief executive officer, in a statement prepared for a Senate hearing today.

Universal is “embracing distribution via the broad range of emerging technologies,” Grainge said in the statement. “I look forward to reinvigorating EMI’s labels with Universal’s resources, expertise and innovation.”

Music industry executives, including opponents of the deal, are scheduled to answer questions today from the Senate Judiciary antitrust subcommittee about the proposed acquisition. The Federal Trade Commission is investigating the proposed purchase of London-based EMI for antitrust violations, and Congress plays no formal role in that decision.

Universal is seeking to buy EMI’s record labels, home to Katy Perry and Coldplay, for 1.2 billion pounds ($1.88 billion). The combined company would control 41 percent of the recorded music market, according to Public Knowledge, a Washington-based consumer group that opposes the deal.

A combined Universal-EMI would have the power to negotiate higher royalty rates from digital distributors, hurt distributors by withholding music, and increase consumer prices, said Edgar Bronfman Jr., director of Warner Music Group Corp., in a statement prepared for the hearing.

“Because of the way digital rights are negotiated, one firm, Universal/EMI, would be in a position to pick winners and losers among digital music services,” Bronfman said.

Universal said on June 19 it received an antitrust complaint on the deal from European Union regulators. The European regulators have a Sept. 6 deadline to rule on the planned acquisition.

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