Sony Music's $430M buyout of awal provisionally cleared by UK competition watchdog

Sony Music Entertainment couldn’t have asked for a better start to the weekend.

Today (February 11), the UK’s Competition and Markets Authority (CMA) has confirmed its provisional decision over Sony‘s $430 million buyout of AWAL – and it’s given the deal the green light.

The approval concludes a months-long investigation into SME’s acquisition of AWAL from Kobalt Music Group in early 2021.

In a statement issued on the AWAL buyout today, the CMA said: “Having examined the merger, the CMA has provisionally concluded that the deal does not substantially reduce competition in the UK and may not be expected to do so in the future.”

Margot Daly, Chair of the independent CMA Inquiry Group, commented: “We have carefully assessed whether this merger will lead to negative outcomes for the market, artists and, ultimately, music fans, now and in the future. Our provisional finding is that the deal is not likely to affect competition in a way that will reduce the choice or quality of recorded music available, or increase prices.

“We think that a combination of other major labels and independent providers will continue to closely rival Sony, so our provisional decision is to clear the merger.”

The CMA is now asking for views on these provisional findings by 4 March 2022 and will assess all evidence provided before making a final decision on or before March 17.

Sony Music said in a statement today in response to the CMA’s announcement: “Sony Music Entertainment welcomes the CMA’s provisional determination that its acquisition of AWAL raises no competition concerns and, in doing so, its recognition of the competitive and dynamic nature of the UK music market.

“Our investment in AWAL will deliver real benefits for artists and consumers, amidst intense competition at every level of the music industry.

“We look forward to continuing to work with the CMA throughout the final stages of their review.”

In February last year, MBW broke the news that Sony Music was to acquire AWAL and Kobalt Neighbouring Rights (formerly Kobalt Neighbouring Rights), in a joint deal from Kobalt Music Group.

Sony Music then confirmed three months later that it had officially completed the acquisition of the two companies for $430 million.

In the same week, the UK’s competition authority announced that it was opening an investigation into the buyout.

Things didn’t start well for Sony: In September last year, the CMA announced that it had decided to elevate the investigation into the AWAL acquisition from ‘Phase One’ into the more serious ‘Phase Two’.

The CMA then showed the world just how serious ‘Phase Two’ could get for multi-nationals: In November, it ruled that Facebook (aka Meta) must sell one of its recent acquisitions, the animated image database Giphy.

At the core of the concerns over Sony’s buyout of AWAL expressed by the CMA was that the deal “could lead to worse terms for artists and less innovation in the music sector”.

Sony rebutted that AWAL only had a “small share” of the global distribution market.

In an October filing with the CMA, Sony Music wrote: “Even after AWAL’s re-launch in 2017/18, it is still a small player and faces competition from a multitude of other A&L and DIY providers, including Believe, BMG, CD Baby, DistroKid, Ditto, PIAS, and Tunecore.”