The European Commission may hinder or entirely block the proposed link-up of America Online, Time Warner and EMI, according to documents viewed by the Wall Street Journal.
Commission antitrust officials fear the merger of AOL and Time Warner, and in particular a proposed joint venture between Time Warner and music group EMI, could lead to dominance of the music market both online and offline, the paper reported. The Journal cited confidential statements of objections given to parties with an interest in the antitrust review.
In the documents, EC regulators criticised the companies' potential to dominate emerging online delivery systems for information and entertainment programming, and noted that the EMI-Time Warner venture would reduce the number of major music publishers from five to only four, the Journal reported.
Time Warner-EMI would have the market power to raise prices without losing substantial market share, and could "lead to a substantial increase in the ability and incentive of the majors to proceed to anticompetitive parallel behaviour in the market for recorded music", the EU commission wrote, according to the Journal.
EMI is the world's largest music publisher, and AOL is the world's largest Internet service provider, with 27 million subscribers.
The companies are expected to meet with the EC soon and propose remedies to allow the mergers to go ahead. The commission is expected to rule on both deals in October.
Disney has also voiced objections to the AOL-Time Warner merger.
The European Commission is currently reviewing the antitrust implications of Microsoft's position in the server market and key US telecoms regulations, among other matters. The commission is also involved in setting the deadline for British Telecom's local loop unbundling process.
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