EU Decision Expected Today on Vivendi-Seagram Merger

The European Commission will decide today whether to approve, with conditions, the proposed merger between France’s Vivendi and Canada’s Seagram Co. or take it to an in-depth four-month probe.

The $34-billion merger would combine Seagram’s entertainment assets, including Universal Pictures and large music holdings, with Vivendi’s growing telecommunications and Internet infrastructure.

In response to reports that the deal would be subjected to further scrutiny, officials said the commission had not yet made up its mind.

“With regard to certain media reports published today, . . . the spokesman for EU Competition Commissioner Mario Monti wishes to clarify that the commission has not yet decided whether to approve this operation in the first phase or to open a second-phase examination,” spokesman Michael Tscherny said in a statement.

He said the decision would be made by the end of the day today, “which is the deadline foreseen by the merger control regulation,” he added.

EU sources said officials from the companies had met Thursday with the commission’s Merger Task Force in a last-ditch attempt to win its blessing for the deal, suggesting today’s ruling could still go either way.

Competition lawyers said they expected the deal to get the go-ahead without further scrutiny, but media reports had suggested an extended investigation would be opened even though the merger was unlikely to be stopped altogether.

The commission, the competition watchdog for the 15-nation European Union, wants to prevent the new group, to be called Vivendi Universal, from discriminating in favor of Seagram-owned music on Vivendi’s Vizzavi mobile Internet portal joint venture with Vodafone Group.

Independent filmmakers are also concerned about exclusive agreements between Seagram’s Universal Studios and Vivendi’s pay-TV unit Canal Plus, which will also be merged into the new group.

“Bear in mind that Canal Plus is Europe’s biggest pay-TV company and that it is dominant in France, Spain and Italy,” an EU source said.

The commission’s deadline to rule on the deal was extended earlier this month after the companies offered concessions to assuage competition concerns, and most analysts thought the offers were sufficient to win the commission over.

Vivendi and Seagram pledged not to favor Seagram’s Universal Music on the Vizzavi service and attempted to assure regulators that Canal Plus would not have preferential access to Universal Studios’ film output.