EU Set to Reject Time Warner, EMI Music Deal

The European Commission is prepared to reject a merger of the music units of EMI Group and Time Warner Inc. because the companies haven’t yet allayed concerns they would stifle competition.

The commission has drafted a preliminary decision to block the merger, which would create the world’s top music company, a European Union official said. The companies will meet Monday with EU Competition Commissioner Mario Monti. They have until Tuesday to offer more concessions that might persuade the commission to revise its decision, the official said.

Time Warner spokesman Ed Adler on Friday backed away from the company’s statement last month that it expected to close the transaction this year. He declined to say whether Time Warner was still optimistic the EMI combination would ultimately win antitrust approval or offer any predictions. “We are still in discussions” with the EU, he said.

“It might be difficult,” to get approval, said Bertold Baer-Bouyssiere, an antitrust lawyer at Coudert Brothers in Brussels, who isn’t involved in the case. “The commission is still worried about collective dominance.”

The companies had already tried to gain support for their merger by promising not to withdraw from collecting societies, the organizations that set song prices and collect royalties. They also pledged not to have agreements favoring their own content and discriminating against rivals.

Time Warner shares fell $1.13 to close at $79.81 on the New York Stock Exchange.