UNIVERSAL MUSIC has finally won EU and US clearance for its £1.2 billion bid for EMI’s recorded music business, but only after the Vivendi-owned market leader was forced to sell off a third of the British firm behind The Beatles.

The green light yesterday ends Universal’s fraught bid for regulatory approval and sounds the death knell on EMI’s 80 years as an independent British music company, providing a home to artists from Pink Floyd to Coldplay.

While the Federal Trade Commission unexpectedly approved the deal without conditions, the European Commission imposed “stringent” terms that require Universal to dispose of two-thirds of EMI’s business in Europe.

Joaquín Almunia, the EU’s competition commissioner, said the original deal posed “very serious” antitrust problems and would have “allowed the company to impose higher prices” and stifle new digital music providers.

This strong opposition from Brussels forced Universal and Vivendi to pay a far higher price to win clearance for the deal than they had expected, including the sale of EMI’s treasured Parlophone label, home to Coldplay.

Universal will have about six months to auction EMI assets that generate annual revenues of £350 million to £400 million, with interest expected from smaller rivals such as Warner Music, Sony Music and BMG Rights Management.

In spite of the steep regulatory price, Universal said it was “delighted” at being able to retain more than two-thirds of EMI on a global basis and said it expected to lose no money from the disposals.

Most of the Parlophone, Mute, Chrysalis and Co-op labels will be disposed of, as well as associated global rights. Furthermore, in contract talks with digital music providers such as Apple or Spotify, Universal will no longer be able to demand a guarantee that it receives the best licensing terms.

While the concessions, in relative terms, represent one of the biggest sacrifices ever made to win EU antitrust approval, they still did not satisfy those rivals who wanted the takeover blocked.

Helen Smith of Impala, representing independent labels, said she was considering a challenge as consumers “will ultimately pay the price” for the deal. – Copyright The Financial Times Limited 2012