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Aol/Time Warner Merger Essay

646 words - 3 pages

In an era of big mergers and large corporate conglomerations, the Time-Warner/AOL merger came as no big surprise. However, it did manage to become a center of controversy as eyebrows were raised among competitors and the FCC, who thought that combining the nations largest internet providers and one of the nations largest cable networks, may violate antitrust laws. What made this issue unique, was the effect of globalized antitrust regulation. Despite the fact that both companies involved were American based, the merger faced examination by the European Commission, and could have been blocked if the Commission feared the deal could reduce competition in Europe. The reasons for argument in the United States and in Europe were for different reasons, however. The merger conflict in Europe centered around the music industry, while in the United States it focused on an antitrust law violation regarding a possible media monopoly. By looking into the case in both America and in Europe, the reasons for argument become obvious.When the Time-Warner/AOL merger come under scrutiny by the European Commission, the subject focused on the problems of one mega-corporation dominating the online music distribution market. Prior to the merger, America Online was half owned by the Bertelsmann Music Group (BMG) who also owned a smaller stake in AOL Compuserve France. Almost immediately after AOL announced the planned merger with Time-Warner, BMG's chief executive declared his resignation from AOL's Board of Directors, and declared that BMG would sell off their ownership in AOL. This was not done to satisfy the European Commission, but rather, for the obvious reason that Time-Warner and BMG were direct rivals in the music industry. Additionally, Time Warner was in an alliance with EMI of Britain at the time of the merger announcement. The music industry is basically run by 5 major corporations (Time-Warner, BMG, and EMI are 3 of the "Big 5"), and the European Commission was opposed to three of the five music producers coming together as one mega-music...

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