EMI shelves £1.35bn Warner merger

Coldplay's latest album was 2005's biggest global seller

UK music group EMI has aborted plans to buy its smaller rival Warner Music amid fears the $1.35bn deal would not get regulatory approval.

It follows a European court ruling which overturned a 2004 decision to permit Sony and BMG to merge, creating the world's second-largest music firm.

EMI, whose stable of artists include Coldplay and Robbie Williams, said the tie-up was off "for the time being".

Warner boasts Madonna and Red Hot Chili Peppers among its stars.

EMI has twice made offers to buy Warner in 2006, which in turn launched counter proposals to buy EMI. Both parties rejected all offers.

US-based Warner has also said it will not now be pursuing a take-over.

'Dominant'

The European Court of First Instance ruling on the Song BMG venture has cast doubts on the prospect of further consolidation in the music industry.

It said that the European Commission, which approved the merger in 2004, had failed to sufficiently demonstrate that the deal would not result in the world's top companies having a "collective dominant position" in the market.

Shares in EMI fell 4% on the news that the Warner deal had been shelved, despite the company saying it had the opportunity to grow alone.

"EMI remains confident that the global music industry has excellent long-term prospects driven by the rapidly expanding demand for digital music," it said.

"EMI is enjoying impressive creative momentum and has exciting release schedules for both divisions for the financial year."

The 2004 Sony BMG deal, which excluded Sony's Japanese music business, left the bulk of the global music market in the hands of four businesses - Sony BMG, Universal Music, Warner Music and EMI.