Global music company Universal has been granted approval to acquire the recorded music businesses of EMI Music in New Zealand.

The deal is part of a proposed US$1.9 billion ($2.3 billion) international merger, the Commerce Commission's clearance in New Zealand believed to be the first in the world.

In giving the green light, the Commission said it was of the view the merged entity would continue facing strong competition from other record labels.

It looked at what effect the acquisition would have on New Zealand markets.


Chair Mark Berry said the Commission was satisfied the proposed deal would not "substantially lessen competition in any of the affected markets".

"The Commission is of the view that the merged entity would continue to face strong competition from other major record labels and independent record labels for the discovery and recording of artists, and the promotion and distribution of recorded music."

It also considered the markets for the wholesale supply of recorded music and the licensing or recorded music to third parties

"The Commission considers that large retail customers would be able to prevent the merged entity from exercising any market power by restricting access to promotions or shelf space."

When considering a proposed merger, the Commission's role is to decide whether any substantial competition is lost in a market when two businesses merge.

"We will give clearance to a proposed merger only if we are satisfied that the merger is unlikely to have the effect of substantially lessening competition in a market."