AlphaTheta’s proposed takeover of DJ software company Serato has hit a regulatory problem in the UK, with the UK Government giving the companies a five-day deadline for answers before a bigger investigation into the takeover is triggered.
The companies now have to convince the Competition and Markets Authority that the takeover will not impact “the price, quality, and innovation of DJ software”. The CMA is concerned that “the remaining (largely much smaller) suppliers would not provide strong enough competition to constrain AlphaTheta and Serato once combined”.
What’s this all about?
AlphaTheta, the makers of Rekordbox DJ software and the manufacturer of DJ equipment including mixers, controllers, DJ players and all-in-one systems under both its own and the Pioneer DJ brand, announced their proposed takeover of Serato last year.
This triggered immediate worries in the DJ world that the two biggest software platforms under one ownership would lead to a near-monopoly situation, and harm remaining rivals such as the inMusic DJ brands (Rane DJ, Denon DJ and Numark) and others including Reloop and Roland who rely on Serato software. Soon after the announcement, inMusic instigated proceedings to try to block it.
What the UK authority has said
Joel Bamford, Executive Director for Mergers at the CMA, said:
“DJs and entertainers depend on having access to the best equipment and software in order to put on a good show.
“We’ve found this deal could substantially reduce competition in DJ software, resulting in increased prices, less innovation, and less choice.
“We’re also concerned it could negatively impact the hardware markets by allowing the combined business to leverage Serato’s leading software to harm its hardware competitors, ultimately affecting DJs and consumers.”
What happens next?
Both AlphaTheta and Serato have five working days to respond with “meaningful solutions” to the CMA, otherwise the deal will be referred to a more in-depth Phase 2 investigation that would allow an independent panel of experts to probe in more depth initial concerns identified at Phase 1.
The merger is also under investigation by the New Zealand Commerce Commission.
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Phil Morse
