The first marriage proposal between EMI and Warner Music was called off in 2001 because the music groups were unwilling to agree to conditions imposed on the union by European antitrust regulators.

Today, although a merger would still be heavily scrutinised by antitrust authorities in Europe and the US and would be likely to force the companies to make divestitures in their music publishing businesses, the regulatory environment has shifted.

The approval in 2004 by both European regulators and the US Federal Trade Commission of a merger between Sony and BMG – a deal that created a music major with $8bn of annual sales and 22 per cent of global share in recorded music – has in many respects opened the door to a deal between EMI and Warner.

A combined EMI and Warner would create a market leader in Europe, with 28 per cent market share, while in the US the company would trail behind Universal and Sony-BMG, according to data published by IFPI, which represents the recording industry.

The increased pricing pressure on the music industry and competition from internet distributors have also been used to argue that the four global majors could become three without distorting the market.

But a change in the rules applied by Brussels for clearing mergers could still pose challenges. In 2000 and 2003 when EMI and Warner were previously close to deals, the key test for approval by the EU was whether a merged group would have a dominant market position. Now the test is whether a deal would result in a significant lessening of competition – both in signing up artists and supplying music.

Unlike Sony-BMG, a merger between EMI and Warner would also involve a close look at the companies’ music publishing businesses. Executives at both companies have long held that a divestiture of some of the assets would be necessary to satisfy regulators. Some analysts believe an asset sale could help finance a deal.

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