NZCC Blocks AlphaTheta’s Acquisition of Serato

NZCC Blocks AlphaTheta’s Acquisition of Serato

Concerns Over Competition in DJ Software and Hardware Markets Lead to Rejection

The New Zealand Commerce Commission (NZCC) has blocked AlphaTheta’s proposed acquisition of DJ software company Serato. This decision comes after the merger, first announced in July last year, was found to potentially harm competition in the DJ software and hardware markets.

Competition Concerns

Dr John Small, chairman of the NZCC, explained the decision: “The Commission was not satisfied that the merger would not have the effect of substantially lessening competition.” The NZCC concluded that combining AlphaTheta, which owns Pioneer DJ, with Serato would give the company too much dominance in both the DJ hardware and software sectors.

Detailed Findings

The NZCC’s investigation revealed that Serato and AlphaTheta’s Rekordbox are direct competitors in the DJ software market. The Commission noted that while other DJ software providers exist, they do not provide sufficient competition to offset the merger’s impact. “We did not consider these rivals, or the possibility of a new DJ software provider entering the market in the near term, would be sufficient to replace the level of competition that would be lost with the merger,” the NZCC stated. This could lead to higher prices and reduced software quality for consumers.

Responses and Appeals

Both companies are expected to appeal the decision. Yoshinori Kataoka, President and CEO of AlphaTheta, expressed disappointment: “We disagree with and are disappointed by the ruling of the New Zealand Commerce Commission against the acquisition. We believe that the proposed agreement would have accelerated our combined ability to deliver incredible products to DJs and producers around the world by capitalising on our complementary expertise.”

Despite the ruling, Kataoka emphasised the ongoing collaboration between AlphaTheta and Serato: “Our organisations have a long history of working together, and we steadfastly believe in the merits and benefits of our ongoing partnership as we seek to harness technology to advance the ways artists create and perform music.”

Broader Implications

In May, the UK’s Competitions and Markets Authority (CMA) also expressed concerns about the merger. Their initial findings suggested that the deal could create a supplier nearly double the size of its closest competitor, potentially affecting price, quality, and innovation in the DJ software market.

Earlier this year, AlphaTheta, the parent company of Pioneer DJ, introduced a new brand for its DJ products, underscoring its commitment to innovation and leadership in the DJ industry.

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