America Online, Inc. (NYSE: AOL) was down 1 61/256 at 56 early Wednesday, after the European Commission agreed to approve its merger with Time Warner, Inc., on the condition that AOL sever all structural ties with Germany’s Bertelsmann AG, AOL’s partner in AOL Europe and AOL Compuserve.
Because of AOL’s close relationship with Bertelsmann and Time Warner’s extensive music publishing holdings, the combined company would have had control over the largest source of music publishing rights in Europe, the commission said.
“The proposed undertakings will prevent AOL from having access to Europe’s leading source of music publishing rights, thereby eliminating the risk of dominance in the emerging markets for online delivery of music over the Internet and software-based music players,” the commission said.
The deal has yet to be approved in the U.S. The two companies said talks with U.S. regulators are “proceeding well,” and that they are confident the merger will be completed this fall.