New Zealand Commerce Commission declines to give clearance to AlphaTheta Corporation (AlphaTheta) to acquire Serato Audio Research Limited (Serato), a New Zealand-based company.
Wellington, New Zealand – It has been announced that the New Zealand Commerce Commission (NZCC) has ruled against a merger between AlphaTheta Corporation and Serato, both active within the DJ segment of the music industry.
The proposed merger was an attempt at bringing together two of the most popular DJ software brands and would have also combined ownership of the most popular DJ software brand (Serato) with the most popular DJ hardware brand (Pioneer DJ).
AlphaTheta supplies DJ hardware under the Pioneer DJ brand and DJ software under the rekordbox brand, and Serato supplies DJ software. Serato’s DJ software is currently integrated with many brands of DJ hardware, including Pioneer DJ.
Chairman Dr. John Small said that the Commission was not satisfied that the merger would not have the effect of substantially lessening competition in the markets for DJ software and DJ hardware.
“The evidence gathered by the Commission indicated that Serato and rekordbox compete closely in the DJ software market. While other DJ software providers would remain in the market, 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. We therefore could not exclude a real chance that the merger would result in a substantial lessening of competition for DJ software, resulting in price rises to consumers and/or a lower quality software offering,” Dr. Small said.
“We were also concerned the proposed merger would substantially lessen competition by making it harder for DJ hardware rivals to compete with Pioneer DJ. Serato is an important piece of software for DJ hardware providers to integrate their DJ hardware products with, and the evidence before us indicated that the merger could give ATC the means to either eliminate or worsen DJ hardware rivals’ ability to integrate their products with Serato. We were also concerned the merger would provide ATC with access to its DJ hardware rivals’ commercially sensitive information, including information about unreleased products shared in the integration process, which could provide ATC with a competitive advantage and lessen the incentive on both ATC and its rivals to innovate.”
Following the announcement, AlphaTheta released this statement:
We are disappointed by the ruling of the New Zealand Commerce Commission against the acquisition. As AlphaTheta and Serato, we believe that the proposed agreement would have accelerated our combined ability to deliver incredible products to DJs and Producers around the world by capitalizing on our complementary expertise while creating significant benefits for the local music technology industry in New Zealand.
Despite the regulatory findings, our organizations 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.
“Regardless of the disappointing outcome of the judgment, we remain excited about the future. Through this process we have built on our 15-year relationship with Serato, leading to the commencement of a number of exciting new projects for DJs and Producers.” – Yoshinori Kataoka, President, and CEO, AlphaTheta.
“While it’s not the decision we wanted, the Serato business has never been in a better place, and neither has our relationship with AlphaTheta. Through the process, we have not taken our eye away from what we do best, and our pipeline of future innovation is incredibly healthy, including projects with AlphaTheta and other industry partners.” – Young Ly, CEO, Serato.