US company InMusic – who owns Numark, Rane, and Denon DJ – has confirmed it is considering legal action in a number of territories to block the acquisition of Serato by Pioneer DJ’s parent company, AlphaTheta.
Pioneer DJ confirmed the 100 million dollar deal back in July, which is still pending approval by the New Zealand government’s Overseas Investment Office where Serato is headquartered.
If the acquisition were to go through, the two leading DJ software platforms, Serato and rekordbox, would have a combined market share of 90%, essentially giving AlphaTheta dominance over the market.
As part of a broader publicity campaign, InMusic CEO Jack O’Donnell recently featured in an advertorial discussing the controversial buyout, suggesting the sale would hand a monopoly to its rival in that global niche, and that it would not be practical for them to continue using Serato’s software if the deal was completed.
Here are highlights from the article:
“When we work with Serato, we give them our product up to a year ahead of time so they can analyse it and put the software in. If I was handing it to the new dominant player, I’m essentially handing it to my competitor.”
‘’Pioneer was the other major supplier of DJ software, Rekordbox, and had about a 72% share of the global market for DJ audio equipment, while InMusic had about an 18% share’’.
The acquisition of Serato by AlphaTheta would “essentially eliminate competition”, creating a monopoly for the DJ industry, he said.
“I am quite confident what’s happening here and it’s an outrage as far as I’m concerned. In any market when you eliminate competition, it has an effect on consumers. It’s going to raise prices, eliminate innovation and limit choice. So it’s a big thing for a small industry.”
It would take InMusic three to five years to develop its own software from scratch and even then it would be “chasing a tail”, as once DJs were used to using one type of software they had little incentive to learn something else, he said.
O’Donnell went on to say that InMusic had “engaged legal representation in the US, UK, and Japan. While New Zealand is the battleground, this is a global fight, as this is a global issue.”
“We’re in early discussions with them, but we think we have legal grounds to fight in multiple jurisdictions.”
A Commerce Commission spokesperson said it was making inquiries to understand how the transaction could affect competition, while making clear its remit was only to consider markets in New Zealand.
It had not received a clearance or authorisation application from AlphaTheta for the acquisition, she said.
The Overseas Investment Office, which is yet to approve the deal, is apparently not focussed on competition issues.
This was a full-page advert also taken out in NZ:
