EU Clears Apple’s $3 Billion Deal to Buy Beats

Written by | Thursday, July 31st, 2014

The European Commission said on Monday (28 July) that it had cleared Apple’s $3 billion (2.2 billion euros) acquisition of the American headphone producer and music streaming business Beats founded by U.S. rapper and hip hop producer, Andre “Dr Dre” Young, and Interscope-Geffen-A&M Records chairman, Jimmy Iovine. The EU executive had been worried that the takeover of Beats Electronics by Apple – the world’s second most valuable company in terms of brand equity – could seriously jeopardize competition in the European market as both Apple and Beats Electronics produce headphones. The Monday ruling of the EU Commission, however, concluded that even possible combining of both companies would yield only a very small market share as both firms would face well-established competition from other headphone makers, such as Bose, Sennheiser and Sony. In terms of digital music sales, Brussels drew a similar conclusion.

Last week, audio technology firm Bose sued Beats Electronics over the reported use of patented technology for getting rid of noise in earphones. Beats popularity was primarily shaped by smart marketing practices focusing on product placement and branding deals with celebrities. In 2012, it was reported that Beats’ market share in the U.S. was 64 percent for headphones prices more than 100 USD. The brand was valued at 1 billion USD in September last year. In May 2014, Apple Inc announced that it would acquire Beats for 3 billion USD in both cash and stock deal that was set to be concluded by the end of this year.

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