Tencent Music Entertainment’s Acquisition of China Music Corp.

In February 2021, Compass Lexecon was retained by Tencent Music Entertainment Group (TME), China’s largest digital music streaming platform, to evaluate the competitive effects of TME’s acquisition of China Music Corp (CMC). The acquisition was initiated in 2016 and consummated in 2017, but the merger was not filed with China’s State Administration for Market Regulation (SAMR). In 2020, SAMR launched an investigation into this merger and the resulting impacts on digital music streaming in China.

The Compass Lexecon team, led by Dr. Elizabeth Wang, submitted a report to evaluate issues related to market definition, TME’s market power, and the competitive effects of this merger on the relevant markets. The team utilized factual evidence, economic data, and econometric models to evaluate the actual competitive impact of this consummated merger, including its impact on consumer prices, digital music output, and the innovation of music streaming platforms. In addition, the Compass Lexecon team also performed a comprehensive review of the business model of digital music licensing in China.

Dr. Elizabeth Wang was supported by a Compass Lexecon team across the Beijing and U.S. offices, including Dr. Kun Huang, Dr. Jason Wu, Dr. Aston Zhong, Jake Cheng, Bella Li, Wendy Wei, and Wenye Sun. The team worked closely with Xie Lin, Tian Chen, and Jiang Ning at TME.