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The European Commission took a step Aug. 22 toward deciding whether America Online Inc. may acquire Time Warner Inc. when it issued a “statement of objections” detailing its problems with the deal. A source familiar with the document said it reiterates concerns the EC expressed in June when it announced it would conduct a full-blown investigation of the deal. “There was nothing unexpected,” the source said. In June, the EC said that it feared AOL’s acquisition of Time Warner would allow it to dominate the market for online music distribution in Europe. It also said the deal would let AOL leverage its strength in dial-up Internet access in the United States to grab control of the European dial-up market, especially when it comes to accessing content that is paid for such as films, television programs and news. Wilfried Schneider, an EC spokesman in Washington, said statements of objections are confidential documents that outline the EC’s understanding of the facts of the case and present general conclusions on how the deal would hurt competition. The companies are expected to quickly counter the document. However, there is no deadline for a response. “This allows the parties to present their objections,” Schneider said. “It protects their rights.” The filing is significant, said Robert Schlossberg, a partner in the antitrust section of the Washington office of the Morgan, Lewis & Bockius law firm. “It makes clear that the EC has problems with the deal,” he said. Schlossberg said EC statements of objections set the parameters for negotiations between the companies and the regulator. They often form the basis for eventual consent decrees, he said. But he noted that it was impossible to tell how close the parties are to working out an agreement without seeing the statement. Separately, the EC also issued a statement of objections to Time Warner’s $20 billion acquisition of EMI Group PLC. The EC is believed to be worried that a combined Time Warner-EMI could use its clout over music publishing to stifle online music sales. Time Warner spokesman Scott Miller said the companies expected the EC to issue statements of objections for both deals. Miller said Time Warner still expects both deals to close in the fall. By law, the EC has until Oct. 24 to approve or block AOL’s purchase of Time Warner, a deal that was valued at $350 billion when announced in January. It must finish the EMI review by Oct. 18, an EC spokesman said. Copyright �2000 TDD, LLC. All rights reserved.

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