In a notable decision, the New Zealand Commerce Commission has denied AlphaTheta Corporation (AlphaTheta) clearance to acquire Serato Audio Research Limited (Serato). This move is seen as a crucial step to maintaining healthy competition in the DJ software and hardware markets.

The Commission’s Decision

Dr. John Small, Chairman of the Commission, stated that the evidence gathered indicated a close competition between Serato and AlphaTheta’s rekordbox in the DJ software market. Despite the presence of other DJ software providers, the Commission was unconvinced that these rivals or potential new entrants could replace the level of competition that would be lost with the merger.

“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 explained.

Implications of the Decision

This decision can be viewed positively, particularly for the DJ community. Serato is a leading DJ platform, as is rekordbox from AlphaTheta (formerly known as Pioneer DJ). Pioneer DJ’s shift to a subscription model means that users must subscribe indefinitely to access its professional features, which could lead to market complacency and turn the platform into a cash cow. In contrast, Serato continues to offer perpetual licenses, alongside subscription options, providing flexibility for its users.

Serato’s collaboration with various hardware manufacturers allows for a diverse range of controllers that leverage the unique features of its software. A merger could have deterred non-Pioneer DJ brands from supporting the Serato platform. They might have perceived it as financially benefiting their competitor and feared that any innovative features they planned could end up in the hands of AlphaTheta, giving them a competitive edge. Keeping Serato independent ensures a more competitive and innovative market.

Broader Context of Mergers

The negative impact of mergers is evident in recent media consolidations such as those involving Fox and Disney, Discovery, and Paramount. These mergers have resulted in significant portions of programming history becoming inaccessible. This example underscores the potential drawbacks of reduced competition and the loss of diverse offerings in any market.

Conclusion

The New Zealand Commerce Commission’s decision to block AlphaTheta’s acquisition of Serato is a significant step towards preserving competition and innovation in the DJ software market. By preventing the merger, the Commission has ensured that consumers continue to benefit from diverse, high-quality options, ultimately fostering a more dynamic and competitive industry.