Deal or No Deal

New Zealand Commerce Commission’s decision to block AlphaTheta’s acquisition of Serato

“Regardless of the disappointing outcome of the judgement, we remain excited about the future,” said Yoshinori Kataoka, president and CEO of AlphaTheta. 

New Zealand’s Commerce Commission has declined to grant clearance for AlphaTheta Corporation’s proposed acquisition of Serato Audio Research Limited, citing concerns over potential anti-competitive effects in the DJ software and hardware market.

AlphaTheta, the parent company of Pioneer DJ, announced its intention to acquire Serato in a deal estimated to be worth over $50 million USD last year. However, the merger faced regulatory scrutiny due to the significant market share held by both companies in the DJ software industry. Together, Serato and Rekordbox DJ, owned by Pioneer DJ, account for an estimated 90% of the market.

The Commerce Commission’s decision, announced on July 18, 2024, highlighted concerns that the merger could substantially lessen competition in the supply of DJ software and hardware in New Zealand. The commission’s chairman, Dr. John Small, emphasized the importance of preserving a competitive market to ensure innovation and fair pricing for consumers.

Implications for the Industry

The blocked acquisition marks a significant development in the DJ industry, as it prevents further consolidation of the market. The decision could encourage new players to enter the market or existing competitors to expand their offerings, ultimately benefiting consumers through increased choice and potentially lower prices.

Reactions and Future Steps

Both AlphaTheta and Serato have expressed disappointment with the decision but remain committed to their partnership. They are exploring alternative avenues for collaboration while respecting the regulatory concerns raised by the Commerce Commission.

The blocked acquisition also highlights the increasing scrutiny of mergers and acquisitions in the technology sector, as regulators strive to balance innovation with fair competition. The outcome of this case may influence future merger decisions in the music technology industry and beyond.

A Timeline

July 2023: Acquisition Announcement

AlphaTheta announced its intention to acquire Serato in a deal estimated to be worth over $50 million USD. The announcement was met with mixed reactions, with some praising the potential for innovation and collaboration, while others raised concerns about the consolidation of power in the DJ hardware and software market.   

May 2024: UK Competition and Markets Authority (CMA) Investigation   

The CMA launched an in-depth investigation into the proposed acquisition, citing concerns about a potential substantial lessening of competition in the UK market. This investigation added a layer of uncertainty to the deal’s future.   

While the current outlook may seem uncertain, one thing is clear: the landscape of the DJ industry is shifting, and the coming months and years will be crucial in shaping its future.