By Yinka Adegoke and Foo Yun Chee - NEW YORK/BRUSSELS (Reuters) - Vivendi SA's Universal Music Group has offered to sell the bulk of EMI Music's most valuable record label, Parlophone, in a bid to get its planned $1.9 billion (1.2 billion pounds) buyout of EMI cleared in the EU, three sources familiar with the matter said on Friday.
The European Commission, which has been examining the proposed takeover of EMI since February, has warned Universal that its plan to buy EMI's recorded music business will significantly impede competition, and may veto the planned takeover unless there are major concessions.
Universal submitted its proposals to the EU antitrust watchdog on Friday.
"We believe the package fully addresses the Commission's concerns and follows our constructive discussions with regulators, independent labels and competitors," the company said in a statement.
"We look forward to working further with the Commission and are confident of receiving clearance," it said.
EU competition policy spokesman Antoine Colombani confirmed the regulator had received the proposal. Neither New York-based Universal nor the Commission provided details on the concessions.
The Commission, which acts as competition watchdog in the 27-member European Union, also extended its deadline for a decision on the case to September 27 from September 6. It will now seek feedback from rivals and consumers.
Putting Parlophone forward is a much bigger concession than previously mooted asset sales. One of EMI's most prized assets, the label has stars like Coldplay and marquee acts like Queen.
One of the sources said Universal would sell most of Parlophone but would retain its most-prized acts, including The Beatles.
DANGERS OF SELLING PRIZED LABEL
That Universal is considering selling Parlophone to satisfy regulators would raise new questions about the dangers of a deal that has run into firmer-than-expected regulatory resistance. It comes even as Universal's parent, Vivendi, is considering whether to sell media assets that could include the music giant.
BMG, the music publishing joint venture between German media giant Bertelsmann and private equity group KKR, has met Universal and expressed interest in Parlophone, said one of the sources, who declined to be identified because the discussions are confidential.
But a third source said Universal had not offered to sell Parlophone to BMG.
"BMG is one of many buyers interested in picking up any assets that come out from Universal but Parlophone in its entirety is not part of the package for sale at the moment," the source said.
BMG and Bertelsmann declined to comment. News of the Parlophone talks was first reported in the Financial Times.
Universal had been planning to sell three much smaller music labels belonging to EMI -- Virgin, Chrysalis and EMI Classics -- and is now offering Parlophone to help address EU reservations about the group's clout in the CD and digital music markets, the source said.
Regulators want to reduce a combined Universal-EMI market share to below 40 percent in several European countries and reduce its market power, two people familiar with the matter said on Wednesday.
Market share is being estimated in terms of sales and distribution assets as well as licensing deals, one of the people said.
A combined Universal-EMI would include a vast library of current top-selling and legendary names including Jay-Z, Kanye West, U2, Katy Perry and Pink Floyd.
The U.S. Federal Trade Commission is also examining the deal.
(Additional reporting by Stephen Mangan; editing by James Jukwey)