Serato deal fails to clear Commerce Commission hurdle

Serato co-founders AJ Wilderman (left) and Steve West first met in the late 90s at the University of Auckland. Photo / Supplied

The Commerce Commission has declined to give clearance to AlphaTheta Corporation to buy Auckland-based Serato Audio Research.

There was a real chance the merger would cause reduction in competition for DJ software, price rises for consumers and possibly a lower quality software offering, Commission chair John Small said.

DJ hardware and software market leader AlphaTheta, known principally through its Pioneer DJ brand, lodged an application with the Commission to buy Serato last October, first flagging the transaction in July.

The proposed US$65 million (NZ$106.8m) sale divided submissions between DJs and tech investors who supported it and a rival hardware maker and retailer who did not.

Serato co-founders AJ Wilderman (left) and Steve West first met in the late 90s at the University of Auckland.

The Commission said AlphaTheta and Serato were both active in the DJ segment of the music industry.

AlphaTheta supplied DJ hardware under the Pioneer DJ brand, DJ software under the rekordbox brand, and Serato supplied DJ software.

Serato’s DJ software was integrated with many brands of DJ hardware, including Pioneer DJ.

The merger proposed bringing together two of the most popular DJ software brands and would have also combined ownership of the most popular DJ software brand (Serato) with the most popular DJ hardware brand (Pioneer DJ), the Commission said.

A decision on the deal was due on June 27 but the Commerce Commission pushed out the date.

InMusic, the US-based owner of DJ hardware brands running Serato software, had argued it would be anti-competitive for Pioneer DJ’s parent to take control of the Kiwi firm.

“InMusic is pleased that the New Zealand Commerce Commission has recognised the threat to competition in the DJ market and blocked this acquisition,” InMusic CEO Jack O’Donnell said today.

“We look forward to continuing our very successful relationship with Serato and putting out innovative and exciting new products, like the recently released Rane Performer.”