Pioneer DJ’s acquisition of Serato would effectively “eliminate competition”, says InMusic Chief Executive, and suggests that the company will take legal action to try and block the deal

We’d assumed that Pioneer DJ owner AlphaTheta’s takeover of Serato was a done deal, but it seems that InMusic chief executive Jack O’Donnell has other ideas.

The Post - a newspaper based in Serato’s native New Zealand - reports that InMusic is currently considering an attempt to block the takeover with a series of lawsuits, accusing it of being anti-competitive.

InMusic’s DJ brands include Numark, Denon DJ, Rane and Stanton. The company currently offers compatibility with Serato DJ in many of its products, and bundles the software with some of them, but O’Donnell suggests that this relationship could be at risk if the deal goes ahead.

“When we work with Serato, we give them our product up to a year ahead of time so they can analyse it and put the software in,” he explains. “If I was handing it to the new dominant player, I'm essentially handing it to my competitor.”

Pioneer DJ is the dominant force in the DJ hardware industry, with Serato offering the leading software. O’Donnell says that it could take InMusic between three and five years to develop its own platform, and that even then, it might struggle to convince DJs to switch to it. However, his biggest concern appears to be the potential impact of the monopoly that he believes the merger would create.

“In any market when you eliminate competition, it has an effect on consumers. It's going to raise prices, eliminate innovation and limit choice. So it's a big thing for a small industry.”

The Post quotes a New Zealand Commerce Commission spokesperson as saying that it is making enquiries in a bid to understand how the takeover would affect competition, but that its primary concern is to consider the domestic market. O’Donnell, though, is looking beyond New Zealand’s shores and says that InMusic has engaged legal representation in the US, UK, and Japan. 

“We're in early discussions with them, but we think we have legal grounds to fight in multiple jurisdictions,” he said.

O’Donnell claims that news of the takeover came as a complete surprise to him, noting that Serato had previously led him to believe that it was also concerned about Pioneer DJ’s level of dominance. The acquisition remains subject to approval from the New Zealand Overseas Investment Office.