EMIand Bertelsmann have called off their long-running talks over a music-industry merger after failing to crack regulatory problems.
Facing its second failed merger attempt in a year, EMI said six months of talks had failed to produce a deal both sides were confident would gain regulatory approval and the two companies had decided to go their separate ways.
"After exhaustive analysis and discussion, we have been unable to find a deal with Bertelsmann which works both for shareholders and for the regulators," EMI chairman Mr Eric Nicoli said in a statement.
EMI and Bertelsmann, two of the world's five big music groups, announced last November they were in merger talks, shortly after EMI abandoned a merger with rival Warner Music in the face of mounting opposition from regulators.
Before committing themselves to a formal proposal, EMI had insisted on sounding out regulators to avoid dragging shareholders through another damaging anti-trust investigation but the two companies were not happy with what they got.
Among regulators' prime concerns was seeing the world's five big music groups shrink to four. One way around that could have involved EMI and Bertelsmann selling off some assets to create an effective "fifth major," but neither company was prepared to offload their prize assets just to get a deal done.
EMI and Bertelsmann had been trying to convince regulators that the rise of the role of the Internet in the music industry had created more competition for the five major groups, making the existence of a "fifth major" no longer a necessity.