The independent music industry has welcomed the breakdown of the £14 billion proposed merger between American giant Time Warner and British record company EMI.

The tie-up ran into trouble after the European Commission expressed concern over the market dominance the new group would enjoy.

The groups told the EC that they were withdrawing their current application for approval of the link-up and had terminated their agreement.

The joint 50-50 venture would have brought together more than 2,500 of the world's best-selling artists, including the Rolling Stones, Robbie Williams, the Spice Girls, Eric Clapton, Phil Collins and Madonna.

Many experts feel the future of music distribution lies with the internet and Warner's recent deal with America On-line gives them a substantial head start in that market.

But smaller independent record labels have expressed concern that the merger could jeopardise creativity and diversity in the industry.

The Independent Music Companies Association (Impala) welcomed Warner/EMI's withdrawal from the merger consultation process.

"It shows that the Commission has accepted our arguments that further concentration in the music sector would amount to further marginalisation of the independent music business.

"We will continue to fight to ensure the music industry's shift towards the digital economy is not made at the expense of creativity and diversity," their spokesman said.

Rob Mitchell, joint managing director of independent record label Warp, also warned that such media conglomerations could be bad news for the music consumer.

"One of the dangers of this merger is that the there would be a real chance of them creating a closed system. With their tie-up with American Online they could restrict access for the customer to their own artists."