MUSIC Music group EMI and Time Warner have gone back to the drawing board on their proposed £14bn tie-up after concerns were raised by the European Commission.

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

However the two are still in talks with each other and the EC to ''attempt to achieve a combination which is acceptable to all parties''.

Analysts said the EC had been concerned with the overall dominant position the new group would hold in the world and the European market.

One analyst thought the pair would have to formally put up some of their assets for sale in order to gain approval for the deal.

This could include EMI's Virgin Records business.

The analyst added that by withdrawing the application now the companies had a chance of reworking it to make it more viable.

The original agreement, announced in January, would have seen the companies set up a 50-50 joint venture representing 2,500 musicians, from the Rolling Stones to Madonna.

It would have seen them merge their music businesses as Warner EMI Music, although EMI would still have remained an independent company with its own listing on the London stock market.

The deal came hot on the heels of Time Warner's planned merger deal with US Internet group America OnLine.

Eric Nicoli, chairman of EMI, said: "The withdrawal of our application allows additional time to reassess regulators' concerns and to pursue solutions simultaneously in Europe and the US.

"We have been, and will continue to be, flexible in responding to the European Commission's concerns.

"However any concessions that are ultimately made must be consistent with our shareholder value objectives."

Mr Nicoli added that EMI continued to believe a joint venture with Time Warner would create ''substantial value for our shareholders and benefit our artists, consumers and employees''.

In the meantime, he said, EMI's business was in "good shape" and the group would "continue to drive it forward".

Richard Parsons, president of Time Warner, said: "Our proposed joint venture with EMI would bring together two of the most creative and complementary organisations in the worldwide music industry."

He added the pair would continue to "explore ways to structure a combination that will make sense for the two companies and be acceptable to the Commission"