Sony And BMG Want To Stay Married

Europe’s independent music companies are claiming Sony BMG’s appeal against the annulment of its 2005 merger should be thrown out of court on the grounds that it’s inadmissible.

The more Japanese electronics giant Sony and Germany’s Bertelsmann media group move toward marrying their recorded music interests, the more the indies stand up and claim they have reason and just impediment to say the ceremony should be stopped.

Within 24 hours of the European Court of Justice announcing it will hear Sony BMG’s appeal against the Court of First Instance’s July decision to annul their marriage, indie trade organization Impala rushed out a statement saying the majors’ appeal “changes nothing.”

“We would be very surprised if the Court were to allow this appeal at all,” the statement continued. “An appeal is only possible on grounds of law. The judgment was based entirely on grounds of fact – material errors of assessment and reasoning by the [European] Commission.

“We would expect it to be struck out on grounds of inadmissibility. The annulment of the Commission’s original authorisation of Sony BMG remains in place.”

Impala said it will examine the wording of Sony BMG’s case as soon as it’s received a copy from the ECJ, but it has already pointed out that it “speaks volumes” that the European Commission itself hasn’t appealed the fact the Court Of First Instance has overturned its original decision to allow the merger.

In a July judgment, the Court of First Instance – the EU’s second-highest court – annulled the joint venture on the grounds that the European Commission had made errors in law and assessment when it approved the deal.

By not appealing, it looks as if the Commission is accepting that it must re-investigate any competition concerns over the tie-up. It will also have to ask the companies to suggest remedies to any remaining concerns that it has.

Impala may also question whether Sony BMG, which had become the world’s second-biggest record company, delivered the appeal to the ECJ within the legal time frame.

The Luxembourg-based court will start examining the appeal later in the year. Such cases usually take at least 12 months to decide.

From the numbers the U.S. industry has released so far, it looks as if the major record companies are all performing to within a fraction of their 2005 market shares.

In round figures, that puts Universal way ahead with close to one-third of the market. Sony BMG, which should already be dismantling itself according to Impala, will have a shade more than one-quarter.

Warner Music Group, which has put its plans to buy EMI on the back burner since the Sony BMG merger was overturned, has a little less than one-fifth.

EMI, which has also put its efforts to buy Warner on ice, has about one-tenth of the market, a couple of percent lower than the combined indie companies.

– John Gammon