Sony BMG Ruling Within A Month
The independent music companies are happy that the European Commission has started the clock on its ongoing investigation into the Sony-BMG merger, meaning the final ruling on the deal could be announced in less than a month.
The competition authority has given itself a March 1st deadline to re-examine the case. However, it’s likely that may have to be extended for four or five weeks because looking into market share and artists’ contracts could turn out to be a time-consuming process.
Japan’s Sony and Germany’s Bertelsmann have re-submitted a request for the Commission to clear the tie-up between the two companies. The EC gave the deal the go-ahead in 2004, although that decision was soon overturned when the European Court of First Instance found "manifest errors" in the way the competition issues had been addressed.
Despite Sony BMG being in operation for more than two years, its owners could still be forced to sell parts of the business to remedy any competition concerns.
Impala chairman Martin Mills, who is president of the U.K.’s Beggars Group, said his organization has been contributing to the Commission’s investigation and will continue to do so, to ensure that the problems identified by the court are properly resolved.
Patrick Zelnik, Impala president and chief exec of Naïve Records in France, believes the majors and the commission need to work with the indies to find a solution to the "structural and competitive problems" facing the whole industry.
The joint venture created the world’s second-largest record label after Universal.
Business analysts, particularly those in the U.K. print media, had long assumed the Sony-BMG merger was a done deal, but the independent sector – through Impala and its related national independent organizations – has mounted a sustained and articulate challenge to the original EC ruling.
They point out that it’s now more than six months since the court annulled the merger and further delays in resolving the issue will be detrimental to the global recorded music business.
As well as highlighting fundamental flaws in the Commission’s economic assessment, the court identified deep-rooted competition problems in the marketplace.