Indies On Warpath Over Sony-BMG

The independent music companies are so furious about the European Commission allowing the Sony-BMG merger "without remedies" that they’re asking the EU ombudsman to intervene.

They want him to investigate if there’s been "potential maladministration." They claim the decision has ignored the major points the European Court found in the indies’ favour last summer, when it nullified the Commission’s original decision to allow the merger without remedy.

Although the majority of the U.K. media has been expecting this outcome, it will come as a shock to European indies organisation IMPALA, particularly its newly appointed secretary general Helen Smith.

A week before the October 3 ruling, she told Pollstar she thought it would be "truly incredible" if the Commission were to pass the merger without remedy for a second time.

IMPALA intends to examine the text of the decision in detail before committing to any further action regarding an appeal, although that looks by far the most likely outcome.

It will certainly be calling for a formal inquiry and says it has a "clear case" for claiming damages against the EC.

The Commission’s first approval of the merger was set aside last summer by the European Court. The judges found that the Commission had wrongfully approved the merger without remedies, despite overwhelming evidence that competition would be severely impaired.

IMPALA is now saying the Commission has simply done exactly the same thing again, ignoring the independents’ evidence of anti-competitive behaviour across all key markets.

Moreover, it claims the Commission did not consider the non-price effects of the merger on consumer choice and diversity, as well as competitive access to retail, radio and online.

It says no cultural diversity impact assessment was carried out, despite an EC Treaty obligation to do so. That may be the thrust of its argument in any investigation into potential maladministration.

The independents also contend that the EC is sending contradictory messages to Europe’s citizens, artists and entrepreneurs.

They say the Commission is seeking remedies from Universal-BMG but not Sony-BMG. It pushes an "Agenda for Culture" to make sure culture and all creative industries are properly prioritised in other key policy areas, but not when it comes to competition.

IMPALA also accuses the EC of signing the UNESCO Convention on Cultural Diversity with a fanfare, while breaching its own treaty obligations to take cultural diversity into account in all decisions.

"We never got an explanation for the EC’s U-turn last time around. The EC has ignored the simple fact that four companies control 95 percent of the music most citizens hear on the radio throughout the world. What kind of a message does this send to European citizens? That the EU’s prioritisation of cultural diversity, creative SMEs and pluralism is purely rhetoric?" said IMPALA president Patrick Zelnik.

Martin Mills, IMPALA chairman and head of the U.K.’s Beggars Group, seemed to echo those sentiments.

"The Commission has simply repeated its previous mistakes. It has ignored the independents’ evidence on anti-competitive behaviour in retail, radio and television, press and of course, the vital online market," he said.

"It is a lost opportunity for Europe’s artists and entrepreneurs. How can the EC demand remedies in Universal-BMG and not in Sony-BMG? This just doesn’t make sense."