Sony-BMG Saga Rolls On

Although Bertelsmann may want to hang on to some of its Sony-BMG assets, even if its partner does buy its 50 percent stake in the business, the independent music companies made it clear that they’re still not happy that the two recording giants were allowed to hook up in the first place.

On June 13, three days before the U.K.’s Financial Times speculated on Bertelsmann’s plans, indies organisation IMPALA lodged an appeal against the EC’s unconditional authorisation of the Sony-BMG merger for a second time.

The objections lodged with the EC’s Court of First Instance in Luxembourg are largely the same as the ones that supported the first successful appeal IMPALA launched after Sony and BMG first got together in 2004.

That’s because IMPALA believes the Commission has taken little notice of the European Court Of First Instance’s 2006 ruling that it was too hasty in allowing the merger, and has therefore repeated many of the same errors all over again.

The indies say the music sector is so highly concentrated that major mergers shouldn’t be allowed unless far-reaching remedies are put in place to protect market access and promote market recovery.

IMPALA executive chair Helen Smith says her organisation has launched a second appeal because it doesn’t have any other choice.

"There is a huge contradiction here. Politically the EC is light years ahead of where it was when it first authorised the Sony-BMG merger, Smith said in a June 16 statement. "But we still seem to be some way off relying on the regulators to guarantee an open and competitive market."

The contradiction, in IMPALA’s view, is that while the EC promotes its Lisbon agenda and unlocking the economic potential of small- and medium-sized culture enterprises as a top priority, it marginalises the market position of those same enterprises by rubber-stamping the Sony-BMG merger.

While the appeal is being considered, the FT says Bertelsmann chief financial officer Thomas Rabe and Rob Wiesenthal, his counterpart at Sony Corporation of America, are already discussing Sony buying the German company’s share.

It says Bertelsmann may want to maintain an interest in the German recording market, if only to cross-sell product from its RTL TV unit, which makes the German version of "Pop Idol."