EU Clears SonyBMG For A Second Time

The European Commission for the second time has approved the Sony BMG (Bertelsmann) recorded music joint venture. The merger had been approved in 2004, but the EU’s Court of First Instance blew it out of the water two years later, accepting an appeal by Impala, an independent record group label representing 2500 independent music companies, that claimed the merger was not studied closely enough for monopoly issues. With that court decision, t the Commission undertook another investigation which has taken a year to complete.

The Commission said this time it actually had the benefit of making a decision on whether a deal might be anticompetitive based on the actual merger having already taken place, so it didn’t just have to rely on possibilities of what might happen if the merger was approved. It had two years of after-merger information to look at, too. “The Commission was able to evaluate the actual impact of the merger on the market since 2004 and was not limited, as is usually the case, to an analysis of likely effects on the market in the future,” the Commission pointed out in a statement.

The Commission also said that few mergers have received such scrutiny. “This investigation represents one of the most thorough analyses of complex information ever undertaken by the Commission in a merger procedure,” according to Competition Commissioner Neelie Kroes. “It clearly shows that the merger would not raise competition concerns in any of the affected markets. 

The merger of Sony and BMG recorded music business created the world’s second largest recording label, reducing the number of major music companies from five to four.  It has under contract such stars as Shakira, George Michael, Avril Lavigne, Elvis Presley, Bruce Springsteen and Christina Aguilera. 

The Commission noted there were many independent labels, but because there were so few major players in the market it particularly looked into whether the companies would coordinate rising prices, limiting production or somehow divide up the market.

“The in-depth investigation has provided no evidence of coordinated behavior prior to the merger or as a result of it,” the Commission said, noting specifically that it has looked not only at the physical market (CD, vinyl – it’s making a comeback, you can now again find ‘record players’ in electronic shops) but also the digital market, too. - Philip Stone October 3, 2007

Keywords:European Commission, ProSiebenSat

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