Sony Music's merger with BMG two years ago could be annulled Thursday (July 13) when the European Union's second highest court rules on a challenge to the controversial joint-venture.

Sony Music's merger with BMG two years ago could be annulled Thursday (July 13) when the European Union's second highest court rules on a challenge to the controversial joint-venture.

European independents' trade body Impala challenged the decision to clear the merger, claiming that EU regulators failed to conduct an adequate investigation into the potential dangers for the music market.

Impala says the European Commission -- the EU's antitrust authority -- overlooked the merger's potential impact on such issues as collective dominance and market access when it unconditionally accepted the amalgamation of Sony and BMG's recording divisions in July 2004. The integration of the two units gave birth to Sony BMG, the second-largest record company worldwide after Universal Music.

The EU's Luxembourg-based Court of First Instance examined the case in an "expedited" procedure, taking three to six months to hear it rather than the usual 12-18 months.

"It's a good sign that the Court is coming to a decision now, just before the summer recess. It shows that the case has been taken seriously," Impala deputy secretary general Helen Smith said.

Although the case was brought against the Commission and not Sony BMG, Impala has a direct interest in the court's decision and is therefore entitled to express its position before the court.

Impala wants the Commission decision be annulled on account of "manifest errors of law, assessment and reasoning in relation to collective dominance." The trade body also says the merger will have a detrimental effect on the online and publishing sectors.

Impala argues that the Commission did not exhaust all paths of inquiry into suggestions that further consolidation among major music companies would damage European culture, consumer choice and diversity.