The Sony-BMG merger won't be cleared by European regulators by June 22, the initial deadline set by the European Commission to end its probe on the deal.
BRUSSELS--The Sony-BMG merger won't be cleared by European regulators by June 22, the initial deadline set by the European Commission to end its probe on the deal.
The EC's competition department announced last week that it would suspend its investigation into the planned merger between Sony's music division and Bertelsmann.
The Commission's "statement of objections" was due at the end of April, but that deadline was also suspended. The "statement of objections" outlines the reservations from third parties and from the Commission on a proposed merger.
The delay--likely two weeks--will allow the EC, the European Union's executive body, to make new demands or give additional time for third parties to provide requested data.
A new deadline for an EU decision on the merger would be set after the companies answered questions on the distribution of music recording and intellectual property rights.
The EC is seeking an unprecedented volume of information from both companies and other market players. A questionnaire was also sent to a dozen companies in Europe--labels, publishers, collecting societies, retailers and e-tailers.
The EC wants to know if the market or the industry has changed significantly since its 2000 probe into the EMI-Warner proposed deal.
"This additional request concerns information on a variety of markets (affected) by this merger," says Tilman Lader, spokesman for EU competition commissioner Mario Monti.
Lader says the EC wants to examine competition concerns into markets for electronic appliances such as TVs and portable music players.
The areas where the new entity could use its muscle in technology or other media to gain competitive edge are part of the vertical and horizontal integrations of the probe.
Rivals fear Sony could use a distribution system, such as the forthcoming Connect service, to give preferential access to its music. Other concerns surround the Sony Playstation PSX, which features music download facilities. There is also concern that Sony and BMG could control the gateway on a range of proprietary technologies.
The vertical-integration concerns about BMG are different: Bertelsmann is the largest media company in Europe, and through its TV and radio stations, could prevent other record companies from getting airtime.