The European Commission has created new doubt about the viability of the proposed merger of the Sony and Bertelsmann music divisions. The EC said Feb. 13 that its antitrust department will conduct an
LONDON-- The European Commission has created new doubt about the viability of the proposed merger of the Sony and Bertelsmann music divisions.
The EC said Feb. 13 that its antitrust department will conduct an in-depth probe of the proposal. That means opponents of the plan--including indie labels body Impala and computer giant Apple--will have plenty of opportunities to state the case against consolidation.
The probe could hold up the merger for as much as four months. The EC has a deadline of June 22 to reach its verdict.
A senior source at one of the majors tells ELW that the EC's decision was expected, but that Sony and BMG executives continue to focus on day-to-day businesses.
"The best we can do for our artists and for us is to concentrate on our job and do the best we can," says the source.
Bertelsmann officials declined comment.
In a Feb. 12 statement, the EC said it will investigate whether the proposed merger, "might create or strengthen a collective dominant position between the remaining four major record companies--Universal, SonyBMG, Warner and EMI --- in the recording market."
The EC noted that the remaining four major players would hold about 80% of the recording market both on a European level and in most national markets in the European Economic Area. Taken together, the new entity, SonyBMG, and the No. 1 music company, Universal Music Group, would account for about half of the recorded music market.
European independent label's body Impala has been raising concern that the new Sony-BMG entity could leverage Bertelsmann's other assets in the media field and therefore create a situation of unfair competition.
Not surprisingly, Impala welcomed the EC's decision.
Michel Lambot, Impala president and co-chairman of Belgium's PIAS Group/Vital, said, "Impala and its members will continue to work with the Commission to provide further evidence on the horizontal and vertical concerns that this merger raises. It is our duty to safeguard artists and consumers."