Independents group' Impala has issued a detailed reaction to the European Commission’s clearance of the Sony BMG merger.

The Commission cleared the merger for the second time on Wednesday (Oct. 3), saying "the transaction would not create or strengthen a dominant or collectively dominant position". The Commission first cleared the merger in 2004, but last year the European Court ordered a new investigation.

Impala reacted to the Commission's ruling by calling for a formal inquiry by the European Ombudsman into why the deal had been cleared a second time without remedies. Now Impala, which lodged the original court appeal that led to the annulment of the original decision, has identified the areas where it says the Commission was at odds with the court's findings.

The independents' group outlines the court's findings that that market "suffers from collective dominance and co-ordination" in a number of areas, including "alignment of prices, transparency of discounts and [the] relatively high level of pricing considering significant fall in demand."

"The Commission has ignored the duopoly with Sony BMG and Universal," said an Impala statement. "These two companies alone have over 50% of the market and 70% of the vital Top 100 in many key EU territories. Even the 'mini majors' EMI and Warner no longer have critical mass -- they only have 10% and 14% respectively of the national Top 100s. Their market share has plummeted in two years.

"As for the other competitors, no independent has even 1.5%. This is an effect which has clearly exacerbated competition in the last two years, so we do not understand how the Commissioner can say she has found no problems. It does not make sense. Is this a competitive market? It is worse than energy."

Impala adds that the Court also identified eight points on price that it says make it "transparent and easy to co-ordinate prices and other competitive behaviour."

"For the independents, apart from market share, there are considerable barriers to entry and growth to compete with the majors," adds the statement, citing increased costs of marketing and competing with the majors to sign artists, plus difficulty of access to retail, radio, TV and print media. "An independent could never grow to become the size of a major. There have been no new independent market entrants. The Sony BMG merger has clearly made it harder for independents to promote new artists."

Sony BMG declined to comment on Impala's call for an enquiry, although a spokesperson told Billboard: "Sony BMG and its parent companies are pleased that the Commission has again approved the formation of Sony BMG and confirmed it raises no competition concerns within the EU."

Meanwhile, sources close to the case told Billboard Sony BMG would not be "quaking in its boots" at the prospect of a further inquiry.

"This was an unprecedented analysis," said the source. "[The EC] has been very careful to address all the issues and has kept things extremely watertight."

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