The European Commission is due to formally announce on Thursday a four-month in-depth investigation into the merger between Sony and Bertelsmann's music units, a European Union source has confirmed.

The second stage investigation into Sony BMG Music Entertainment comes eight months after an EU court annulled the Commission's original 2004 decision to clear the music merger.

The Commission - the EU's anti-trust authority - is due to say that the merger raises "serious doubts" over the effects on competition in the music market.

"The Commission will open a second stage inquiry," said the source. "This does not mean the investigation has run into any trouble. It just means that the complexity of the issues demand in-depth study."

The Commission now has 90 working days to take a final decision. The Commission launches second phase merger investigations if competition concerns cannot be resolved during the initial, one-month first-phase inquiry.

During the in-depth probe, the Commission can demand classified company data, and hold hearings involving both the merging parties and other interested groups. It also has the authority to block the deal or demand changes to the merged company before granting its approval.

The deal to create the world's second largest music company behind Vivendi's Universal Music Group was initially cleared by the Commission in July 2004. But in July last year the EU's Court of First Instance annulled the decision, ruling that the Commission had not properly investigated the potential consequences of the merger. The court decision effectively put on ice any other plans by the music majors for further consolidation.

The Court appeal was originally lodged by independents' group Impala, which said the merger would muscle out smaller labels and prevent newcomers from breaking into the market. They said the Commission failed to show that the-then five music majors were not colluding over market prices or that they would not afterwards.

Last October, Sony and Bertelsmann appealed the Court of First Instance decision at the EU's top court, the Luxembourg-based Court of Justice. The appeal could last two years, and is almost certain to emerge after the Commission's decision on the new merger bid. But there are fears that if the Commission blocks the second bid, and the Court upholds the appeal, it could create a legal quagmire.