A leading EU judge today said its lower court was correct to annul the 2004 clearance of the merger of the recorded music units of Sony Corp and German media company Bertelsmann AG.
Juliane Kokott, the advocate general of the European Court of Justice, today delivered a lengthy "opinion." It follows a grand chamber hearing last month on Sony and Bertelsmann's appeal against a 2006 ruling by the European Court of First Instance, which forced a rethink into the European Commission's original 2004 clearance of the Sony BMG merger.
In conclusion, on the final of 291 points, Kokott today suggested to the Court of Justice that "the appeal is dismissed," and said Bertelsmann AG and Sony Corporation of America should be ordered to bear their own costs, and to pay three quarters of Impala's costs. The independent music companies' trade association should carry one quarter of its own costs, Kokott said.
The European Commission's competition authority first approved the deal in 2004, but a European Court of First Instance ruling in July 2006 meant the Commission was required to conduct a new investigation into the enlarged company. On Oct. 3 the Commission cleared the merger for the second time, without conditions.
Brussels-based Impala had described the EC's October decision to approve the deal without remedies as "indefensible," claiming it had ignored the ruling of the Court of First Instance, which had been instigated by Impala.
Impala has now welcomed the advocate general's opinion, which its sees as "vindication" of its ongoing efforts to police concentration in the music industry. "The opinion also confirms that there is no presumption in favor of mergers," Impala secretary general Helen Smith tells Billboard.biz, "which Impala see as crucial in concentrated cultural markets such as music."
"This is very encouraging," comments Patrick Zelnik, president of Impala and Paris-based indie label Naïve. "I trust the Court will follow the advice of the advocate general and find in favor of thousands of small and medium sized record companies and artists across Europe."
Martin Mills, chairman of Beggars Group and Impala, noted that the original Sony BMG merger approval was annulled "with good reason." He adds, "It was a landmark result for the independent community, notwithstanding events since, and for the main Court to recommend that the original judgement should be upheld on its merits is a further vindication of our position on the mergers issue."
Impala says it expects the European Court to follow the advocate general's opinion, and deliver a final decision early in the new year.