Sony, BMG Defend Merger Plans

Majors claim deal would help revive industry.

Sony Music and BMG made a robust defense of their proposed merger today (June 14) at a special hearing in Brussels, the start of a two-day gathering organized by the competition department of the European Commission.

Executives from both music majors -- which are trying to secure regulatory clearance from the European Union's anti-trust authorities -- argued that the proposed merger would help revive the beleaguered music market.

"They said that a merger was the best way to cope with the falling sales and the threat of piracy," one participant at the closed-door hearing tells

The two groups also rebutted arguments made by the EC in its 51-page Statement of Objections (SO) to the deal, issued last month. The SO accused the five music majors of price-fixing, market collusion and collective dominance.

"They insisted that the market was transparent, that the majors competed against one another and that it was not possible to fix the market," says the source.

Today's meeting was also attended by competitors and other interested parties, including representatives of EMI, Warner Music, independent labels body Impala, European consumer group BEUC and computer giant Apple. These third parties are due to deliver their own assessments of the proposed merger tomorrow.

Impala said last week that the EC should block the merger, as it would further strengthen the alleged stranglehold the majors have on pricing and distribution.

The planned merger would create the world's second-largest music company, with control of about one-quarter of the $30 billion industry.

The EC's SO says a merger "would strengthen a collective dominant position in the market for recorded music and in the wholesale market for licenses for online music, as a result of which effective competition would be significantly impeded."


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