Sony, BMG Prep For EC Hearing

Majors to defend merger against issues raised in SO.

Sony Music and BMG are expected to present a robust defense of their proposed merger at the European Commission's oral hearing June 14-15 in Brussels.

The closed-door hearing, called for by the EC's competition department, will be the occasion for Sony and BMG to respond to the issues raised by the Commission in its Statement of Objections (SO), sent at the end of May.

Other interested parties, such as European indie labels body Impala, are also expected to present their views on the merger during the hearing. understands that several executives from BMG and Sony, with their respective lawyers and advisers, will be holding final preparatory meetings on Sunday (June 13) in Brussels.

During the hearing, they are expected to counter the EC's accusations of price-fixing, market collusion and collective dominance. A Sony-BMG competitor described the SO as "pretty aggressive" and containing "serious issues for Sony and BMG to respond."

One executive close to the merger says, "The SOs are always strongly worded and raise issues that are of concern to the Commission. We hope to be persuasive. We believe our arguments are sound."

The executive continues, "Our views about the state of the industry and the evolution of the marketplace are consistent. They have not changed with the SO. But we will answer the issues that it raises. On the whole, we will present what we believe in, and hopefully, good sense will prevail."

During the hearing, Sony and BMG could make concessions to alleviate some of the Commission's concerns.

The EC has to rule on the case before July 22.