EUROPEAN COURT ANNULS SONY BMG MERGER Al Peterson – Records and Radio
A European Union Court has annulled the 2004 merger that was approved between Sony and BMG, sending the deal back to the European Commission for review and re-examination. The Court ruled that the Commission had not adequately established that the major music companies involved in the merger were not practicing collusion on market prices and market access. The suit against the merger was brought by Impala, a Brussels-based group representing independent record companies.
Impala said the Commission had not taken into account the merger's possible impact on issues including marketplace dominance and access when it approved the merger of Sony and BMG, which created the second-largest record company; Universal Music is the largest. The Commission has two months to appeal the decision to the European Court of Justice.
News of the annulment has reportedly cast some doubt on the potential merger of EMI and Warner Music, two major music labels who have been competing to purchase one another for the past several months. As a possible reaction to the news of the Sony BMG annulment, investors sent Warner's shares tumbling more than 15% in early trading today on the New York Stock Exchange, while London-based EMI's shares were down 9.5%.
Sony BMG Music Entertainment issued a statement, saying, "Today's judgment does not affect the validity of the Sony BMG joint venture, which has been up and running since August 2004 (after having been notified and investigated by the European Commission under the Merger Regulation). We are studying the judgment carefully and shall discuss the appropriate next steps with the European Commission."
Meanwhile, Warner Music Group also issued a statement: "We are in the process of reviewing today's decision by the European Court of First Instance regarding Sony BMG to determine what impact it might have on a potential combination of Warner Music Group and EMI Group plc." |