Sony BMG Music Venture Wins EU Approval

Wednesday, 3 Oct 2007 | 7:20 AM ET

Japanese electronics giant Sony and Germany's Bertelsmann won competition clearance from the European Commission on Wednesday for their recorded music joint venture.

The Commission, which polices competition in the European Union's 27 member states, placed no conditions on the companies.

Sony and Bertelsmann already won clearance for the deal in 2004 and went ahead with their joint venture but that decision was overturned by the Court of First Instance, the EU's second-highest court, after an appeal by rival music groups.

The court decision sent shockwaves through the music industry and potentially could have forced the break-up of the venture between Sony and BMG, which subsequently appealed to the EU's highest court.

The Commission was obliged to conduct a fresh investigation, which it opened in January this year and could have resulted in a decision to unravel the joint venture.

"This investigation represents one of the most thorough analyses of complex information ever undertaken by the Commission in a merger procedure," Competition Commissioner Neelie Kroes said in a statement.

"It clearly shows that the merger would not raise competition concerns in any of the affected markets."

Sony BMG said it was pleased with the decision.

"Sony BMG can now devote its resources to addressing the challenges faced by the industry," it said in a statement.

The Commission said in its statement that it had re-evaluated the merger in the light of current market conditions, taking into account developments since 2004, including the growth of sales in online music.

"This means that the Commission was able to evaluate the actual impact of the merger on the market since 2004 and was not limited, as is usually the case, to an analysis of likely effects on the market in the future," it said.

The Commission's chief concern in the investigation was that with so few companies active in the market, firms would collectively coordinate their behavior by increasing prices, limiting production or dividing up the market.

"The in-depth investigation has provided no evidence of coordinated behavior prior to the merger or as a result of it.

This finding relates to both the markets for music in physical format and in digital format," said the Commission.

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