Brussels looks into music merger
HELENA SPONGENBERG
28.06.2007 @ 09:14 CET
EUOBSERVER / BRUSSELS – The European Commission this week restarted an investigation into the merger between music company giants Bertelsmann Music Group and Sony Music, after the European Court of Justice last year overruled the EU executive's previous green light for the link-up.
The commission announced on Tuesday (26 June) that it would now look into the merger again after the initial re-examination had been postponed in March 2007 due to lack of complete and accurate information from the companies.
The digitalisation of music is changing the face of the music industry (Photo: European Commission)
"The file is finally complete and the probe has been re-launched," said commission spokesman for competition issues Jonathan Todd, according to AFP.
Brussels is now expected to come out with a final say on the 2004 merger of the music groups of the Japanese Sony Corporation and the German Bertelsmann AG on 10 October this year.
The EU's top court in July last year backed a challenge by a group of independent music companies - Impala - saying that Brussels had failed to prove that there was no danger that the merged Sony BMG would not be in a position to stifle competition in the music industry.
The Sony BMG merger brought together Sony artists like Aerosmith, George Michael and Barbra Streisand and BMG's Avril Lavigne and Elvis Presley, shrinking the number of major music companies from five to four.
The changing face of the music industry
In the meantime however, the commission approved last month the €1.63 billion takeover of BMG by the Universal Music Group – which is based in the US but owned by the French media conglomerate Vivendi – creating the world's largest music publisher.
However, the commission imposed the condition that certain important catalogues had to be sold off in order to allow post-merger competition of music in Europe.
The Sony BMG re-examination is also closely followed by the US-based Warner Music Group and the UK-based EMI Group – the world's number three and four record labels respectively – who are in talks about a potential merger, which could depend on the commission's decision in October.
The music industry across the world is undergoing fundamental changes as music has become digital and much more accessible.
Digital era
With the opening of legally licensed music download sites, the major record companies have begun to embrace digital downloading as the future of the music industry.
But, in the field of online rights, music publishers have started to withdraw their respective rights for Anglo-American song repertoires from the traditional collecting societies system in Europe.
Following these withdrawals, pricing power has shifted from the collecting societies to the publishers, according to the European Commission.