by CIO Staff

Sony, Bertelsmann Merger OK Tossed by E.U. Court

Jul 13, 20062 mins
Mergers and Acquisitions

The Court of First Instance in Luxembourg has tossed out European Commission approval of a merger between Sony and Bertelsmann’s music divisions and ordered an additional review of the proposed deal, Bloomberg reports.

The court said the commission’s “extremely cursory examination” was not enough to prove that a merger between Sony and Bertelsmann would not lead to a music market that is too concentrated, according to Bloomberg.

A collection of independent music firms logged the appeal because they said that Sony BMG would make it difficult for unknown, new artists to make a name for themselves, and therein decrease competition in the industry, Bloomberg reports.

Sony Headquarters
Sony Headquarters

Within their appeal, the group of independent music firms said that four large companies currently control music sales, and those four companies own 80 percent of the market in the music space, according to Bloomberg. The largest music firms in the world are Vivendi’s Universal Music, Sony, EMI and Warner Music, Bloomberg reports.

The merger between Sony and Bertelsmann was initially approved in 2004 by the European Commission, the European Union’s antitrust body, according to Bloomberg.

Oliver Fahlbusch, Bertelsmann spokesman, told Bloomberg, “Today’s judgment does not affect the validity of the Sony BMG joint venture. We are studying the judgment carefully and shall discuss the appropriate next steps with the European Commission.”

Sony has one week to notify the commission of another transaction, as the first has been annulled, Bloomberg reports.

European Commission spokesman Jonathan Todd told Bloomberg the commission will take its time in deciding whether to appeal the Court of First Instance in Luxembourg decision to the European Court of Justice, the highest court in the union. The commission has two months to file an appeal, according to Bloomberg.

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