Indies dismayed at Sony clearance

10:10 | Tuesday September 16, 2008

The deal, which was reached in early August, saw Bertelsmann take over selected European catalogues of music rights from Sony BMG. But, the Commission concluded that the transaction would not significantly impede effective competition in Europe.

The Commission's investigation also found that the transaction would not lead to any horizontal overlaps in the music recording markets as Sony has no other music recording activities in Europe.

However, European indies group Impala is disappointed the EC did not give the matter a full investigation, claiming that the move fully integrates the world's second largest music company with the largest consumer electronics company, thus "creating a wide array of new vertical and horizontal problems as the industry progresses toward digital delivery of music through multiple platforms".

Impala co-president and president of Naïve Patrick Zelnick says, “It is difficult for us to understand how there can be such a difference between what the Commission says and what the Commission does. Cultural diversity is meant to be properly taken into account in all decisions. Merger control rules must be adapted to cultural industries.”

Michel Lambot, Impala co-president and co-president of PIAS Entertainment Group, adds “We keep saying that music is not like widgets. The Commission needs to completely reassess its view of the music market. They have just let the world’s largest consumer electronics company merge with the second largest music company without any detailed investigation.”

But, the Commission also says it investigated whether the combination of the music recording activity of Sony BMG with the music publishing activity of Sony/ATV (its joint venture with the artist Michael Jackson) could have a detrimental effect. It found online retailers would continue to have access to a sufficiently large portfolio of music rights from alternative suppliers.

The Commission also concluded that Sony would continue to have the incentive to sell its music to as many customers of portable music devices, mobile phones, video games and films as possible and would, therefore, not restrict access to its music catalogue to competitors in these markets.

The EC approved the Sony BMG joint venture between Sony and Bertelsmann in 2004 and 2007, despite extensive lobbying from Impala and others.