In 2004, the two companies turned the former Big Five Organized Music labels into the Big Four when the European Union decided to approve a merger between them.
"The decision came after two days of closed-door hearings in which the companies faced EU charges, supported by many small independent labels, that the deal would lead to higher CD prices, less choice for music lovers and stifle the development of on-line music stores," stated the Associated Press at the time.
"Lawyers for the independent record companies that have opposed the deal are likely to meet Mr Monti today to warn of likely legal action if the merger is cleared," says the Financial Times. "They believe that the Commission's economic analysis of the case may have been flawed from the outset."
Now, “Shares of EMI Group Plc fell as much as 10 percent after a European Union court threw out EU regulators' approval of the merger between Sony Corp. and Bertelsmann AG's music units, damping the prospects of a deal between EMI and Warner Music Group,” says Bloomberg News, going on to quote analyst Anthony De Larrinaga as saying:
“It appears to pour a bucket of ice water over the hopes of an EMI-Warner merger and that's what's been supporting the shares.”
EMI (Britain), Sony BMG (Japan Germany), Warner Music (US) and Vivendi Universal (France) comprise the Big Four Organized Music cartel which is trying, and so far failing, to establish a viable corporate online music market, mainstream media reports to the contrary notwithstanding.
Meanwhile, the European Commission has two months to decide whether to appeal against an EU court ruling annulling its approval of a 2004 merger between Sony Music and BMG and it will take due time to consider," says Reuters, quoting EC spokesman Jonathan Todd, and continuing:
"The Court of First Instance, in response to a case brought by independent record companies, annulled the EU competition regulator's decision, which allowed the music industry to shrink from five major companies to four."
The EC failed to, "demonstrate effectively enough that the combined group Sony BMG would not create a dominant position," says AFX News.
The court, "observed that under the commission's decision, the absence of a collective dominant position on the market for major record companies could be inferred from a number of factors including the diversity of products available," says the story, going on, "However, the court found that the commission did not provide enough legal evidence to argue that promotional discounts for Sony BMG products would not create anti-competitive effects.
"It said this argument was impaired by a 'manifest error of assessment'."
AFX has Bertelsmann saying the ruling doesn't affect the validity of the Sony BMG joint venture.
Also See: EU charges - Green Light for Sony, BMG deal, June 17, 2004 Bloomberg News - EMI Shares Fall After Court Annuls Sony BMG Approval, July 13, 2006 Reuters - EU says has two months to appeal Sony-BMG ruling, July 13, 2006 AFX News - EU court annuls EU decision authorising creation of Sony BMG, July 13, 2006
