EU Court Halts Sony, Bertelsmann Merger

[webmaster]

BRUSSELS, Belgium -- An EU court on Thursday overturned the European Commission's approval of a merger between the music units of media giants Sony and Bertelsmann AG that created the world's second-largest record label.

This forces Sony and BMG to ask the EU to clear the deal again based on current market conditions, said EU spokesman Jonathan Todd. However, Sony BMG said it did not believe the judgment undermined its business.
[...]
The European Commission had unconditionally approved the 50-50 joint venture between Japan's Sony Music and BMG, the German media giant's music unit, in July 2004 after finding insufficient evidence the deal would harm consumers.

The deal brought Sony artists like Aerosmith, George Michael and Barbra Streisand and BMG's Avril Lavigne and Elvis Presley under one roof. It also reduced the number of music "majors" from five to four. Sony and BMG argued they needed to join forces to deal with declining CD sales and the threat from illegal downloading on the Internet.

Regulators had assumed that there was no record industry monopoly because there were a wide variety of products on the market and the absence of open disputes between the five largest companies.

But the court found they did not properly support a theory that promotional discounts ultimately prevent a monopoly occurring.
[...]

Source:
http://www.latimes.com/business/inve...ck=1&cset=true