Surprise EU Ruling May End Merger Between Sony and Bertelsmann

Classic Arts News   Surprise EU Ruling May End Merger Between Sony and Bertelsmann
An EU court has overturned the European Commission's approval of the merger between the music divisions of Sony and Bertelsmann, forcing the companies to apply again.

The European Commission (the European Union's executive arm) had previously approved unconditionally the joint venture between Japan's Sony Music Corp. and BMG, Bertelsmann's music unit, in July 2004 after deciding the deal wouldn't harm consumers.

The July 13 ruling of the European Court of First Instance, however, stipulated that there was insufficient evidence to prove that a combined Sony-BMG wouldn't potentially develop into a monopoly.

Both Sony and BMG said they did not think the judgment undermined its business, according to the Associated Press. "Today's judgment does not affect the validity of the Sony-BMG joint venture, which has been up and running since August 2004," Bertelsmann said in a statement.

EMI Group, which has been discussing takeover offers with Warner Music Group, said "detailed study" would be needed before any decisions about a deal could be made, but noted that the ruling was about the "particular evidence" presented in the Sony-BMG case.

Warner and EMI abandoned a proposed merger four years ago in the face of EU charges that fewer major music companies could reduce competition and lead to higher prices and less choice for consumers.

A statement on Warner Music Group's website said, "We are in the process of reviewing today's decision by the European Court of First Instance regarding Sony BMG to determine what impact it might have on a potential combination of Warner Music Group and EMI Group plc."

Warner Classics, whose roster includes pianist Pierre-Laurent Aimard, conductor Daniel Barenboim, mezzo Susan Graham, baritone Dmitri Hvorostovsky and violinist Maxim Vengerov, experienced its own reshuffle last month. The Warner Classics unit is being incorporated into Rhino, Warner's reissue division. Stefan Bown will replace the recently departed Matthew Cosgrove as general manager of Warner Classics, reporting to Rhino U.K. director Nick Stewart. However, the label responded to reports that it was shutting down by saying it would "remain a key part of the Warner Music family."

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