New role for Klein

Bertelsmann names antitrust warrior to top U.S. ops

NEW YORK — Continuing its company-wide push for an expanded presence in the U.S., German media conglom Bertelsmann on Wednesday named renowned former government antitrust warrior Joel Klein to the newly created post of chairman and CEO of Bertelsmann’s U.S operations.

Veteran attorney Klein — best known as chief prosecutor in the U.S. government’s antitrust suit against Microsoft in 1998, a case that led to a court order mandating the breakup of the seemingly indefatigable tech giant — will take office Thursday, the company said.

Klein’s vigilance as a defender of competition, as well as his connections in political and regulatory circles, likely contributed to Bertelsmann’s decision to sign him on. The company will likely have to address concerns from international regulators over its own market power in the near future.

Bertelsmann’s plan to merge its music division, BMG Entertainment, with U.K. label group EMI is expected to meet with some resistance from the European Commission’s competition arm, which harbors concerns over the combined company’s domination of the global music market.

It was a similar set of EC concerns, in fact, that derailed EMI’s planned union with Warner Music Group last fall. Under the terms of that deal, which is technically still on the table, EMI is officially allowed to entertain offers from suitors other than Warner as of yesterday.

Klein said his role with regard to the BMG-EMI merger will be that of advisor to Bertelsmann topper Thomas Middelhoff, but he’ll leave the hands-on negotiations to others.

“I won’t be the lawyer; I won’t be the guy that deals directly with the agencies,” he told Daily Variety. “But on the other hand, I think I could be a good resource in helping Bertelsmann to deal with these issues.”

Bertelsmann is no stranger to accusations of unfair market dominance: Its acquisition of publishing giant Random House in 1999 also stirred fears of a corporate monopoly. The Authors Guild and the Association of Authors’ Representatives filed an objection with the FTC alleging that the deal, which merged Random House and Bantam Doubleday Dell, would have an unhealthy effect on the industry.

Klein also will act as Bertelsmann’s corporate liaison in the U.S., paying especially close attention to the company’s venture capital, e-commerce and online file-sharing operations stateside, Bertelsmann said.

The latter responsibility could prove to be among Klein’s most important. In October, Bertelsmann inked a controversial pact with file-sharing outlaw Napster, through which the German conglom hopes to set up the first legal, membership-based content sharing network.

(Jonathan Bing contributed to this report.)

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