EU may extend investigation into Sony-BMG marriage

LONDON — Objections to the proposed merger of Sony Music and BMG will be probed at length by the European Union’s antitrust watchdog.

The EU’s competition commission Wednesday refused to confirm that it has referred the proposed merger of the multinationals’ music divisions to a phase two investigation, but sources in Brussels and at the record companies are in no doubt that the extended investigation will happen.

The phase one investigation is due to end Feb. 12, but under EU merger rules, an extended probe may take a further four months, meaning the deadline for a decision would be around June 12.

“No decision has been made yet,” said a competition commission spokesman. “The commission will either grant regulatory clearance on Feb. 12 or it will start a more in-depth investigation.”

Sony and BMG are tight-lipped on the subject, but a senior exec at one of the companies said the process was going ahead as expected. “It’s only natural that the EU would want to take a complete look at the deal,” added the exec.

Music industry observers expect the second probe following loud objections to the merger from Brussels-based Impala, a trade body representing more than 2,000 independent record companies in Europe.

Impala outlined its four main objections to the merger Monday during a press briefing at the Midem music fair in Cannes.

It claims the merger would make it easier for all the majors to abuse the marketplace. This would not only adversely affect record companies, Impala says, but also music publishers, artists, performers, employees, managers, retailers, composers, writers, collecting societies and, ultimately, consumers.

Impala concludes that the EU will have no choice but to block the merger following its market assessment of a failed merger bid between EMI and Warner Music in 2000. Impala was also instrumental in having the EU investigate that proposal.

BMG and Sony hope to form a 50-50 joint venture to rival market leader Universal Music Group in size, with a little more than 25% of the global recorded music market share.

It is understood that the EU has asked for comments and objections to the Sony/BMG merger from main rivals Universal, EMI and Warner.

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