Sources say ruling may be sooner than July 22 deadline
Hopeful music newlyweds BMG and Sony Music were confident on Tuesday that their merger would get a green light from European Union regulators.Finishing off two days of oral hearings with European Commission competition authorities in Brussels, the companies said they believed that their “presentations on the business environment of the music industry and the nature of music as a cultural product are understood.” A BMG spokesman said that while some follow-up meetings with EC reps would take place this week, much information had already been exchanged. In a joint statement Tuesday, the duo said the recent presentations supplemented “extensive detailed written responses” to all the issues raised in the commission’s earlier statement of objections. The two called the hearings “constructive” and said they would continue “proactive engagement with the European Commission” until a decision is made next month. Price collusion and “collective dominance” of the market are regulators’ primary concerns in vetting the merger. The EU must give a final decision by July 22, but sources say a ruling could come sooner. Independent labels argued before the commission Tuesday that they would have even more difficulty getting their CDs to retail as the major players already abused market power. Indies praised the EU’s statement of objections spelling out EU concerns that the big four would collude on price. The 50-50 combo of the two music majors was first announced in the fall, but will depend on a seal of approval from notoriously tough European cartel cops. The combined entity could claim about 30% of the North American recorded music sales market, making it slightly larger than Vivendi-owned market leader Universal Music Group. Its market share in Europe would be slightly more than 25%. Some argue the EU could compel one or both companies to sell off pieces of their business — such as music publishing — to get the merger approved. BMG sources deny as speculation any suggestion that they may have to make divestitures. The deal as outlined in December does not include the parent companies’ businesses in music publishing, physical distribution and manufacturing. Nor does it include Sony’s Japanese music business in Japan, SMEJ. Independent music distribs opposing the deal argued that the combination would give the major labels too much power in the music market. But Sony and BMG parent Bertelsmann insist the deal would not suppress competition or inflate consumer music prices. Among others campaigning against the deal was iTunes backer Apple Computer, which is launching a version of its download service in Europe. It may be concerned about competing for prime product given Sony’s own online music store, Sony Connect.
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