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European parliament questions SonyBMG approvals
By CMU Editorial | Published on Thursday 18 December 2008
The elected European Parliament has challenged the European Commission about it’s speedy decision earlier this year to allow Sony Music to buy Bertelsmann out of the two companies’ joint venture record company, SonyBMG, which put the second biggest music firm in the world into the ownership of one organisation, Sony Corp.
They also question the Commission’s wider policy regarding allowing such big companies to be created in the music and cultural industries without safeguards to protect smaller independent firms – in essence questioning the approval of the SonyBMG merger in the first place.
As much previously reported, the merger of Sony Corp and Bertlesmann’s respective record companies to create SonyBMG in 2004 was not without controversy.
Pan-European indie label trade body IMPALA said the creation of a company as big as SonyBMG was anti-competitive and should not be approved by the Commission (who have the power to block such deals).
When the Commission then OKed the merger, without conditions, IMPALA went to the European Courts who ruled in the trade body’s favour, agreeing that the Commission had failed to sufficiently investigate the merger before giving it the green light and ordering them to reinvestigate the proposals. That they did, subsequently approving the merger for a second time. IMPALA are currently appealing that Commission decision too.
When Sony Corp announced it was taking complete ownership of SonyBMG (which will become just Sony Music Entertainment again in January) IMPALA issued a formal objection, but has not taken legal action because it is already fighting two cases in relation to SonyBMG – the aforementioned appeal of the Commission’s second decision, plus Sony’s appeal of the European Court’s decision regarding the Commission’s first decision.
You’re keeping up with this right? Anyway, the European Parliament has demanded that EC Commissioner for Competition, Neelie Kroes, who oversees all this, answer the following questions regarding Sony’s dominance in the music space, and the more general issue of protecting independent players in the cultural sector.
1. Why didn’t the Commission carry out an in-depth investigation when it adopted its last approval decision (re Sony buying BMG out of SonyBMG)?
2. What is the Commission’s strategy for making sure that SMEs have market access in concentrated sectors like music?
3. Will the Commission adopt new rules or guidelines on how competition policy should be adapted to the specificities of cultural markets such as music?
Welcoming the European Parliament’s moves, IMPALA said in a statement this morning that it continued to fight the dominance of companies like Sony “on both political and commercial levels, as well as judicial”.
Collective bargaining operations like Merlin is an example of the ‘commercial level’, while on the political front IMPALA said: “We will also continue to ask the Commission to reform competition rules, and investigate the structure of the music market and the impact that this is having on the development of the critical online market”.
They concluded that such activity was essential because their predictions about “the consequences of excessive concentration have indeed come true. The combined market share of Universal and Sony for chart albums in key territories such as the UK is over 80%”.
