As expected, the European Commission has announced it is launching a new more detailed investigation into the 2004 merger of Sony and BMG's record label operations which means competition regulators will now not rule on whether the merged enterprise, SonyBMG, can continue to operate in its current form until July.
The EC has been reconsidering whether or not the SonyBMG merger should have gone ahead ever since the European Courts last year ruled it should not have given approval in 2004 based on the evidence available to it at that time. They were due to announce their findings yesterday, but instead said a second probe was necessary before reaching a conclusion, so that officials could undertake a "thorough analysis of the complex information".
The pan-European trade body IMPALA, who spearheaded the original legal fight against the SonyBMG merger, welcomed the news of a more detailed investigation, claiming that the fact EC officials had not been able to re-approve the merger without in-depth investigation backed their claims that there were/are considerable concerns regarding the impact the merger could and has had on the wider music sector.
The trade association says it hopes the new in-depth investigation will look into issues ignored by the original 2004 probe into the potentially anti-competitive results of further consolidation in the record industry. They said in a statement yesterday: "IMPALA has been pushing for a wider investigation as, last time around, the focus was mainly on price. IMPALA's members have raised specific concerns about their reduced market access. These include the collective dominance of the majors and co-ordination of competitive behaviour in retail, radio and television, press and other media, as well as in the vital on-line market. The independents also asked the Commission to address other vital issues such as cultural diversity, the role of creativity and small business in the Lisbon strategy, vertical integration, links with sister publishing companies, unfair leveraging of repertoire and review of SonyBMG promises during the first investigation, as well as what has happened since".
Keen to distinguish their continued opposition to the SonyBMG merger to their recent somewhat controversial backing of a Warner takeover of EMI, the trade body continued: "IMPALA's agreement with Warner acknowledges that mergers without far-reaching remedies cannot be authorised. IMPALA expects the Commission to roll that out as a template for SonyBMG to serve as a model for the independents and all majors to work together towards market recovery". Which is possibly a controversial statement in itself, given that up until now IMPALA have been resolute that the only way forward in this domain was for SonyBMG to be demerged into Sony Music and BMG, but now seem to be implying that if SonyBMG made the same commitments to the indie sector as Warner are proposing to make should they takeover EMI, then all might be fine. Will be interested to see Ministry's take on that!
EC officials will now report back on 4 Jul.