Hey, watch out Messrs Major Label, IMPALA are on the attack after their tactical win in the European court room last week. Yep, the pan-European trade body for the independent sector has been talking tough after winning its legal fight against the European Commission last week - telling reporters yesterday: "[the] mere fact that the SonyBMG house is already built doesn't mean it won't have to be pulled down".
As previously reported, following legal action by IMPALA, the European Courts last week ruled that the European Commission should never have allowed Sony and Bertelsmann to merge their record companies in 2004 because, they said, there was little evidence that such a merger would not be detrimental to the wider music sector. Commenting on the court's findings, IMPALA says that the judges identified "fundamental problems" with the merger and, as such, they are confident that any reapplication of merger proposals by Sony and Bertelsmann to the EC will be unsuccessful.
Therefore IMPALA concludes that they "take the view that SonyBMG must now be demerged" adding that "this is a constructive move and [we] offer to work with the Commission and the majors to create a viable and competitive music market".
Rounding up, IMPALA President Patrick Zelnik said yesterday: "13 July 2006 will go down as a vital date not only for music, but for the EC. SonyBMG will have to demerge and the damage caused in the meantime will have to be repaired ... IMPALA is ready to work with the Commission and the majors to make sure the European music market is as strong and innovative as it should be. Let's avoid having an IMPALAGATE situation on our hands."
Beggars boss and IMPALA chairman Martin Mills added: "We will be looking to the parties and the Commission to implement this judgment fully. They must cure the problems of collective dominance as identified by the court. Independents need guarantees on market access and promoting cultural diversity. This judgment could kickstart the recovery of the music market.
IMPALA also reckon that their court win last week will stop Bertelsmann from selling its publishing company to one of the other major music companies. As you'll remember, the German conglom is currently selling BMG Music Publishing, and the other four major music firms (that'll be EMI, Warner, Universal and Sony) have all bid for it. Bosses there said earlier this week that, as far as they are concerned, the EU ruling on SonyBMG does not affect the sale. Whether that means they weren't planning on selling to one of the other music firms anyway, or that they believe the ruling on the recorded sector won't effect regulator decisions on the publishing world isn't clear, though it it's the latter IMPALA definitely disagree.
The association's Vice President, Hein van der Ree, said yesterday: "We are concerned about any move to sell BMG Publishing to another major. Our appeal was not just about SonyBMG or EMI/Warner. It was about concentration right across the board in music. In today's climate, the question is whether merger talks are a reasonable use of shareholders' money. The financial markets will be watching this very closely. The judges in Luxembourg were not just concerned about procedural problems that can be fixed next time round".
So, there you go, much fun to be had in the world of music mergers methinks. If it's any consolation to SonyBMG, according to my Microsoft Word dictionary there's no such word as 'demerge', so there might be linguistic grounds for not 'demerging'.