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EUROPEAN COURT ANNULS SONY/BMG MERGER
INDEPENDENTS WIN LANDMARK JUDGEMENT
In a landmark ruling which will
set important legal and political precedents,
the European Union’s Court of First Instance
has overturned the European Commission’s
2004 authorisation of the Sony/BMG music merger.
The Luxembourg Court pointed
out that the Commission’s analysis of the
Sony BMG case was left wanting in various fundamental
respects. It contained a series of legal and economic
errors which renders the decision null and void.
The Commission waved the merger
through unconditionally in 2004, creating the
world’s second largest music company and
putting 80% of the worldwide music market into
the hands of four media conglomerates. This was
despite widespread industry objection and previous
market assessments that further concentration
could not be tolerated. The independents highlighted
a catalogue of fundamental mistakes which left
the Court in no doubt that it had to overturn
the Commission’s approval. The Court also
ordered the Commission to pay three quarters of
IMPALA’s costs.
This is a victory for music and
cultural diversity. It is the start of market
recovery. The independents take the view that
the judgement underlines the need for any assessment
of mergers in creative sectors to take into account
the economic, social and cultural specificities
of markets. IMPALA also emphasises that a review
of the merger process in terms of the rights of
third party market operators is required. IMPALA
had made the case to the Court that the merger
clearance process is biased towards large corporations
and lacks transparency. Third parties who oppose
a merger have few rights compared to the notifying
parties. They also have extremely limited access
to the Commission’s file. This makes proper
decision making is very difficult.
The parties will now have to
consider their options. An appeal to the EU’s
highest court, also in Luxembourg, would be difficult
as it can only be made on grounds of law. The
merger will go back to the Commission but the
independents believe that the problems highlighted
by the Court right across the music market are
too fundamental to be repaired. Without competition
clearance Sony/BMG would have to dismantle.
The Court’s ruling will
also thwart any other attempts to merge such as
between EMI and Warner. It now looks extremely
unlikely that they would obtain the competition
clearances necessary. IMPALA will continue to
oppose any further concentration.
Patrick Zelnik (Impala President
and President of Naïve): This is a watershed
in European affairs. A landmark judgement for
music. There is no doubt that it will block any
further mergers and will transform how music and
other creative sectors are treated. We have proved
that, by acting collectively, we can challenge
the unchallengeable. We will make the terms of
the UNESCO convention on cultural diversity a
reality in the market place. The EC will now promote
cultural diversity under Article 151 (4) of the
EC treaty and carry out a proper cultural diversity
impact assessment across its decision making.
Martin Mills (Impala Chairman
and Chairman of Beggars Group): We are delighted
with the judgement. There was an objective need
in the general interest to ensure effective judicial
review of a decision comforting anti-competitive
structures. This is an incredible result, especially
considering the inequality of arms between IMPALA
and the Commission and Sony Corporation and Bertelsmann
Group. We are comforted that we found an ally
in the European Court which challenged the European
Commission and found it wanting. The fight for
market access and diversity will go on. And politics
and theories apart, this is a great result for
music.
Michel Lambot (former Impala
President and Co-Chairman of PIAS Group/Vital):
This judgement is a turning point for the EC.
The Court has recognised that the rights of Europe’s
creators to create should not be thwarted by unchecked
concentration. We see it as a call for the EC
to turn its rhetoric on the Europe’s creative
sectors into action. IMPALA is proud of its action
– the first of its kind in any sector. When
we took the decision to appeal, we proved that
collectively the independents can challenge large
commercial interests and the European Commission.
We see this as a victory for European artists,
entrepreneurs and European citizens.
Hein van der Ree (Impala Vice-President
and Managing Director of Epitaph Europe): I have
always had the confidence that we were fighting
for a just cause. The EC had the courage to scrutinize
and correct its mistakes. Although it took some
effort to get there, they are to be lauded for
doing so. This locks the door for an EMI/Warner
merger, thankfully, and keeps the doors of market
access open for the little guy.
About Impala
IMPALA is a non-profit making
organisation with a scientific and artistic purpose
to help independent record companies and music
publishers organise themselves.
IMPALA has over 2500 members
including the top independents: Beggars Group
(UK), !K7 (Germany), Epitaph (US/NL), Playground,
Gazelle (Sweden), Naïve (France), Edel Music
(Germany), PIAS Group (Belgium), V2 Music Group
(UK), Wagram (France), Roadrunner (NL), as well
as national trade associations from the UK (AIM),
France (UPFI), Germany (VUT), Spain (UFI), Denmark
(DUP), Norway (FONO), and Sweden (SOM).
For further queries, please see
http://www.impalasite.org
www.forculturaldiversity.org
or contact IMPALA on T: + 32 2 289 2600, IMPALA
Rue du Trône, B-1050, Brussels.
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