Brussels, 13/02/2004 (Agence Europe) - The European Commission decided on Thursday to open an in-depth inquiry into the proposed merger of the global recorded music businesses of Germany's Bertelsmann AG and Japan's Sony Corp. After a routine one-month review, it is concerned that the operation may create or reinforce a collective dominant position of the major record companies on the recorded music market. In its inquiry, the Commission will also look at other competition problems related to the vertical integration of the parent companies on other markets.
On 9 January, Sony and Bertelsmann sent the Commission their plans to combine their respective global recorded music activities into a joint company, to be known as SonyBMG. Their activities in the field of music publishing and the manufacturing and distribution of records will remain separate. After the one-month review, the Commission decided to see whether the operation would create or reinforce a collective dominant position between the four major remaining record companies- Universal, SonyBMG, Warner and EMI- on the recorded music market (the signing of artists, the actual recording of the songs, the marketing of artists and their works and CD sales). The four majors would have some 80% of the recorded music market in Europe and on most national markets within the European Economic Area. The rest of the market is characterised by a large number of smaller players active mainly on a national level. SonyBMG and Universal only would account for approximately half of the recorded music market.
The opening of a second-stage merger investigation does not prejudge the Commission's conclusions, according to a press release, nor its final decision, to be taken no later than 22 June. During the course of its investigation, the Commission will also see whether the vertically-integrated structure of Sony and Bertelsmann would cause competition problems. Bertelsmann holds a strong position in the field of television and radio broadcasting in Europe through its RTL subsidiaries; third parties fear that this could give preferential access to SonyBMG music, foreclosing competing record companies from equal access to the TV/radio markets in some countries. Sony, on the other hand, announced the launch, this spring, of a music downloading device called "Sony Connect"; it has an extensive range of consumer electronic devices which play digital music, especially portable digital players. Here too, some third parties fear that Sony, thanks to its proprietary technology for music downloading, could limit access by competitors to the markets for music downloading services and portable music players by denying them access to SonyBMG's music library.