Brussels, 10/06/2004 (Agence Europe) - The Sony and Bertelsmann groups will defend the proposed merger of their music production activities before the European Commission at a hearing on 14 and 15 June. The European Executive, which opened an in-depth inquiry into this operation, seems to be highly concerned at its consequences. With a 25% share of the world market, Sony and Bertelsmann will become the number two in the sector, behind Universal. The music world will be shaken all the more as the four "majors" (Universal, Sony/BMG, EMI and Warner Music) will have almost 80% on the market between them.
Having imparted its serious concerns further to a preliminary inquiry in mid-February (see EUROPE of 14 February, p.10), the European Commission sent the partners a communication of its objections on 26 May, in which it lists the majority of the problems. For example, the Commission has analysed the price of music CDs and noted that these follow the same evolution in the current five large groups, which will help to prove the existence of a collective dominant position. Sony and Bertelsmann sent a written response to the Commission, and are preparing now to defend themselves orally. According to both groups, the merger between their music production subsidiaries is justified in that the sector must consolidate and rationalise costs in the face of illegal Internet downloads. BMG adds that its merger with Sony will also help investment in looking for new talent, which is of benefit to artists and consumers. The Commission's answer is anticipated for 22 July.
Independent music producers (Impala) welcome Commission's resolve
The Association Impala, which represents some 2,000 members including some of the largest independent music producers, has welcome the position adopted by the Commission, whose strictness towards EMI and Time Warner four years ago led to plans to merge their respective music divisions being abandoned. Impala fears that one more concentration in the music production sector, which is already highly concentrated, could allow the "majors" to block the access of independent music producers even more. This imbalance would cause excellent, but less bankable, artists than the fashionable "blockbusters" to fall by the wayside, leading to reduced choice for consumers and cultural uniformity.
According to Patrick Zelnik, Impala Vice-President, "the music market is full of opportunities, and we need to the Commission to guarantee independents' access to it, in the interest of competition, innovation and the consumers". Horst Weidenmüller, a member of the Impala board, said: "it is already difficult to launch new artists onto the market. As a result, creativity is stifled, leading to the sector's decline. Concentration is the real cause of the market's problems, and an additional concentration would make things even worse for artists and diversity".