Luxemburg, 13/07/2006 (Agence Europe) - The European Court of First Instance has annulled the European Commission's decision of 18 July 2004 authorising the Sony BMG merger. “The Commission did not demonstrate … either the non-existence of a collective dominant position before the concentration or the absence of a risk that such a position would be created as a result of the concentration,” said the Court. The Commission, the Court said, could not rely either on the lack of transparency of the market to conclude that the concentration did not entail a risk that a collective dominant position would be created.
The Annulment of the Commission's decision had been called for by the Independent Music Publishers and Labels Association (Impala) (see EUROPE 8820).
The spokesman for the Commission said that it would study the judgment very carefully, but he could already say: - Sony and Bertelsmann have seven days from Thursday, the day of the judgment, to inform the Commission once again of the merger; - the Commission investigation will be carried out on the basis and according to the criteria of the old European “concentrations” directive, but according to current market conditions; - the two companies can appeal to the European Court, but any possible appeal on their part would not have a suspensive effect; - if the companies have made strategic choices on the basis of the authorisation granted by the Commission and they consider that they have suffered harm, they have in theory the right to seek damages.
The spokesman also said that in the Moulinex Case, the Court had annulled the Commission's authorisation of the SEB/Moulinex concentration, but following a second investigation, it had come to the same conclusions, “by explaining better” (see EUROPE 8584).
On 9 January 2004, Bertelsmann and Sony notified the Commission of their proposed concentration whereby they envisaged merging their global recorded music activities (with the exclusion of Sony's activities in Japan) into three new companies operated together under the name Sony BMG.
“This is a watershed …a landmark judgment for music. There is no doubt that it will block any further mergers and will transform how music and other creative sectors are treated,” said Patrick Zelnik, Impala President and President of Naïve in a press release. He went on, “We will make the terms of the UNESCO convention on cultural diversity a reality in the market place. The EU will now promote cultural diversity under Article 151 (4) of the EC treaty”. Martin Mills, Chairman of Beggars Group and Impala Chairman was “delighted” and said “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”. Former Impala President and Co-Chairman of PIAS Group/Vital Michel Lambot said the judgment was a “turning point”: “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 the large commercial interests and the European Commission,” he added. Impala Vice-President and Managing Director of Epitaph Europe Hein van der Ree said, “I have always had the confidence that we were fighting a just cause. This locks the door for an EMI/Warner merger, thankfully, and keeps the doors of market access open for the little guy”.
The press release points out that Impala, which has over 2500 members, is a non-profit making organisation, which helps independent record companies and music publishers organise.