Luxembourg, 20/12/2007 (Agence Europe) - In its conclusions submitted on 13 December, the advocate general at the European Court of Justice (ECJ), Juliane Kokott (Germany) called for the ECJ to reject the appeal by the Sony (USA) and Bertelsmann music publishing (Germany) joint venture BMG. Now known as Sony BMG, this new company went to the ECJ to annul a decision by the Court of First Instance, which refused the authorisation of the merger in July 2006 (EUROPE 9232). If the Court follows the conclusions of the advocate general, the refusal will be confirmed. The impact on the company will be minimal as the merger obtained a second green light from the Commission in October 2007, which remains valid and takes precedence over the refusal obtained at the Court of First Instance.
The parties opposed to the merger, including the European association of independent record labels (IMPALA) claimed that Sony BMG would not benefit at all from this appeal even if the ECJ found in its favour, given that the decision opposed by the European Court of First Instance had not had any effect. Subsequently, in order to preserve the legal resource the case would require, it has not been allowed to go to the ECJ on questions that are only of principle, and a specific interest has to be at stake. Ms Kokott acknowledged that a successful appeal would not directly affect the legality of the merger but she said, however, that Sony BMG, did actually have a specific and legitimate interest - the Commission's most recent approval, which has also been criticised by several parties, including IMPALA, who claim that there is an excess of mergers in the recorded music sector and an incompatibility with cultural support for SMEs. IMPALA will in principle oppose the most recent decision once the Commission has published the confidential version of its October decision, probably in January. In the meantime, the different parties involved are preparing their position for the future confrontation. The case currently at the ECJ will certainly be mentioned as a precedent. Its result is therefore important for both parties in the next chapter of this saga. The advocate general will be asking for recognition of Sony BMG's specific interest.
Although Ms Kokott believes that the position and stakes for Sony BMG should be given a hearing in the courts, she does not, however, find its arguments convincing and is advising the ECJ to throw the appeal out. Sony BMG claimed that there had been a “general presumption” in favour of the concentrations - in other words, the acquisitions will in principle be authorised unless there is concrete proof of the damaging impact on free competition. The advocate general deems this mistaken - the burden of proof goes both ways. It will therefore not be enough for Sony BMG to invalidate the Court of First Instance's analysis, it will also need to demonstrate that the concentration is not likely to distort free competition in the Union. The company has so far been unable to demonstrate this and Ms Kokott does not believe that Sony BMG can win at the ECJ.
If this principle is upheld by the ECJ, it will probably be used again in the impending appeal against the second Commission clearance. Sony BMG will therefore have to come up with a favourable market analysis in the meantime. (C.D.)