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Thursday, October 05, 2006
Sony and Bertelsmann appeal against EU court ruling

Sony and Germany's Bertelsmann have appealed against an EU court ruling that scuppered a planned merger of their music businesses, the European Court of Justice has said.

A joint appeal was lodged on Tuesday," a European Court of Justice spokesman told AFP on Thursday. In the summer of 2004, the European Commission gave the green light for the merger of Sony Music and BMG, the music arm of Bertelsmann.

That marriage would have given birth to the second-largest music group in the world. However, independent music labels brought a case to the European Court citing competition problems. They claimed the deal would stifle competition, as it would reduce the number of major music labels from five to four -- the others being Universal, Warner et EMI -- and that those behemoths would control 80 percent of the European music record market.

In July the judges in Luxembourg ruled that the Commission decision had been "riddled with errors". The ruling suggested that the European competition authorities should re-examine the matter. The Commission could in theory veto the deal within weeks. While such an outcome remains unlikely, industry experts expect new conditions to be attached to any merger to assuage the anti-competition fears.

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