News Release
No. 115/04
July 20, 2004
EU COMMISSION DECIDES NOT TO OPPOSE RECORDED MUSIC JV BETWEEN SONY AND BERTELSMANN
The European Commission has granted regulatory approval to the creation
of Sony BMG, a joint venture combining the recorded music businesses of Sony and
Bertelsmann, after concluding that it did not have sufficiently strong evidence
to oppose the deal. The Commission will keep a close watch on the music sector
as it becomes even more concentrated and would very carefully scrutinise any further
major concentration in the industry.
On 9 January 2004, the Commission received a notification
whereby Sony Corporation and Bertelsmann AG (BMG) would merge their recorded music
businesses into a 50/50 joint venture named Sony BMG. The transaction comprises
the companies’ activities regarding the discovery and development of artists and
the recording and marketing of their music. It does not include their activities
in music publishing or the manufacturing and physical distribution of records.
The Commission has assessed the merger very carefully as it reduces the number
of so-called music majors from five to four without, however, giving Sony BMG
the number one spot in Europe which continues to he held by Universal. Therefore,
the Commission sought to establish whether the deal could create or strengthen
a collectively-held dominant position between Sony BMG, Universal, EMI and Warner
Music, the other two main players in the music industry.
The Commission particularly focused its attention on the markets for recorded
music. An analysis of a large amount of price data and third-party submissions
in the recorded music markets of the different European
Economic Area[1] countries indicated a relatively close price parallelism
for CDs released by the five majors in some countries as well as certain features
that could facilitate tacit collusion. On balance, however, the Commission had
to conclude, taking into account a deficit in the transparency of the market,
that the evidence found was not sufficient to demonstrate in a successful way
that coordinated pricing behavior existed in the past and that a reduction from
five to four major recording companies would not yet create a collectively held
dominant position in the national markets for recorded music in the future.
The Commission also examined the merger’s impact in the emerging market for online
music licenses as well as online music distribution, but concluded to the absence
of serious competition problems. The same goes for the examination of the vertical
relationships between Sony BMG’s recorded music and Bertelsmann’s downstream TV
and radio activities in Germany, France, Belgium, Luxembourg and the Netherlands.
The Commission and the Federal Trade Commission of the United States co-operated
closely in their review of the case.
Bertelsmann Music Group is a subsidiary of Bertelsmann AG, a German-based international
media company whose activities also include television and radio production and
broadcasting as well as book and magazine publishing. BMG’s music labels include
Arista, Jive, Zomba and RCA.
Sony Corp. of America belongs to the Japanese Sony group whose activities include
consumer electronics and the entertainment industry besides the music recording
and publishing business. In recorded music it acts through Sony Music Entertainment
which owns the Columbia, Epic and Sony Classical, among other labels.
[1] European
Union plus Norway, Iceland and Liechtenstein.
|
Press Contacts:
|
Anthony Gooch
202-862-9523
|
Maeve O'Beirne
202-862-9549
|
