Report: European Court's Ruling Could Affect Warner-EMI Merger
July 12, 2006 at 11:46 AM (PT)
The EUROPEAN COURT OF FIRST INSTANCE is set to rule tomorrow (7/13) whether or not to disallow the 2004 merger of SONY MUSIC and BMG on the basis of antitrust violations, and while experts do not expect the court to rule the pairing unlawful, the wording on the court's ruling could affect the potential WARNER-EMI merger, reports REUTERS.
"It seems difficult at this juncture to see how the SONY BMG merger could be unbundled ... but the wording the court uses will be extremely important," commented music attorney and MUSIC LAW UPDATES editor BEN CHALLIS.
"If, for example, the court is critical of the EC's (EUROPEAN COMMISSION) decision, or even its decision-making process," he added, "this could be a major hurdle for any potential WARNER-EMI tie-up."
Independent record companies trade group IMPALA filed its appeal against the SONY BMG deal in NOVEMBER 2004, and in MAY spoke out against any combination of EMI and WARNER, the world's third- and fourth-largest music companies, respectively. The organization contends that allowing the music industry to shrink from five major companies to four marginalized the independent sector and cost it market share. If the WARNER and EMI merge, the music industry will be left with three majors.
"If three companies have a market share of 75 percent, they can effectively dictate their terms to 100 percent of the marketplace. I don't see how that can be acceptable to anyone interested in ensuring market access to all players, large and small," said IMPALA member EPITAPH EUROPE Managing Director HEIN VAN DER REE, earlier this year.
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