EU Court Nixes 2004 Approval Of Sony BMG Merger; WMG-EMI Talks "Likely" Suspended
July 13, 2006 at 10:28 AM (PT)
The 2nd highest ranking court in the EUROPEAN UNION has thrown out earlier EU approval of the SONY MUSIC GROUP and BERTELSMANN MUSIC GROUP (BMG) merger. EU regulators now must re-review the merger. The EUROPEAN COMMISSION, the EU's antitrust authority, approved the merger in July 2004.
An International coalition representing some 2500 independent record companies, IMPALA, had appealed the EC's approval of the SONY BMG merger, arguing that the merger would hamper up-and-coming artists and stifle competition. SONY BMG has seven days to renotify the merger to the EC for review.
We are in the process of reviewing today's decision ... to determine what impact it might have on a potential combination of WARNER MUSIC GROUP and EMI GROUP PLC
The EU's Court of First Instance ruling and merger uncertainty has thrown a monkey wrench into talks between WARNER MUSIG GROUP and EMI. BLOOMBERG.COM reports a 10% drop in the EMI stock price following the EU ruling. BLOOMBERG.COM has more details on the EU's SONY BMG ruling here.
UPDATE: In the wake of the court's decision, WARNER MUSIC GROUP has issued the following statement:
"We are in the process of reviewing today's decision by the EUROPEAN COURT OF FIRST INSTANCE regarding SONY BMG to determine what impact it might have on a potential combination of WARNER MUSIC GROUP and EMI GROUP PLC."
REUTERS reports that sources familiar with the situation say EMI and WMG will likely suspend their merger talks because of the ruling.