Feeds

Sony BMG ruling rocks European Commission

'Watershed' decision

3 Big data security analytics techniques

The European Commission's arguments supporting the Sony/BMG merger in 2004 were not of "the requisite legal standard" and were marred by "a manifest error of assessment" according to Europe's second highest court.

In overturning the commission's decision to allow the two record labels to merge, the Court of First Instance has dealt a severe blow to the commission in its role as Europe's competition regulator. It is the latest in a long line of overturned decisions, though the first in which an approval was overturned; other cases involved blocked mergers which were then approved.

In 2002, the commission blocked three mergers which were subsequently approved by the Court, prompting a major review of the commission's merger review processes. The Sony/BMG decision was the first taken entirely under the guidance of the new rules, and this latest overruling will undermine that new approach.

"This is a disappointing result for the commission, particularly given the radical changes it has implemented since the series of defeats in 2002," said Christina Day, a competition law specialist with Pinsent Masons, the law firm behind OUT-LAW.COM.

This week, the Court upheld a case brought by independent music label association Impala to have the approval annulled. "This is a watershed in European affairs, a landmark judgement for music," Impala president Patrick Zelnick said. "There is no doubt that it will block any further mergers and will transform how music and other creative sectors are treated."

Previous overrulings have involved mergers that were blocked by the commission. Many observers assumed that approvals of rulings were less likely to be challenged. Some commentators have said that former competition commissioner Mario Monti, who made the original decision just as he was leaving office, was keen to approve the merger to avoid controversy.

The ruling itself carried scathing criticism of the incomplete nature of the commission's basis for its judgment. "The elements on which that argument was founded were incomplete and did not include all the relevant data that ought to have been taken into account by the commission," it said. "They were therefore not capable of supporting the conclusions drawn from them."

The commission now has the right to appeal, but only on points of law and not on the case as a whole. The body has two months in which to lodge its appeal with the European Court of Justice.

The case may also have implications for a proposed merger between two of the other four major labels, Warner Music and EMI. Both companies are keen on the merger but cannot agree on price. The Court's ruling makes a regulatory hurdle more likely even if the companies can come to a financial agreement.

Following the annulment of its first decision, the commission will have to conduct another investigation into the merger.

"Given that the Court's judgment heavily criticises the commission's inadequate analysis and assessment of the merger, it is likely that the commission will be even more wary when reconsidering this case, thus prolonging the parties' uncertainty further," said Day.

In a message to staff, Sony BMG chief executive Rolf Schmidt-Holtz said: "While we are not pleased with having to incur the cost and inconvenience of a reconsideration process, we are confident this re-examination will confirm the commission's original findings."

See:

Copyright © 2006, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

High performance access to file storage

More from The Register

next story
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Did a date calculation bug just cost hard-up Co-op Bank £110m?
And just when Brit banking org needs £400m to stay afloat
Sorry London, Europe's top tech city is Munich
New 'Atlas of ICT Activity' finds innovation isn't happening at Silicon Roundabout
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
prev story

Whitepapers

Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
SANS - Survey on application security programs
In this whitepaper learn about the state of application security programs and practices of 488 surveyed respondents, and discover how mature and effective these programs are.