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EC to re-examine Sony-BMG merger

Launches in-depth investigation

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The European Commission (EC) has launched an in-depth investigation into the merger of Sony and Bertelsman AG, despite having given the deal its blessing back in July of 2004.

The deal was given the go-ahead largely because, even post-merger, Sony-BMG did not knock Universal off the market number one spot. However, the EC was concerned that the merger could create a collective dominance for the four main players, (Sony-BMG, Universal, EMI and Warner) paving the way for collusion in the market. The commission concluded that there was not enough evidence to oppose the deal.

But in July 2006, the the European Court of First Instance annulled that judgement. It ruled that the commission had failed to demonstrate "either the non-existence of a collective dominant position before the concentration or the absence of a risk that such a position would be created as a result of the concentration".

Now the commission has opened the books again, and says it will re-examine the evidence, including new developments since 2004, such as the growth of online music sales.

It has until 2 July to reach its conclusion.

If the commission finds the merger to have been illegal, it can veto it. As to how it could unpick the two companies that have been merged for almost three years, the commission is reluctant to elaborate.

"I'd rather not get into hypothetical situations," a spokeswoman said. "Every situation is different and each case must be judged on its merits."

She declined to elaborate on the extent of the commission's powers in such a situation, so it seems to be a case of "watch this space".

Sony-BMG could not be reached for comment. ®

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