EU gives green light to Sony-BMG music tie-up, again

(BRUSSELS) - EU competition regulators gave Wednesday a new green light to a recorded music joint venture between Sony Music and Germany's BMG, after a court ordered a reassessment of the merger.

The European Commission decided that the creation of Sony BMG "would not create or strengthen a dominant or collectively dominant position in the music markets."

The merger bid has a long history that has brought it into the European courts.

The marriage, which would give birth to the second-largest music group in the world, was originally approved by the Commission, the EU's executive body and top competition regulator, in 2004.

However independent music labels brought a case to the European Court of First Instance, the EU's second highest tribunal, citing competition problems.

They claimed the deal would stifle competition, as it would reduce the number of major music labels from five to four -- the others being Universal, Warner et EMI -- and that those behemoths would control 80 percent of the European music record market.

In July 2006, the judges in Luxembourg ruled that the Commission decision had been "riddled with errors" and suggested that it should re-examine the matter.

Now that re-examination is over.

"This investigation represents one of the most thorough analyses of complex information ever undertaken by the Commission in a merger procedure. It clearly shows that the merger would not raise competition concerns in any of the affected markets," said EU Competition Commissioner Neelie Kroes in a statement.

The Commission re-evaluated the transaction in the light of current market conditions, taking into account new technologies including the developments in the sales of online music.

Sony BMG's combined share of global music sales would be around 25 percent, making it the world's second-largest music group after Vivendi's Universal. The only other two major global players are Warner and EMI.

The two companies hope their tie-up will open up synergies of around 280 million euros (347 million dollars).