Court of First Instance blocks BMG-Sony merger

In an unprecedented move, the Court of First Instance has overturned the European Commission’s decision to clear the merger between Bertelsmann Music Group (BMG) and Sony Music.

The surprise decision, which was announced last Thursday (13 July), is the first time a merger clearance by the Commission has been reversed by the Court of First Instance.

The move followed an application by the Independent Music Publishers and Labels Association, an international association that represents the interests of 2,500 independent music production companies, on 3 December 2004.

The Commission cleared the merger between BMG and Sony, advised by Slaughter and May and Cleary Gottlieb Steen & Hamilton respectively, in July 2004.

At the time it was the only high-profile, in-depth, second-phase investigation to be concluded after the Commission appointed chief economist Lar-Hendrick Roeller.

However, the court said that the Commission did not demonstrate, to the requisite legal standard, 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.

The court criticised the Commission for carrying out an extremely cursory examination as regards the creation of a collective dominant position.

The Commission will now have to reconsider the decision for a second time.