EU court reverses Sony/BMG merger clearance

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 this morning (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 on 3 December 2004. The Commission cleared the merger between BMG and Sony, advised by Slaughter and May and Cleary Gottlieb Steen & Hamilton, in July 2004.

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.

Commenting on the ruling a competition partner said: “How do you unscramble something that has already been scrambled together?”