Sony BMG appeals merger clearance reversal

Bertelsmann Music Group (BMG) and Sony Music are appealing against the Court of First Instance judgment, which overturned the European Commission’s decision to clear the merger between the two companies.

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

However, in an unprecedented move the Court of First Instance in July reversed the merger clearance, thereby requiring the Commission to carry out a fresh investigation.

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

The joint appeal by BMG and Sony is based both on procedural and substantive grounds. It is understood that the parties will argue that the Court of First Instance’s decision has blurred the Airtours judgment, which overturned a finding of collective dominance and clarified the Commission’s evidentiary burden.

In its judgment, 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.

IMPALA was advised by senior partner Scott Crosby and of counsel Jane Golding of Brussels-based competition specialist Crosby Houben & Aps.

Competition partner Philippe Chappatte is leading the Slaughters team while Brussels-based Cleary Gottlieb partner Robbert Snelders is leading the charge for Sony.