Monti team out of tune as music minnows sing the merger blues

By Peter Chapman

Date: 13/05/04

The independent record companies fighting the merger of Sony Music and BMG have complained that their efforts to block the multi-billion euro deal have been hindered by Commissioner Mario Monti's competition directorate-general.

IMPALA, the Brussels-based independent labels association, said Monti's merger team demanded huge amounts of information from small labels - many without their own legal departments - with deadlines right in the middle of the music industry's biggest trade fair, Midem in Cannes, which took place from 25-29 January.

Monti's merger watchdogs fired-off requests for information to companies - at one of the sector's busiest times of the year - along with a warning that the Commission has the right to impose fines of up to €25,000 a day for failing to respond.

In its own response to DG Competition, IMPALA complained about "the difficulties of dealing with such a technical document with four - then extended to six - working days notice".

It added that it would have been impossible under any circumstances to provide "this level of information in as much detail as would be requiredwithin deadline".

IMPALA said the Commission's heavy-handed approach "places the independent sector at a severe disadvantage and raises issues about its right to be heard".

The EU executive is expected to issue a 'statement of objections' to the merging firms next week, outlining its concerns about the deal, ahead of a 22 July date for announcing a decision in the case.

Sony Music and BMG argue that the merger makes sense because the music market has been hit by a slump, partly fed by online piracy and counterfeiting.

If the merger goes ahead, the 50/50 joint venture would combine world number two music company Sony Music, which includes musicians such as Beyonce Knowles and Bruce Springsteen, with number five BMG, home to Britney Spears.

The company would rival leader Universal Music Group.

However, critics, including the independents, say the merged firms would squeeze rivals thanks to their massively increased marketing clout.

The Commission's investigations should be a formality, they say, because it opposed a similar deal between other music giants Warner Music Group and EMI four years ago, because it would have harmed competition.

http://www.impalasite.org/ http://www.impalasite.org/

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