Indie labels outraged as EU approves Sony BMG deal
LEIGH PHILLIPS
16.09.2008 @ 09:28 CET
EUOBSERVER / BRUSSELS - The European Commission has given Japanese electronics giant Sony the green light to purchase outright the record label Sony BMG in an 840 million ($1.2 billion) buy-out from German media firm Bertelsmann.
The EU executive sees no competition worries resulting from the merger, but indie music labels say Brussels is missing the point - it is cultural diversity concerns that are under threat from the creation of such a music titan.
Danish indie band Mew at record signing (Photo: wikipedia)
On Monday (15 September), the EU executive said that after examining the deal, it was unlikely that the transaction would harm competition, over howls of protest from independent music firms.
In August, Sony announced it intended to purchase Bertelsmann's 50 percent stake in Sony BMG, jointly owned by the two companies, for 630 million ($900 million), as well as some 210 million ($300 million) in cash of Sony BMG revenues.
Following the purchase, Sony will become the sole owner of Sony BMG, which will be renamed Sony Music Entertainment Inc. The Japanese firm would now become the second largest music company in the world.
The commission said that the transaction would not lead to any "horizontal overlaps in the music recording markets," as Sony has no other music recording activities in Europe.
The commission also believes that the vertical integration between the activities of Sony in consumer electronics such as mobiles and MP3 players, as well as its substantial video gaming operations and film studio, would not create any problems, and that the firm would not restrict access to its music catalogue to competitors in these arenas.
The European independent music label trade association, IMPALA, however strongly disagreed, saying the merger threatens cultural diversity and that the commission did not carry out an in-depth investigation as to the consequences of the deal.
"We keep saying that music is not like widgets," said Michel Lambot, co-president of IMPALA. "The commission needs to completely reassess its view of the music market.
"They have just let the world's largest consumer electronics company merge with the second largest music company without any detailed investigation."
"Artists and music fans will lose out from this," warned Horst Weidenmueller, the head of Berlin's K7 Records. "In the digital era vertical integration like this will make it harder and harder for the independents to keep producing ... innovative music."
Patrick Zelnik, another of IMPALA's presidents, added: "Cultural diversity is meant to be properly taken into account in all decisions. Merger control rules must be adapted to cultural industries."