EU tells Sony, Bertelsmann music deal given go ahead

FRANKFURT/LONDON- The European Union approved without any conditions the merger of BMG and Sony Music, both music companies said on Monday, one day ahead of a planned announcement from competition authorities.

Combining the recorded music businesses of Bertelsmann AG and Sony Corp. will create the world’s second-largest music company, behind Vivendi’s Universal Music, with revenue between US$4,5 billion (N$26,55 billion) and US$5 billion (N$29,5 billion).The company is slated to be named Sony BMG and will include a wide array of artists, including Aerosmith, Beyonce and Britney Spears.The proposed merger does not include the music publishing units of either company, Sony’s Japanese arm or its CD manufacturing business.”We are delighted that the European Commission has decided to approve the creation of Sony BMG without imposing any conditions,” BMG Chairman and Chief Executive Officer Rolf Schmidt-Holtz said.He is scheduled to become chairman of the board of directors of Sony BMG.Commission officials were not immediately available to comment, though approval has been widely expected since people familiar with the situation tipped the EU’s likely recommendation last month.Sony and Bertelsmann have argued that difficulties in the music industry, which is facing declining sales of CDs and illegal downloading, necessitated the merger.”We’re pleased that (EC officials) have recognised that the creation of Sony BMG is an appropriate and necessary response to current market conditions,” said Sony Music Entertainment chairman and chief executive Andrew Lack, who will become CEO of the combined company.The deal still requires approval from US regulators, who are expected to reveal their decision as early as Tuesday, when the European Commission is also scheduled to make its formal announcement on the merger.”We are working closely with the US Federal Trade Commission and are optimistic that final action will be forthcoming in the very near future,” a Bertelsmann spokesman told Reuters.FTC spokesman Mitch Katz said it would be “inappropriate” for the agency to comment.”The commission hasn’t even confirmed that we’re looking at this transaction,” he said.The deal is opposed by independent record producers, who found some initial support at the commission.Ultimately, however, Competition Commissioner Mario Monti and his staff decided that the original arguments against the deal would not stand up before the European Union’s Court of First Instance in Luxembourg.The court has thrown out three commission prohibitions, deciding that the commission failed to prove its cases, setting a high bar for proof in the process.At two days of closed hearings earlier this year – where Sony, BMG, their critics and their allies aired views – one lawyer warned the commission that it had best remember the high standards of proof set by the court, sources said.-Nampa-Reuterswill create the world’s second-largest music company, behind Vivendi’s Universal Music, with revenue between US$4,5 billion (N$26,55 billion) and US$5 billion (N$29,5 billion).The company is slated to be named Sony BMG and will include a wide array of artists, including Aerosmith, Beyonce and Britney Spears.The proposed merger does not include the music publishing units of either company, Sony’s Japanese arm or its CD manufacturing business.”We are delighted that the European Commission has decided to approve the creation of Sony BMG without imposing any conditions,” BMG Chairman and Chief Executive Officer Rolf Schmidt-Holtz said.He is scheduled to become chairman of the board of directors of Sony BMG.Commission officials were not immediately available to comment, though approval has been widely expected since people familiar with the situation tipped the EU’s likely recommendation last month.Sony and Bertelsmann have argued that difficulties in the music industry, which is facing declining sales of CDs and illegal downloading, necessitated the merger.”We’re pleased that (EC officials) have recognised that the creation of Sony BMG is an appropriate and necessary response to current market conditions,” said Sony Music Entertainment chairman and chief executive Andrew Lack, who will become CEO of the combined company.The deal still requires approval from US regulators, who are expected to reveal their decision as early as Tuesday, when the European Commission is also scheduled to make its formal announcement on the merger.”We are working closely with the US Federal Trade Commission and are optimistic that final action will be forthcoming in the very near future,” a Bertelsmann spokesman told Reuters.FTC spokesman Mitch Katz said it would be “inappropriate” for the agency to comment.”The commission hasn’t even confirmed that we’re looking at this transaction,” he said.The deal is opposed by independent record producers, who found some initial support at the commission.Ultimately, however, Competition Commissioner Mario Monti and his staff decided that the original arguments against the deal would not stand up before the European Union’s Court of First Instance in Luxembourg.The court has thrown out three commission prohibitions, deciding that the commission failed to prove its cases, setting a high bar for proof in the process.At two days of closed hearings earlier this year – where Sony, BMG, their critics and their allies aired views – one lawyer warned the commission that it had best remember the high standards of proof set by the court, sources said.-Nampa-Reuters