DailyTech - Court Rejects Merger Between Sony and BMG

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IT Court Rejects Merger Between Sony and BMG
Tuan Nguyen (Blog) - July 14, 2006 11:01 AM

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12 comment(s) - last by Dfere.. on Jul 17 at 8:18 AM

Anti-trust issues arise

A EU court this week rejected an approval made by the European Commission to allow the music unit of Sony and Bertelsmann AG to merge. According to reports, Sony's music division was set to merge with BMG Music but it appears that the two companies must file for approval again.

Sony and BMG stated that they would investigate the ruling and discuss on how to proceed with the European Commission. Representative from both companies told reporters that they did not believe the court's decision hurt their respective businesses. Bertelsmann said "today's judgment does not affect the validity of the Sony BMG joint venture, which has been up and running since August 2004."

The court decision to reject the merger marks the first time that a court has overturned a decision made by the European Commission to clear a merger deal. Analysts said that the stakes for the merger could rise or both companies may end up calling off the merger altogether.

The decision made by the Court of First Instance, was supported by an independent record label called Impala. The label represents over 2,500 independent music companies. Clearly, there is a concern over a monopoly if the merger goes through. The Court said that the approval by the EU did not properly show that the merger between Sony and BMG's music unit would not create a monopoly situation.

Sony and BMG now have seven days to submit applications for antitrust clearance.

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God?

By Misty Dingos on 7/14/2006 11:17:27 AM , Rating: 2

All the bad things happening to Sony are becaused they cancelled Qrio. Stupid Sony.

RE: God?

By epsilonparadox on 7/14/2006 11:28:35 AM , Rating: 2

Whats a Qrio?

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RE: God?

By unparalleled intellect on 7/14/2006 11:56:00 AM , Rating: 3

A dancing robot.

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EU Court of Justice

By lemmy on 7/14/2006 1:17:33 PM , Rating: 4

The decision about this merger is interesting, given that it was dcided by the CoFI, which is the second highest court in the EU, and is specifically an offshoot of the ECoJ. Thhe CoFI was designed to ease to work load of the ECoJ. It is unlikely that the decision will be reversed, given the nature of the relationship between the two courts, but more specifically, because of the nature of the commercial law of the EU. Eu law specifically prohibits anti-competitive commercial ventures, including cartels and monopolies, something Microsoft is only too aware of. If the laws regarding competition were as robust in other countries, smaller companies would find it easier to flourish

RE: EU Court of Justice

By Dfere on 7/17/2006 8:18:09 AM , Rating: 2

Lemmy,

Thanks for the info on the courts, but how can you say businesses flourish in the EU as compared to other countries? As far as a I know, we still have the shortest product development to market cycle of anyone, and only Taiwan was even close. Anyone help here?

Protecting consumers is one thing, while not mutually exclusive, the ability of a business to flourish is inversely related to regulatory costs, which of course, includes consumer protection laws.

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By wmansfield on 7/14/2006 11:11:55 AM , Rating: 5

Every time I hear of another blue ray delay or sony product that doesn't sell I cheer quietly inside...

Wouldn't be so different if they did...

By jon1003 on 7/14/2006 2:00:21 PM , Rating: 2

Is it just me, or do the music companies already seem to operate as one big friendly group...

RE: Wouldn't be so different if they did...

By BladeVenom on 7/14/2006 3:21:18 PM , Rating: 3

Yes, the big music companies already engage in collusion, e.g., price fixing, and the RIAA.

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RE: Wouldn't be so different if they did...

By lemmy on 7/14/06, Rating: -1

What IS their problem?

By Anemone on 7/14/2006 8:30:21 PM , Rating: 2

I don't exactly love Sony, and I definitely have serious issues with the music and movie industry, however mergers can't just be "undone" two years plus after the fact. This is really ridiculous. If you are going to decide such a thing it has to be timely. After that, you get what you got, and that's the end of it.

It would cost horrid amounts of money, not to mention millions of man hours to get this all undone, if even could be done this late in the game. And the costs of the merger itself on top of that could never be recovered. This decision smacks of those with little to no knowledge of how these things work and the costs involved, waving a gavel and thinking it can just be erased. Piss poor judicial management is just the least I would call it. And the EU judicial branch is famous for this kind of thing too.

It's a horrible decision, and frankly is just going to cost a lot of jobs, a disgustingly stupid amount of money (of course the EU lawyers get rich, go figure), and change just about nothing since the music industry works collaboratively anyway.

And to top it all off, the EU taxpayers PAID to have this money wasted. This is stupid on all accounts.

RE: What IS their problem?

By glennpratt on 7/15/2006 12:29:21 PM , Rating: 2

Umm....

quote:
Bertelsmann said "today's judgment does not affect the validity of the Sony BMG joint venture, which has been up and running since August 2004."

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