MUMBAI: Independent music group Impala has contested the decision by European Union regulators to approve the combination of the music units of Sony Corp. and Bertelsmann AG, which brings artists like Shakira, George Michael, Avril Lavigne and Elvis Presley and labels such as Arista, Jive, Epic and Columbia under one roof.
According to an AP report, the European Commission gave Sony BMG unconditional clearance last November to combine their music units - a second approval in three years after a court ripped up the original assent following a complaint from Impala, which represents 2,500 independent music firms.
While the EU's executive arm maintained it had looked carefully at the deal and concluded that the group - the world's second-largest record label - would not create or strengthen a dominant position in the music markets of Europe, Impala says the regulators had repeated many of the same mistakes."The EC has simply repeated the economic, political and cultural errors it made before," said Patrick Zelnik, co-president of Impala. "These need to be corrected." The group has now lodged an appeal at the EU's Court of First Instance in Luxembourg.
The AP report cites independent producers complaining that the deal would damage the music scene by combining and shrinking the number of major music companies from five to four, with too much power concentrated in the hands of Sony BMG and its rivals Vivendi SA's Universal Music Group, EMI Group PLC and Warner Music Group PLC.
In 2006, the European Union's second-highest court backed a challenge from Impala. The court ruled that regulators did not properly show that there was not a monopoly position before the deal or that there would not be one afterward.
However after a second review of the deal, the EU regulators confirmed their original decision that the combination would not raise competition concerns in the music market.
BMG was a branch of Germany's Bertelsmann AG, an international media group with interests in broadcasting, book and magazine publishing. It joined with the Japanese electronics and entertainment giant Sony in 2004, saying they needed to combine forces to deal with declining CD sales and the threat of declining record sales as illegal Internet downloads surged, the report notes.