EC judges refer SonyBMG merger back to lower court and confirm there is no presumption in favour of approving mergers

Brussels 10 July 2008, IMPALA Press Release


Thousands of music SMEs were surprised by the decision of the highest European court in Luxembourg, that the lower court needs to re-assess its previous judgement annulling the EC’s first approval of the SonyBMG merger decision in 2006, in IMPALA's favour.

The lower court remains free to conclude that the Commission got it wrong, in which case the merger approval decision would be annulled all over again.

At the same time IMPALA welcomed the court's ruling that there is no presumption in favour of approving mergers, which is very important as regards future concentration in the music market. The court agreed on this point with the Advocate General and IMPALA, as well as the Commission itself, which sets a clear precedent. Through their appeal, Bertelsmann and Sony were attempting to re-write merger control and lower standards to benefit merging parties. This was clearly rejected by the ECJ.

Today’s judgement follows an appeal made by the merging parties against the 2006 annulment. The Advocate General’s opinion, given last December, concluded that the merging parties' appeal should be rejected.  Now both IMPALA and the merging parties have to wait again for final resolution, with the court also looking at the other arguments of IMPALA, which it did not examine the first time around (it only considered two out of IMPALA's five pleas).

In June IMPALA lodged a separate appeal against the Commission’s second approval of the merger.

IMPALA will review its next steps and, in parallel, will continue to push for regulatory reform through the package of measures it recommended in the IMPALA Action Plan for Music, adopted in March.

Quotes

Horst Weidenmueller, CEO of !K7 Records and Co-President of IMPALA said:  “Although we are disappointed that the judges decided they could not finally decide the facts of the first case, we welcome the legal precedent for future cases in the interests of artists and music fans.”

Michel Lambot, President of PIAS Group and Co-President of IMPALA added: “When the Court of First instance overturned the first approval, it was with good reason. This final judgement confuses the issue. Music is different to widgets.”

Patrick Zelnik, President of Naïve and Co-President of IMPALA commented: “We are obviously delighted that the court agrees that merging parties do not benefit from a presumption that mergers are good for the market. That further vindicates IMPALA’s position on mergers. Any music mergers need remedies.”

Helen Smith, Executive Chair of IMPALA added: “The lower court can still set the approval decision aside. This result underlines the need for a complete overhaul as far as cultural markets are concerned.”

 


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