To be effective, competition assumes that the market is made up of suppliers, who are independent of each other. However, if certain companies agree among themselves to, for example fix the price of a given product, then such agreements impair competition, and freeze smaller companies out of the market. Similarly if two large companies decide to merge or join forces, the extent of control over the market of that group increases – thus decreasing the possibility of fair competition.
Independent music companies are often micro companies and SME’s – they’re are at a disadvantage with regard to the majors – they do not have access to the same developed communication networks, financing, means to run marketing campaigns, the distribution networks.
The recently released EC Green Paper on creative and cultural industries highlights that:
Market access is a key issue, with the green paper stating: “A diverse range of entrepreneurs ... is a pre-requisite for a culturally diverse offer to consumers. This is possible only if fair access to the market is guaranteed. Creating and maintaining the level playing field which ensures that there are no unjustified barriers to entry will require combined efforts in different policy fields, especially competition policy.”
the ability of business to respond to the structural changes of the digital market greatly depends on a company’s size and bargaining power viz a viz new digital outlets.
Some acquisitions and mergers squeeze SME’s out of the market – leading to a lack of diversity for consumers. Download Martin Mills’ (Chair of IMPALA and Beggars Group) view on concentration here - MMillsarticle PDF.pdf . Impala has already been consulted by the EU on various important cases of antitrust and plays a key role in advising on the consequences of anti-competitive conduct and mergers, for example SonyBMG, EMI Warner etc.
In summer 2006, IMPALA and independent labels won an important result for music and cultural diversity. In a landmark ruling which sets important legal and political precedents, the European Union’s Court of First Instance overturned the European Commission’s 2004 authorisation of the Sony BMG music merger. Click here to see IMPALA’s Press release.
The Luxembourg Court pointed out that the Commission’s analysis of the Sony BMG case was left wanting in various fundamental respects. It contained a series of legal and economic errors which renders the decision null and void.
The judgment underlines the need for any assessment of mergers in creative sectors to take into account the economic, social and cultural specificities of markets.
In July 2008 the court took a vital judgment declaring that there was no presumption in favour of mergers.
The 2006 decision set out important political and legal precedents, not only for music mergers but right across the media sector. It is a victory for fairness, access to justice and cultural diversity.