IMPALA calls for a formal enquiry into the news that the EC has cleared the SonyBMG merger a second time without remedies. The independents take the view that this is indefensible. The Commission has ignored major findings of the European court in favour of IMPALA last summer. The independents will ask the European Ombudsman to investigate potential maladministration. IMPALA will examine the decision in detail when the non-confidential version becomes available. As well as a formal enquiry, there is the option of appealing, and a clear case for claiming damages against the EC.

IMPALA takes the view that the Commission has simply repeated its old mistakes. It ignored the independents’ evidence of anti-competitive behaviour across all key markets. Moreover, the Commission did not consider the non-price effects of the merger on consumer choice and diversity, as well as competitive access to retail, radio and online. No cultural diversity impact assessment was carried out, despite an EC Treaty obligation to do so.

The Commission has ignored the duopoly with SonyBMG and Universal. These two companies alone have over 50% of the market and 70% of the vital Top 100 in many key EU territories (EC’s own market share analysis in UniBMG). Even the “mini majors” EMI and Warner no longer have critical mass - they only have 10% and 14% respectively of the national Top 100s. Their market share has plummeted in two years. As for the other competitors, no independent has even 1.5%. This is an effect which has clearly exacerbated competition in the last two years so we do not understand how the Commissioner can say she has found no problems. It does not make sense. Is this a competitive market? It is worse than energy.

The independents also highlight the fact that the EC is sending contradictory messages to Europe’s citizens, artists and entrepreneurs. It seeks remedies from UniversalBMG but not SonyBMG. It pushes an “Agenda for Culture” to make sure culture and all creative industries are properly prioritised in other key policy areas, but what about competition? It signs the UNESCO Convention on Cultural Diversity with a fanfare, yet breaches its own Treaty obligations to take cultural diversity into account in all decisions.  It acknowledges the vital role of SMES in all creative sectors yet takes decisions which restrict their market access.
Patrick Zelnik, IMPALA President and President of Naïve said: “We never got an explanation for the EC’s u-turn last time around. The EC has ignored the simple fact that four companies control 95% of the music most citizens hear on the radio throughout the world. What kind of a message does this send to European citizens? That the EU’s prioritisation of cultural diversity, creative SMEs and pluralism is purely rhetoric?”

Martin Mills, IMPALA Chairman and Chairman of Beggars Group: “The Commission has simply repeated its previous mistakes. It has ignored the independents’ evidence on anti-competitive behaviour in retail, radio and television, press and of course, the vital on-line market.  It is a lost opportunity for Europe’s artists and entrepreneurs. How can the EC demand remedies in UniversalBMG and not in SonyBMG? This just doesn’t make sense. It's hard to avoid the conclusion that this is a victory for well connected and influential big business at the expense of entrepreneurs, consumers, music fans and artists.”

This is the Commission’s second review of the Sony/BMG merger. The EU’s first assessment was set aside last summer by the European Court. The court upheld an appeal by IMPALA of the approval of the merger in 2004 without remedies.  This echoed the Commission’s finding in 2000 when it held that EMI/Warner should not be allowed without remedies – a stance which lead to the parties walking away from the merger.

In 2006 the European judges found that the Commission had ignored overwhelming evidence that competition would be severely damaged by SonyBMG and had made an unexplained u-turn when it walked away from the serious objections that it had previously highlighted. The court found that the recorded music market suffers from collective dominance and co-ordination, characterised by:

  • alignment of prices, both gross and net,  
  • transparency of discounts and  other terms, including campaign  
  • stable and relatively high level  of pricing, considering significant fall in demand  
  • links between majors companies (eg jvs for  compilations, distribution and licensing, industry association membership,  joint copyright negotiations, merry-go-round of senior executives, vertical links)  
  • relative stability of market shares (ie if  they were really competing we would expect to see real  variations)  
  • homogeneity of product (even though content is heterogenous)  
  • existence of deterrents  

The court also identified 8 points on price that make music very transparent and easy to co-ordinate prices and other competitive behaviour.

  1. Public nature of PPDs  
  2. limited no of reference  prices  
  3. limited no of albums that need to  be monitored  
  4. publication of weekly charts   
  5. long-term stable relationships  between retailers and majors  
  6. limited no of players on market   
  7. monitoring of the retail market   
  8. regular and permanent contact  between majors' sales forces and retailers and distributors  

Earlier this year IMPALA called on the Commission and the majors to work together with the independents towards market recovery through broad and constructive remedies, such as those already agreed with Warner Music Group.

In May, the EC authorised the UniversalBMG Music Publishing merger on the basis of remedies, including divestments.

At the same time, all the European Heads of State called on the Commission to ensure that there is proper support for small operators in the creative sector. Last week in Lisbon, the Portuguese Presidency hosted the EU Cultural Forum, attended by the EU President Barroso and Culture Commissioner Jan Figel. The Forum again underlined the importance of the creative industries and the fundamental role of SMEs in promoting innovation. Market concentration was identified as a key issue for creative SMEs, along with under-capitalisation.

There are considerable market access barriers to entry and growth (increased costs of marketing and competing with the majors to sign artists; difficulty of getting into retail, on radio, tv, print media etc). An independent could never grow to become the size of a major. There have been no new independent market entrants. The Sony BMG merger has clearly made it harder for independents to promote new artists.

Article 151 (4) of the EC Treaty obliges the Commission to take cultural diversity into account in ALL decisions.

The EC is currently working on a “Agenda for Culture” to make sure culture is properly mainstreamed into all key policy areas.

The European Ombudsman is based in Strasbourg and investigates complaints about maladministration in the EU institutions. The current Ombudsman is Mr P. Nikiforos Diamandouros.


IMPALA was established in April 2000 to help independent record companies and music publishers to consider the issues of interest to independent music companies and to promote the expansion and competitiveness of independent music in the interest of cultural diversity.

99% of music companies are SMEs. The independents are world leaders in terms of R&D and discovering new music and artists. Despite this, they face increasingly complex barriers to trade and severe market access problems. Over 80% of the market and 95% of key radio and retail is concentrated in the hands of the majors. The independents’ collective market share fluctuates considerably from territory to territory in Europe. The gap between the majors and the independents is now so wide that not one independent has more than 1.5% across Europe.

IMPALA has over 3500 members including the top independents: !K7 (Germany), Beggars Group (UK), Bonnier Amigo (Sweden), CLS Kft (Hungary), CNR (NL), Cooking Vinyl (UK), Edel (Germany), Epitaph (US/NL), Gazell (Sweden), Menart doo (SIovenia), Musicvertrieb (Switzerland), Naïve (France), Odyssey (Ukraine), PIAS Group (Belgium), Playground (Sweden), Red Bullet (NL), Soyuz Music (Russia), SPV (Germany), V2 Music Group (UK), Wagram (France), as well as national trade associations from the UK (AIM), France (UPFI), Germany (VUT), Spain (UFI), Italy (PMI), Denmark (DUP), Norway (FONO), Israel (PIL) and Sweden (SOM) and the Catalonian association APECAT.

For further queries, please see or contact IMPALA on T: + 32 2 503 31 38, IMPALA, Coudenberg 70, B-1000, Brussels.