The issue of Sony/BMG merger was raised again by the European Parliament this week during its Culture Committee meeting, when it debated the committee’s draft report on cultural industries in the presence of the Commission.
The parliamentarian responsible for the report, Guy Bono (European Socialist Party, France), criticised the response of Commissioner Kroes to the written question he had posed challenging the Commission’s second approval without remedies of the Sony/BMG merger in October.
Mr Bono’s written question had asked the Commissioner to explain how the Sony/BMG second approval could be justified in the context of the EC’s policy of support for cultural SMEs. During the hearing, Mr Bono said the Commissioner had not answered the question and asked for further clarification.
Guy Bono said: “The Commission once again has side stepped the issue. There is a paradox existing between the policy of support for SMEs and the second Commission approval of the Sony/BMG merger. As underlined in my report, concentration in the sector of cultural industries constitutes a risk for the diversity and the offer of cultural goods to consumers. There is a need for further support for SMEs and micro businesses who contribute hugely to creating wealth in an economy whose growth does not necessarily require the existence of large-scale organisations, with their tendency to focus on the most profitable activity, namely cultural distribution (publishing, distribution and marketing), but rather calls for the proliferation of less complex structures and the stimulation of their networks.”
Patrick Zelnik, IMPALA President and President of Naïve: “The Commission must launch a sector enquiry, which also takes into account concentration at retail and the media. IMPALA gave vital evidence on SonyBMG, which was ignored. As a result consumer choice and cultural diversity have clearly suffered.”

Guy Bono stressed that he will ask to meet Neelie Kroes so as to urge her to come up with concrete proposals supporting cultural and creative SMEs.
See below for initial written question and response of the Commissioner in full.



“The European Commission has confirmed the merger of Sony and BMG for a second time despite the decision of the Court of First Instance in July 2006.
     - the conclusions of the European Council on the 8th May 2007 confirming that “the importance of SME’s in the cultural sector in view of their role as drivers of growth, job creation and innovation.”
     - The UNESCO Convention which underlines that “cultural diversity is manifested through the varied ways of artistic creation and production.”
     - The Commission’s communication on a European agenda for culture in a globalising world.
     - Previous cases in which the European Commission reiterated the necessity of introducing remedies to re-establish a competitive music market as was done for EMI/Warner in 2000, as well as in the Universal/BMG decision in 2007.
     - The conclusions regarding Apple and the majors in which the Commission raised competitively problems with the majors in the online music market.
is the Commission’s authorisation of the merger between Sony and BMG coherent with the points mentioned above as well as with European policy of supporting SMEs in the music sector who create more jobs than the majors and represent 99% of the actors in the market as well as 80% of the innovation in the sector.”


« P-5280/07FR
Answer given by Mrs. Kroes
On behalf of the Commission
The Commission places great importance on the protection and promotion of the European cultural wealth. The implementation by the Commission of EU law in the competition field aims at preventing potential anti-competitive practices, among others in the cultural sector, and isn’t in contradiction with the promotion of the European cultural diversity.
Therefore, uncompetitive practices in the cultural sector may have a negative impact on the cultural diversity and block the artistic creation’s access to the market. These aspects have been considered during recent cases that have been dealt with by the Commission, whether being either in the frame of its mandate or the concentration control, or in the anti-trust field.
The in-depth analysis carried out by the Commission on the Sony-BMG merger, which took into account the points raised by the Court of First Instance in its 13 July 2006 judgement, affair T-464/04 (IMPALA vs. Commission), was based on factual information gathered on qualitative and quantitative aspects of the concerned markets, notably through the contributions of the interested third parties. The merger impact on consumer choice, and on their expectations in terms of cultural diversity, has been carefully evaluated.
The Commission’s analysis established that the merger didn’t risk leading to the creation of or a reinforcement of a dominant position in the concerned markets – a possibility which would naturally have had very negative consequences on cultural diversity. Whilst carrying this analysis, the Commission has notably looked at the competition between the recording companies for the “acquirement” and the “development” of artists, the share represented by local artists in the full repertoire of the recording companies, as well as the new prospects presented by the new technologies that now allow the artists to record and present their music to a wider audience themselves.
So, the Commission’s analysis showed that, for example between 2002 and 2006, the share of local repertoire (as opposed to international repertoire) has increased in almost every member state.  It also turns out that new artists’ access to the market has been considerably improved by the Internet. As illustrated by the recent success of the Arctic Monkeys or Lily Allen, as well as the appearance of online stores such as iTunes, of which the European catalogue is mainly composed of artists affiliated to independent recording companies. »
About IMPALA  

IMPALA was established in April 2000 to help independent music companies represent their own agenda and promote the expansion and competitiveness of independent music in the interests of entrepreneurial and cultural diversity. IMPALA is the only cultural and creative SME association in Brussels.
99% of Europe’s music companies are SMEs. Known as the “independents”, they are world leaders in terms of innovation and discovering new music and artists - they produce more than 80% of all new releases. They are also key employers, providing more than half the jobs in the whole sector. Their potential is enormous but their potential is hampered by undercapitalisation, complex barriers to trade, as well as chronic concentration and market access problems. The impact on diversity, consumer choice and pluralism is clear. Over 95% of what most people hear and see, whether on radio, retail or the internet, is concentrated in the hands of four multinationals, known as the majors”. The Commission is now expected to put new policies in place to give SMEs preferential treatment, which is seen as is “economically and politically justifiable”.  Cultural and creative SMEs are now officially recognised by the EU as “the drivers of growth, job creation and innovation”.  
IMPALA has over 3500 members including the top independents: ! K7 (Germany), Beggars Group (UK), Bonnier Amigo (Sweden), CLS Music (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), Wagram (France), as well as national trade associations from the UK (AIM), France (UPFI), Germany (VUT), Spain (UFI), Italy (PMI), Belgium (BIMA), 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.