Sony-BMG music merger gets formal clearance from the EU

brussels -- The European Commission gave Sony Corp. and Bertelsmann unconditional clearance Wednesday to combine their music units, concluding that the deal, originally approved in 2004, was not monopolistic.

The European Union’s executive arm approved the deal a second time after a court ripped up the original over antitrust concerns and told regulators to reexamine it.

The commission concluded that the deal, which formed the world’s second-largest record label, “would not create or strengthen a dominant or collectively dominant position in the music markets” of Europe.

That gives the all-clear to a venture that has been up and running since it was first approved in 2004, but faced the possibility of alteration or even breakup since last year when the EU’s second-highest court overturned the EU’s original decision.

But regulators said that their original conclusion was correct and that they had mountains of new evidence to prove that the two companies would not damage the music scene by shrinking the number of major music companies from five to four.

“Sony BMG and its parents are pleased that the commission has again approved the formation of Sony BMG,” said Liz Young, the company’s head of global communications.

The commission failed to find evidence of collusion to back up complaints that record labels coordinated their budgets, pricing and album release dates, among other accusations.

“This investigation represents one of the most thorough analyses of complex information ever undertaken by the commission,” said Neelie Kroes, the EU’s antitrust commissioner. “It clearly shows that the merger would not raise competition concerns in any of the affected markets.”

The deal between Japanese entertainment and technology company Sony Corp. and Bertelsmann Music Group brought artists including Shakira, George Michael, Avril Lavigne and Elvis Presley under one roof and joined labels such as Arista, Jive, Epic and Columbia.

BMG was a branch of Germany’s Bertelsmann, an international media group with interests in broadcasting, book and magazine publishing. It linked up with Sony in 2004, saying they needed to join forces to deal with declining CD sales and the threat from illegal downloads.

In 2006, the EU’s second-highest court backed a challenge from the independent record label group Impala, which represents 2,500 independent music firms. The court ruled that regulators failed to show that there was not a monopoly position before the deal or that one would not emerge afterward.

Impala reacted with dismay to Wednesday’s decision, announcing that it would appeal to the EU’s ombudsman to investigate whether the commission was doing its job correctly. The group said it had “a clear case for claiming damages” against the commission.