EU to Examine Deal to Link Sony Music, BMG

European Union regulators said Thursday they would open an in-depth probe into a planned merger of the music units of Sony Corp. and Bertelsmann, heralding a battle between independent producers and the two major labels.

The four-month probe will give the European Commission a chance to listen to all sides in an industry facing weak retail sales because of new competition from online file sharing and other forms of entertainment.

“The commission is concerned that the transaction might create or strengthen a dominant position,” it said in a statement.

SonyBMG, a 50-50 joint venture, would combine No. 2 Sony, which includes such artists as Beyonce and Bruce Springsteen, with No. 5 BMG, which is home to Britney Spears and Elvis Presley.

After the dust clears there would be four major companies holding 80% of the record market in Europe and in most major countries, the commission noted.

Bertelsmann and Sony will face off against a contingent of 2,000 independent music labels banded together as trade group IMPALA, which played a key role in the EU’s rejection of a merger between EMI Group and Time Warner Inc.’s Warner Music Group.

Bertelsmann said in a statement: “We feel well prepared. We look forward to cooperating with the regulatory authorities over the coming weeks and months.”

The commission said it took the views of critics into account in opening its investigation.

For example, the commission said it was investigating whether Bertelsmann may use its interests in the RTL Group radio and television unit to give preference to SonyBMG, “foreclosing competing record companies from equal access in some countries.”

It also is following up on the view of critics that Sony Connect, a Web downloading music service to be launched soon, may bar competitors and incompatible digital players.

“Our main point is access. We want to avoid a situation where a combined entity makes it impossible for smaller independent labels and artists to get access to broadcasters and retailers,” Philippe Kern, secretary general for IMPALA, said last month.