Europe court annuls Sony-Bertelsmann alliance EMI, Warner Music tumble as deal chances wane
By Steve Goldstein, MarketWatch Last Update: 9:59 AM ET Jul 13, 2006 http://www.marketwatch.com/news/story/Story.aspx?guid=%7B33F014E4%2D9CF1%2D495B%2D9965%2D58455C26B325%7D&siteid=&print=true&dist=printTop LONDON (MarketWatch) -- The European Court of First Instance on Thursday said the European Commission approved the recorded music alliance between Sony Corp. and Germany's Bertelsmann on erroneous grounds, possibly putting consolidation in the industry on hold. The European court said the European Commission made a "manifest" error in ruling that the venture of Sony and privately-held Bertelsmann didn't have a dominant position. The court said the regulator's decision was based on incomplete data, and also incorrectly based on the notion that there wasn't evidence of retaliatory measures. "According to case-law, the mere existence of effective deterrent mechanisms is sufficient, since where the companies comply with the common policy there is no need to have recourse to sanctions," the court said in its ruling on Thursday. It also blasted the competition regulator for "an extremely cursory examination." The court decision means Sony and Bertelsmann will have to re-apply to win European Commission approval for their venture. Bertelsmann said the decision doesn't affect the "validity" of the Sony BMG venture, which has been operating since August 2004. "We are studying the judgment carefully and shall discuss the appropriate next steps with the European Commission," the company said in a statement. Sony put out an identical statement. The case was brought to the European court by Impala, a collection of independent record labels. The immediate losers were EMI and Warner Music, which have been trying to buy each other. Impala also opposes EMI and Warner coming together. Warner Music tumbled 15% and EMI lost 9.5%. EMI said the decision will require "detailed study" before wider conclusions may be reached. Vivendi, the owner of Universal Music, lost 2.6% in Paris. Sony shares slipped 1.2% in early New York trade. ================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 antunes at uh dot edu Reply with a "Thank you" if you liked this post. _____________________________ MEDIANEWS mailing list [email protected] To unsubscribe send an email to: [EMAIL PROTECTED]
