SONY BMG Joint Venture Wins European Commission Approval
October 3, 2007
The European Commission on October 3 confirmed its clearance under EU merger control rules of the creation of SONY BMG, a joint venture combining the recorded music businesses of Sony and Bertelsmann. The European Court of First Instance in 2006 annulled the Commission’s original clearance decision of 2004. Following a thorough and meticulous re-assessment, the Commission found that the joint venture would not create or reinforce a position of collective dominance and would not allow music majors to raise prices. Cleary Gottlieb represented Sony Corporation of America and SONY BMG in the re-notification procedure.
The review proceedings in the case were unprecedented in that they allowed the Commission to examine the impact of the transaction on the market following its implementation in 2004. The Commission considered a broad range of potential theories of harm and engaged in one of the largest and most complex econometric analyses ever applied in EC merger control review. The parties provided the Commission with comprehensive and detailed evidence and economic data demonstrating that the joint venture did not raise competitive concerns and that the various national markets for recorded music are highly competitive.
The parties’ appeal against the judgment of the Court of First Instance, which annulled the original clearance decision, remains pending before the European Court of Justice.