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Doyle, Barlow & Mazard PLLC

On January 9, 2004, Sony Corp of Japan and Bertelsmann AG of Germany notified the European Commission (the “Commission) of their intention to combine their global recorded music businesses into a joint venture under the name of SonyBMG. They notified under the old EC Merger Regulation.
The Commission approved the merger unconditionally on July 20, 2004. Following the Commission’s approval, Impala, a trade association representing independent music companies, sought to annul the Commission’s decision by lodging an action with the Court of First Instance (“CFI”). The CFI annulled the Commission’s decision on July 13, 2006, finding that the Commission’s reasoning did not properly support its decision that there was not a collective dominant position on the recorded music markets.

On March 1, 2007, the Commission opened a Phase II investigation into the re-notified transaction. The Commission applied the same criteria (set out in the Airtours judgement) as it had used in the first investigation to assess the existence or future likelihood of a collective dominant position arising.

The Commission also assessed the actual impact the original merger held on the market. The Commission found no indication that there had been coordinated behavior in any of the relevant markets, either before or after the merger and consequently again came to the same decision that the merger would not result in the creation or strengthening of a collective dominant position in any of the EEA states. The merger was therefore approved on October 2, 2007. Given the positive outcome for the parties in the Commission’s new decision, it is not yet known whether Sony Corp America and Bertelsmann AG will continue their appeal of the CFI’s decision to annul the original merger. Similarly, it is not known if Impala will attempt an appeal against the Commission’s new decision.

Camelia C. Mazard

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