Sony BMG Appeals Merger Annulment

By Ed Oswald, BetaNews

October 5, 2006, 12:30 PM

Sony and Bertelsmann filed an appeal Thursday of a decision that would break up the world's second biggest music label. The EU's Court of First Instance annuled the merger in July, sending the merger proposal back to the European Commission and ordering the two companies to re-file.

Europe's high court, the Court of Justice, will preside over the case. A decision in the matter is not expected for at least a year, if not longer. In the meantime, however,the EC will have to review the merger and investigate any competition concerns.

The case originally came to the Court of First Instance due to a legal challenge by Independent record label Impala. The company said in a complaint that European antitrust regulators made false assumptions that promotional discounts would inhibit the creation of a monopoly.

The European Court of First Instance agreed, saying, "The commission did not demonstrate to the requisite legal standard either the nonexistence of a collective dominant position before the concentration or the absence of a risk that such a position would be created as a result of the concentration."

Neither Sony nor Bertlesmann had commented publicly on the appeal as of press time.