Favorite Files

No favorite files added yet

Recent Posts

1. Comment - European Union Could Split Sony BMG

   (Jul 14, 2006 - 6:02 PM)

   Not quite correct, cornucopia.
   
   1) Merger was approved by the European Commission (which is - kind of - the "government" of the European Union) two years ago.
   
   2) The merger approval was appealed by Impala, the independent labels' association a few months later.
   
   3) The appropriate appeal's body, the Court of First Instance (The second highest court of the European Union), annulled the decision a few days ago. This does not mean that the merger is not allowed to take place, only that the decision of the European Commission was not well reasoned.
   
   Next steps of action are:
   
   1) SonyBMG will have to re-apply to the European Commission for merger clearance. (Many news sources cite that this has to be done within 7 days, but I believe this is impossible and extensions will be granted. Preparations for such a filing usually las several months at minimum.)
   
   2) The Commission will then decide whether or not to approve the merger (should take about 5 months after new filing of the merger).
   
   3) If it approves the merger, SonyBMG will continue. Impala could of course appeal the Commission's new clearance decision again.
   
   4) If the Commission blocks the merger, SonyBMG can then sue the Commission for damages for integration cost etc. They can also appeal the decision before the Court of First Instance but would nevertheless be required to be split up.
   
   Irrespective of all this, the Commission or SonyBMG could appeal this weeks judgment at the European Court of Justice, the highest court of the EU. This appeal would then run in parallel to the actions mentioned above and will take many years. I am not sure what would happen if the Commission now rejects the merger, forcing SonyBMG to split up and then the European Court of Justice annulling the judgment of the Court of First Instance...
   
   Regarding the issues, the real problem of the Commission was that the few people dealing with the transaction were very narrow-minded in their investigation to get the deal blocked. However, in the last weeks of the investigation, people higher up in the Commission realised that their arguments were not all well-founded, and that they had ignored lots of evidence presented by Sony and BMG. So, they decided to clear the merger, but did not re-write reasons for its the decision from scratch. So they ended up with a reasoning hinting at potential competition problems, while at the end saying "therefore, we clear the merger". Of course, the Court picked up on this....
   
   Marko