Merger

Sony-BMG music merger sent back to lower court

The European Court of Justice (ECJ) has rejected a lower court's refusal to clear the merger of Sony Corp.'s and Bertelsmann A.G.'s (BMG) recorded music units.

The ECJ, European Union's (EU) highest court, referred the case back to the Court of First Instance (CFI) for it to reconsider the remaining three pleas it has not dealt with.

The ECJ made its ruling after the lower court refused to back the European Commission's decision to approve the deal.

'Since the Court of First Instance examined only two of the five pleas relied on by Impala (Independent Music Publishers and Labels Association) in support of its action, the Court of Justice considers that the present case is not in a state where judgment may be given. The case must therefore be referred back to the Court of First Instance,' a court document read.

Imapala, which represents 4,000 independent music labels, opposes the deal.

Sony and BMG asked the ECJ to set aside the lower court's judgment of 2006 -- that the commission should re-examine the merger -- after an appeal by Impala.

The commission re-examined the deal but approved the 50-50 joint venture for a second time without conditions. Impala is appealing this second approval with the CFI.

Impala said in June it 'believes the commission repeated many of the errors that it made before, despite the court's judgement in Impala's favour in 2006'.

(Published by Forbes - july 10, 2008)