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Last Updated: Thursday, 12 February, 2004, 17:50 GMT
Sony and BMG merger faces probe
Justin Timberlake
Justin Timberlake is one of BMG's key performers
The European Commission has said it is to carry out an in-depth probe into the planned merger between music giants Sony and Bertelsmann (BMG).

It said the four-month probe would give it the chance to explore potential monopoly and competition problems.

Japanese Sony and German Bertelsmann are the second and fifth biggest record companies worldwide.

They first announced their tie-up plans in November 2003, saying the deal would be a merger of equals.

"The Commission is concerned that the transaction might create or strengthen a dominant position," the Commission said in a statement.

Leading stars

Some 2,000 independent music labels have come together to fight the Sony and Bertelsmann merger.

Music market shares
Sony is home to artists including Beyonce Knowles and Bruce Springsteen, while Bertelsmann is the record label of Britney Spears and Justin Timberlake.

The European Commission has set itself a 22 June deadline to come to its decision.

Sony and Bertelsmann's intended coming together would create the world's second largest record label, behind Universal Music, despite the deal excluding Sony's recorded music business in Japan.

The merged company, to be called Sony BMG, is to be based in New York.

Downloads

Their intended coming together comes after EMI, the third largest record company, failed last year to buy the fourth - Warner Music.

US Warner was eventually bought by Canadian media mogul Edgar Bronfman Jr for $2.6bn (or 1.5bn at the time).

Analysts agree the consolidation among the world's leading record labels has come as a result of the uncertainties surrounding the future sale of CDs and the industry's tentative first efforts to sell their music as internet downloads, and thus tackle the explosion in web-based music piracy of the past few years.

Oliver Herrgesell, a spokesman for Bertelsmann, said the company was "not surprised" by the EU's decision.

'Safeguard'

"We look forward to cooperating with the regulatory authorities over the coming weeks and months, and we feel well prepared," he said.

Michel Lambot, president of Impala, the international independent record companies trade association, said the organisation welcomed the European Commission's decision.

"Impala and its members will continue to work with the Commission to provide further evidence on the concerns that this merger raises," he said.

"It is our duty to safeguard artists and consumers."


SEE ALSO:
Mixing up the music industry
19 Nov 03  |  Business
Music giants join forces
06 Nov 03  |  Business
What now for EMI?
24 Nov 03  |  Business
EMI in bid for Time Warner music
19 Nov 03  |  Business
EMI boss defends music industry
04 Sep 03  |  Entertainment


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