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Last Updated: Tuesday, 25 May, 2004, 05:38 GMT 06:38 UK
Brussels objects to Sony-BMG deal
Beyonce Knowles, one of Sony's best-selling artists
The combined firm would boast Beyonce Knowles on its roster
Music giants Sony and BMG have two weeks to respond to objections from the European Union about their plans for a merger.

Brussels' objections to the deal remain confidential, but are understood to centre on market share.

Combined, the two would rival Universal for top spot in the $30bn industry.

But some fear that the consolidation would damage competition and give the big firms too much control over the emerging online music market.

As well as responding on paper within two weeks, Sony and Bertelsmann - BMG's parent company - can call for a closed-door hearing.

Music market shares
That could happen in mid-June, with the European Commission's final decision due on 22 July.


The argument behind the merger is that competition from DVDs and other media, piracy and the challenge of the online environment means consolidation is inevitable.

The two firms say they could save $300m a year in annual costs.

On recent figures, their combined market share would be 25.2%, just a whisker behind Universal's 25.9%.

A merger would create a stable of artists including Beyonce Knowles and Bruce Springsteen from Sony and Justin Timberlake and Elvis Presley from Bertelsmann.

The sheer size, opponents say, is precisely the problem - not least because the EC blocked an EMI-Time Warner tie-up four years ago on similar grounds.

The merger would mean four companies controlled 80% of the global music market.

Sony's strong position in consumer electronics would give the combined entity too much power over the way the sale of online music evolves, according to some critics - including Apple Computer, keen to protect its iTunes online music store.

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