Music firms hopeful of EU backing

George Michael would be just one artist on Sony-BMG's books

Music groups Sony and BMG have voiced their confidence that their proposed merger will win anti-trust approval from European Union regulators.

The news followed two-days of hearings behind closed doors in Brussels.

However, opponents who spoke out against the proposed 50-50 joint venture disparaged the claims.

Impala, a group of independent record producers, told the EU they would suffer if the number of major record companies was cut from five to four.

A joint statement from Sony and BMG called the talks "constructive" adding they were "confident their presentations on the business environment of the music industry and the nature of music as a cultural product was understood".

'Constructive' talks

They added the hearings had been "constructive" and they would continue their "proactive engagement" with the Commission until its decision next month.

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

However, Impala spokesman Philippe Kern expressed surprise at the announcement form the pair, telling Associated Press that they had been "a little shaken" by questioning from the regulators.

Representatives from the group refused to comment.

However, at a news conference last week they did say the tie-up would further limit their members' ability to win sufficient exposure for their artists and ensure a diverse music industry in Europe.

Meanwhile Apple Computers also gave evidence to the hearing on the day it launched its iTunes online music store to the UK, Germany and France.

Strong position

According to reports, Apple voiced concerns at the hearing about increasing competition from Sony, which also owns a site for downloading music.

The latter's strong position in consumer electronics would give the combined entity too much power over the way the sale of online music evolves, critics have argued.

Sony and BMG claim the merger of their operations outside Japan will result in cost savings of $300m a year.

They also argue that consolidation in the sector is inevitable in the face of competition from DVDs and other media, piracy and the challenge of the online environment.

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

A merger of the two would swell their artist rosters to include Aerosmith and George Michael from Sony and Beyonce Knowles and Justin Timberlake from BMG.