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Last Updated: Monday, 19 July, 2004, 20:50 GMT 21:50 UK
Sony and BMG merger backed by EU
Sony artist Beyonce
Beyonce is one of Sony's key performers
The planned merger between music giants Sony and Bertelsmann (BMG) has been given the green light by the European Union, with no strings attached.

The proposed marriage will leave four industry majors with about 80% of the world music market.

"The merger was approved without conditions," said a spokesman for the German media group.

The EU said initial concerns that the deal could lead to higher CD prices and fewer customer choices were unfounded.

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.

Come together

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

New global music share

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

The deal will bring together under one roof Sony stars such as Barbara Streisand and Beyonce and BMG stars, including Elvis Presley and Christina Aguilera.

The Japanese and German parent groups argue that their businesses need to join forces to tackle the crisis in the global music industry faced with both pirate CDs and an explosion of illegal music downloading.

"We're pleased that (EC officials) have recognized that the creation of Sony BMG is an appropriate and necessary response to current market conditions," said Sony Music Entertainment chairman and chief executive Andrew Lack, who will become chief executive of the combined company.

Compressed industry

Yet smaller record companies were quick to voice their exasperation that the merger has been given the go ahead.

Michel Lambot, president of independent record company association Impala said the move endangered "the existence of thousands of young and small enterprises".

The coming together of Sony and BMG takes place after EMI, the third largest record company, failed last year to buy the fourth largest - Warner Music.

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

The deal between Sony and Bertelsmann will leave 80% of the market in the hands of four groups: Sony-BMG, Vivendi Universal, EMI and Warner Music.

However, the 50-50 joint venture is still undergoing anti-trust review in the US, but approval is expected within days.

Recently, the Financial Times reported that the two companies plan to shed 2,000 jobs, or a quarter of their combined workforce.


WATCH AND LISTEN
The BBC's John Moylan
"Independent record companies warn it will be tougher for them to get their products on the market"



SEE ALSO:
Sony and BMG merger faces probe
12 Feb 04  |  Business
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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