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Adding New Coordinates to Collective Dominance? An Analysis of the Sony/BMG Decision

2008; RELX Group (Netherlands); Linguagem: Inglês

10.2139/ssrn.1721797

1556-5068

Pradhuman Gautam,

Merger and Competition Analysis

On January 9, 2004, Bertelsmann AG and Sony Corporation of America (a wholly owned subsidiary of Sony Group, Japan), both engaged in recorded music business, sent a notification of merger to the Commission of the European Communities (hereinafter, the Commission) under Article 4 of the EEC Regulation no 4064/89 (hereinafter, the Merger Regulation). On 24 May 2004 the Commission sent a statement of objections to Sony and Bertelsmann, in which it provisionally concluded that the joint venture was incompatible with the common market and the functioning of the EEA Agreement. In support of this decision, it stated that the proposed merger would strengthen a collective dominant position in the recorded music market and in the wholesale market for licenses for online music and would coordinate the parent companies’ behaviour in a way incompatible with Article 81 EC. Due to this reason, it initiated proceedings under Article 6(1)c of the Merger Regulation. Thus began the Sony/BMG case, which forms the material for analysis in this essay. The Commission, after five months of assessment cleared the proposed concentration, but on an appeal to the CFI by IMPALA, the former overturned the decision of the Commission and sent the case back for reassessment. In 2007 the Commission has reaffirmed its earlier decision, even as an appeal is pending before the European Court of Justice. Needless to say, such judicial indetermination provides endless scope for analysis and speculation, a part of which shall be taken up in this essay. In doing so it will attempt to look at the case from a competition and merger control point of view, try to identify the relevant legal bottlenecks, and finally, suggest a way forward from the quagmire. The research has been structured into three main areas. The first part will present the decision given by the Commission, its reasons for doing so, and the relevant factors that assisted its findings. The second part will present the judgment of the Court of First Instance, its legal reasoning and other relevant factors. The third part will look into evolution of key concepts, probable policy considerations behind the decisions and a suggested way forward, which also concludes the essay.