Impala appeals Sony BMG decision

Says European Commission made errors

LONDON -- European independent music companies trade association Impala has launched another appeal with the European Commission contesting regulators' clearance of the Sony BMG merger.

Brussels-based Impala said Monday that it lodged an appeal on Friday with the EC's Court of First Instance in Luxembourg, in which it challenges the EC's unconditional authorization of the recorded music joint-venture.

In its new appeal, Impala is arguing that the commission made a "whole series of errors of law, assessment and reasoning in relation to collective dominance in the recorded music market" when it ushered through clearance for the merger last year for a second time.

"The EC has simply repeated the economic, political and cultural errors it made before," comments Patrick Zelnik, president of Naive and co-president of Impala, in a statement issued today. "These need to be corrected."

Zelnik's comments are echoed by fellow indie-label chief and Impala co-president Horst Weidenmueller. "A merger such as this with no remedies has repercussions for thousands of artists and small businesses across Europe," Weidenmueller said. "Impala's primary issue is the dysfunctioning of the music market. Online is the key example here and the EC should look more closely at how the majors are controlling the roll-out of this market."

The commission -- the European Union's executive arm -- had first cleared the merger in 2004. But that decision was annulled by a European court ruling in July 2006 after a challenge was launched by Impala, which serves a membership of more than 4,000 independent companies. The court then ordered the commission to conduct a new investigation into the company.

Sony Corp. and Bertelsmann, the joint partners in Sony BMG, launched their own appeal and re-notified their merger to the commission. In October, the commission cleared for the second time the merger.

Pan-European independent music companies association Impala responded soon after, lodging a formal complaint with the European Ombudsman into why the deal had been approved again without remedies.

It is understood that European court judges will deliver on July 10 their verdict on Sony and Bertelsmann's appeal of the July 2006 judgment.