Since the merger of Sony and BMG in August 2004, the major music group has acted more like a towel over the face of the already suffocating major music industry than as a resuscitating device. Things started off with the payola scandal of 2005, in which Sony BMG (among others) was caught bribing radio DJs to promote artists like Franz Ferdinand and Jessica Simpson. It was fined $10 million. Then, of course, there was the rootkit scandal in 2005. As equally funny as the payola scandal, Sony BMG's shitty DRM software auto-installed onto the consumer's computer and auto-compromised its security. Even one of Sony BMG's uninstallation options for the rootkit made personal computers vulnerable.
Talk about bad PR. Which is probably why Sony BMG decided to skip a scandal in 2006. Or maybe because that's when Impala (indie trade association) convinced the European Union to annul the Commission's decision to clear the merger in the first place. Who has time to worry about a new scandal when the company's own marriage is skating on thin ice?
It's now October 2007, 15 months since the annulment, and the EU Commission (who earlier this year approved Universal's giant takeover of Bertelsmann's BMG publishing arm) has FINALLY announced that... the... Sony... BMG... merger... has... been... for... the... second... time... cleared. According to EU competition commissioner Neelie Kroes:
"This investigation represents one of the most thorough analyses of complex information ever undertaken by the commission in a merger procedure. It clearly shows that the merger would not raise competition concerns in any of the affected markets. [...] It analyzed all retail net prices, discounts and wholesale prices for all CD chart albums sold by all major record companies to all of their customers. This was an enormous exercise. We found no evidence to support any theory of actual or likely anti-competitive effects of this merger."
The investigation also supposedly offered "tangible evidence" of Sony BMG's activity since 2004, something the Commission couldn't possibly predict in its original 2004 decision to allow the merger. But with the above-mentioned scandals and the bad press that came along with it, doubts are raised as to whether or not this "tangible evidence" is truly representative of Sony BMG's potential clout.
Impala, of course, reacted strongly to the decision. The group claims the Commission ignored the Court's ruling, calling the decision "indefensible" and wondering why the merger was cleared a second time without remedies. Chairman Martin Mills said the decision ignored the "independents' evidence on anti-competitive behavior in retail, radio and television, press and the online market," according to Billboard. Meanwhile, Impala President Patrick Zelnik said "The Commission has ignored the simple fact that four companies control 95% of the music most citizens hear on the radio throughout the world. What kind of a message does this send to European citizens?"
