ACCC to not intervene in proposed merger of BMG and Sony music

The Australian Competition and Consumer Commission will not intervene in the proposed merger of BMG Australia and Sony Music Entertainment (Australia), ACCC Chairman, Mr Graeme Samuel, said today.

"The ACCC has carefully considered the competitive impact of the proposed merger on the Australian music industry and concluded that it is unlikely to substantially lessen competition in the wholesale recorded music market or in the emerging online music market", Mr Samuel said.

The proposed merger forms part of a global joint venture between Sony Corporation and Bertelsmann AG that would combine their recorded music businesses. The European Commission and the U.S. Federal Trade Commission also recently decided not to oppose the joint venture after extensive scrutiny by all of the regulatory agencies.

"In coming to its view, the ACCC sought views from a large number of Australian organisations involved in the different facets of the industry. The ACCC also took considerable guidance from the findings of the Federal Court in the Universal Music and Warner Music case.

"While increased concentration in any industry raises issues of a greater potential for coordinated conduct between the remaining players, the ACCC formed the view that the evidence before it suggested that this was unlikely in the traditional and online music markets.

"The ACCC also noted that significant concern was raised by some market participants regarding the potential impact upon the online distribution of music, digital music standards and on the downstream sale of portable music players. However, the ACCC considered it unlikely that the proposed merger would lead to foreclosure given the emerging and dynamic nature of this aspect of the industry.

"Nevertheless, the ACCC would be very concerned by any attempt by SonyBMG to utilise its vertical links, including its catalogue of music, to restrict or hinder competition in any emerging market".

Background

Bertelsmann is an international media company active in television and radio, book publishing, magazines and newspapers, recorded music and music publishing, print and media services, book and music clubs and media e-commerce. Bertelsmann's international record labels include Arista Records, Jive Records, Zomba and RCA.

Sony is globally active in music recording and publishing, industrial and consumer electronics, and entertainment. Sony's international labels include Columbia Records Group, Epic Records Group and Sony Classical.

In 2003, the Full Federal Court upheld that Universal Music and Warner Music had breached section 47 of the Trade Practices Act 1974 involving exclusive dealing, when responding to the parallel importation of music by small business.