Apple opposes Sony-BMG merger plan

By | February 13, 2004 at 12:00 AM

Apple, the US computer company behind the iTunes music service, has become the latest group to oppose the proposed deal between Sony Music and BMG, the recorded music arm of Germany’s Bertelsmann media group.

The development comes as the European Commission begins an intensive second-stage investigation of the merger, a probe it is due to close by June 22.

In an announcement on Thursday, the Commission said it had “decided to investigate whether the deal might create or strengthen a collective dominant position between the remaining four major record companies”.

It said it would examine “the extent to which the vertically-integrated structure of both Sony and Bertelsmann could raise competition concerns”.

Bertelsmann said it was “not surprised” by the Commission’s step and would co-operate with Brussels during coming months.

Both Sony and BMG also maintain the Commission should take into account industry problems such as internet piracy. These were much less of a concern when the Brussels body effectively blocked a similar merger between EMI and Time Warner in 2000.

The Commission has been at pains to show its sympathy for the industry’s plight. But the Brussels body is acutely aware that it could face legal action if it does not give due weight to substantive issues in the case.

Apple, which has sold more than 30m songs through its US internet service, is understood to have expressed concerns about possible “vertical integration” between the merged entity and its respective media parents. The group declined to comment.

People familiar with the situation, however, said Apple had “forcefully” raised objections over the enlarged music group’s selling power for music downloads and potential favourable terms with Sony Connect, the Japanese group’s forthcoming rival to Apple’s iTunes.

Music majors including Warner, EMI and Universal Music are also understood to have filed objections citing similar fears.

The Commission noted companies’ concerns that the joint entity “could foreclose competitors in the markets for music downloading services and portable digital music players from access to Sony-BMG’s music library”.

It also referred to similar fears that Bertelsmann “could give preferential access to Sony-BMG music” on the television and radio channels owned by its RTL division, Europe’s biggest broadcaster.

Related Content