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EC SEES “TACIT COLLUSION” AMONG MAJORS IN SONY-BMG OBJECTIONS
Still-Secret Statement of Objections Cites Pricing Data, Focuses on “Collective Dominance”
Details of the European Commission’s formal statement of objections to the proposed Sony-BMG music merger are slowly leaking out.

The Financial Times reports today that the Commission found that recorded-music prices among the Big Five music groups tend to “move in parallel,” implying “tacit collusion” in the form of price-fixing. Though all of the major companies have denied any such activity, the trends spotted by the Commission could prove a major obstacle to the Sony-BMG merger.

“The commission has concluded from a review of pricing data that the majors are moving in parallel, and that it is explicable by tacit collusion,” one official familiar with the case told the paper.

Lawyers from both would-be merger partners are said to be busy studying the EC objections, though neither side would discuss details of the 60-page document.

Meanwhile, The London Times reports that the statement of objections focuses more on “collective dominance” than the vertical-integration issues to do with Sony’s new Connect online store or Bertelsmann’s ownership of RTL, Europe’s biggest broadcaster.

If the merger were to go through, 80% of the global music market would be controlled by just four companies. The statement of objections, according to the Times, says “such a situation would allow each company to know exactly what its competitors were doing, discouraging any one competitor from behaving aggressively.”

Despite these and other concerns, however, the International Herald-Tribune points out, the number or severity of the EC’s objections might be reduced by the upcoming “devil’s advocate panel,” during which the commission will internally debate each issue. The practice, a recent addition to the Commission’s merger examination process, could possibly eliminate some objection arguments even before hearing from Sony and BMG.
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