EUROPEAN COMMISION TO CONSULT GOVERNMENTS IN SONY-BMG DEAL

Following reports that the European Commission has reversed its position on the Sony-BMG merger and will likely approve the deal without demands for concessions, EC spokesperson Amelia Torres said regulators will consult with member governments before formally approving the deal, according to Dow Jones News.

Saying Competition Commissioner Mario Monti and the rest of the European Union’s regulatory body will follow “normal procedure,” Torres said they will send copies of a draft decision to government authorities for consultation. The July 22 deadline for approval of the deal is still in place, she said.

Yesterday, the EC reportedly decided that there was insufficient evidence to stand on its central argument for blocking the merger, which held that the major music companies operate in “tacit collusion,” keeping CD prices artificially high. According to the New York Times, a person close to the EC proceedings said Sony and BMG had been given “strong signals” that approval was imminent.

However, the chairman of European independent-label trade organization Impala, Michel Lambot, said he was unaware that the EC had decided to let the merger go through. “If it is true, then we will go to court,” he told the Times, referring to Impala’s previous threats of legal action if the EC should fail to block the deal.

One music industry executive expressed surprise at the EC’s apparent about-face, telling the New York Post, “Is it surprising that they approved it? Yes, given the well-thought-out argument that further consolidation in a weak market would hurt consumers.”

The decision to approve the deal reportedly came yesterday after Monti reviewed the case with Commissioners including “Devil’s Advocate” panel head Olivier Guersent and chief economist Lars-Hendrik Röller.

The Dow Jones report notes that if the EC were to move to block the merger, Sony and BMG would likely appeal the decision to the same court that has overruled three previous EC attempts to shoot down merger deals. The EC has approved seven or more mergers since 2000 where the chances of approval at first appeared slim.

Those familiar with the case say that the U.S. Federal Trade Commission appears set to approve the Sony-BMG deal without requiring concessions.

Meanwhile, the Los Angeles Times reports, a successful merger between Sony and BMG would likely spur EMI and Warner Music Group to revive their own merger talks.