LawFont.com

For the first time, the Court of First Instance has annuled the European Commission‘s approval of a company merger. In January 2004, Sony and BMG notified the Commission that they intended to merge their worldwide music recording businesses (except for Japan) into a joint venture. In July 2004 the Commission approved the joint venture in Europe, and SonyBMG started business.

This week, in an action brought against the Commission’s decision by Impala, an organisation representing 2,500 independent music publishing and record labels, the CFI ruled that the Commission had failed to satisfy the legal requirement that the combined music recording businesses of Sony and BMG would not come to hold monopoly power.

What this decision means for the joint venture is unclear–reports state that Sony and BMG will need to lodge a new notice, and the Commission will undertake a new analysis of the transaction. But the conclusion reached could be the same. If it is not, it will be interesting to see how a joint venture that has been operating for two years will be unravelled.