MUSIC INDUSTRY : SONY-BMG: ADVOCATE-GENERAL ADVISES COURT TO UPHOLD ANNULMENT.

A new episode opened in the lengthy Sony-BMG saga on 13 December. Advocate-General Juliane Kokott of the EU Court of Justice advised the Court to reject the appeal lodged by the two big record companies, Japan's Sony Music and Germany's Bertelsmann, against the Court of First Instance (CFI) decision to annul the merger authorisation (Case C-413/06). The European Commission originally cleared the deal in July 2004. After having re-examined the case, it cleared the merger a second time on 3 October, once again without setting any conditions or obligations.

Sony and BMG argued in their appeal that the CFI exaggerated the legal requirements set for the Commission's decision and its judicial review.

Conversely, Juliane Kokott held that the Court of First Instance had not committed any error in law by concluding that the first clearance decision was not sufficiently justified. The approval decision therefore had to be annulled. First, she argued, contrary to what the two firms claim, the authorisation of a merger operation may indeed be revoked on the grounds of an infringement of the duty to state reasons. Nor did the CFI impose erroneous or excessively high standards of proof for clearance of the deal.

The advocate-general concluded that the statement of reasons for a clearance decision is not subject to a lesser standard than for a prohibition decision.

On the other hand, Bertelsmann and Sony were right to criticise the CFI for setting excessive requirements as to the cogency of their defence submissions and for erroneously considering that the Commission had the...