EU Parliament Monitor - 09/01/09

MEPs to back 'passport' for investment funds
"Revision makes cross-border investment easier; directive offers significant savings for funds.
The European Parliament is expected to approve a report next week (13 January) that will recommend making it easier for investment funds to operate outside the state they are registered in. Under a controversial management ‘passport' provision, which MEPs are set to insert into a directive proposed by the European Commission, investment funds will be able to locate their operations outside their state of origin more quickly. The revised directive on UCITS (undertakings for collective investment in transferable securities) will mean significant cost-savings for funds. It will also make cross-border mergers of investment funds easier." [EuropeanVoice]

The Week Ahead 12-18 January 2009: Plenary Session – Strasbourg (overview)
[Europa]

EU Commission: Competition - 30/12/08

EUROPEAN PARLIAMENT QUESTIONS SONYBMG APPROVALS
"The elected European Parliament has challenged the European Commission about it's speedy decision earlier this year to allow Sony Music to buy Bertelsmann out of the two companies' joint venture record company, SonyBMG, which put the second biggest music firm in the world into the ownership of one organisation, Sony Corp.

They also question the Commission's wider policy regarding allowing such big companies to be created in the music and cultural industries without safeguards to protect smaller independent firms - in essence questioning the approval of the SonyBMG merger in the first place." [CMUDaily]

Sony BMG Merger Still Under Scrutiny December 23, 2008
"The European Parliament continues to seek further scrutiny of the Sony BMG merger, although the major has since demerged and will officially be renamed Sony Music Entertainment in 2009. EC Commissioner for competition Neelie Kroes has six weeks to provide a written explanation regarding competition in the music market." [Billboard]

The standard of proof in EC merger control: the implications of the Sony BMG saga
"One of the most important developments in EC competition policy during 2006 was the Court of First Instance’s (CFI) Impala v. Commission judgment annulling the European Commission’s approval of the merger between the music units of Sony and Bertelsmann. It harshly criticized the Commission’s Decision because it found that the evidence relied on was not capable of substantiating the conclusion. This was the first time that a merger decision was annulled for not meeting the requisite legal standard for authorizing the merger. Consequently, the CFI raised fundamental questions about the standard of proof incumbent on the Commission in its merger review procedures. On July 10, 2008, the European Court of Justice overturned Impala, yet it did not resolve the fundamental question underlying the judicial review of the Sony BMG Decision; does the Commission have the necessary resources and expertise to meet the Community Court’s standard of proof? This paper addresses the wider implications of the Sony BMG saga for the Commission’s future handling of complex merger investigations. It argues that the Commission may have set itself an impossible precedent in the second approval of the merger. While the Commission has made a substantial attempt to meet the high standard of proof imposed by the Community Courts, it is doubtful that it will be able to jump the fence again in a similar fashion under normal procedural circumstances." [IES]

Pan-European Indie Label Group Attacks EC’s Decision to Allow Sony Corporation Buyout of Sony BMG (Because In Other Parts of the World, People Actually Freak Out When This Shit Happens)
"Thanks to the European Commission’s decision to let Sony Corporation gobble up Sony BMG, we’re one step closer to a multi-headed monster that will be known as Sony Music Entertainment Inc. The EC’s 2007 decision to allow the merger means that Sony Corporation of America is now free to acquire the 50% share held by Bertelsmann AG of Germany in Sony BMG. Yikes." [TinyMixTapes]

EU Parliament Monitor - 19/12/08

European Parliament questions Sony BMG merger
"The indie sector has been given renewed hope that the Sony BMG merger story hasn’t ended following the European Parliament’s decision to ask the EC competition commissioner to justify her decision to approve the merger of the two majors in 2004.

The European Parliament has fired off three questions to Neelie Kroes challenging the Commission about competition in the music market. The questions are:

- Why did the Commission not carry out an in-depth investigation when it adopted its last approval decision?
- What is the Commission's strategy for making sure that SMEs have market access in concentrated sectors like music?
- Will the Commission adopt new rules or guidelines on how competition policy should be adapted to cultural markets such as music?

The commissioner has six weeks to provide a written explanation, although it is unclear what action Parliament can take if it doesn’t like her answers. Meanwhile, European indie organisation IMPALA is still appealing the original EC decisions allowing Sony and BMG to merge, which led to an appeal in the Court of First Instance. An IMPALA spokesman says that the move by Parliament is quite rare and it means Kroes has to justify her decision.
SonyBMG were not commenting." [MusicWeek]

European Parliament questions Sony BMG approvals
"The elected European Parliament has challenged the European Commission about it's speedy decision earlier this year to allow Sony Music to buy Bertelsmann out of the two companies' joint venture record company, SonyBMG, which put the second biggest music firm in the world into the ownership of one organisation, Sony Corp.

They also question the Commission's wider policy regarding allowing such big companies to be created in the music and cultural industries without safeguards to protect smaller independent firms - in essence questioning the approval of the SonyBMG merger in the first place.

As much previously reported, the merger of Sony Corp and Bertlesmann's respective record companies to create SonyBMG in 2004 was not without controversy. Pan-European indie label trade body IMPALA said the creation of a company as big as SonyBMG was anti-competitive and should not be approved by the Commission (who have the power to block such deals). When the Commission then OKed the merger, without conditions, IMPALA went to the European Courts who ruled in the trade body's favour, agreeing that the Commission had failed to sufficiently investigate the merger before giving it the green light and ordering them to reinvestigate the proposals. That they did, subsequently approving the merger for a second time. IMPALA are currently appealing that Commission decision too." [CMUDaily]

European Parliament challenges the Commission again about competition in the music market and the SonyBMG merger, as independents’ appeal continues without new action over Sony buy out
"The European Parliament has challenged the European Commission for the third time over SonyBMG. The EC Commissioner for Competition, Neelie Kroes has six weeks to provide a written explanation regarding:

1. Why the Commission did not carry out an in-depth investigation when it adopted its last approval decision?
2. What the Commission's strategy is for making sure that SMEs have market access in concentrated sectors like music?
3. Whether the Commission will adopt new rules or guidelines on how competition policy should be adapted to the specificities of cultural markets such as music?

In the meantime IMPALA will continue its initial appeal regarding SonyBMG. In September the European Commission approved the buy out by Sony of Bertelsmann's shares in the joint venture SonyBMG and IMPALA objected because no remedies were put in place and there was no detailed investigation. As IMPALA is still in litigation over the creation of SonyBMG in the first place, however, it will not launch a new appeal over the buy out. IMPALA's concerns mainly relate to the market power of SonyBMG (and the other majors) rather than who owns it. IMPALA's appeal in the European courts will be heard again by the judges next year. IMPALA also appealed the EC's second approval decision and this case is on hold while the appeal against the first approval is being dealt with." [RecordOftheDay]

Christa Prets MEP on media literacy in a digital world: MEP Christa Prets wants more "digital education"
"We all need to better understand the media we are touched by daily, especially the young, says Austrian Socialist Christa Prets. MEPs backed her report on "media literacy in a digital world" on Tuesday. In an exclusive interview Ms Prets explained to us what media literacy actually is, how we can improve it and how it can be used to teach the young." [Europa]

EU Commission: Competition - 24/10/08

Mergers: Commission revises Remedies Notice and amends Merger Implementing Regulation
"The European Commission has revised its guidelines on remedies in merger control in order to ensure that competition concerns are dealt with more effectively and to clarify to companies involved in merger cases how best to address competition concerns. Remedies are modifications to a proposed transaction suggested by the parties involved with a view to eliminating possible competition concerns identified by the Commission. The main changes include the introduction of a form for submitting information on remedies, details on divestiture and access remedies and clarifications on the role of the Trustee. The Commission has also modernised the Remedies Notice in the light of the revised Merger Regulation (EC) No. 139/2004 (see MEMO/04/9), the Commission's experience in a large number of cases, the Commission Mergers Remedies Study (see IP/05/1327) and recent judgements of the European Courts. The Remedies Notice also takes into account comments received from the public consultation held in 2007 on a draft Notice (see IP/07/544). In addition, the Commission has adopted amendments to the Merger Implementing Regulation (Commission Regulation (EC) No. 802/2004) in line with the changes to the Remedies Notice." [Europa]

State aid: Commission consults on three year extension of film support criteria
"The European Commission has launched a public consultation on plans to extend the state aid assessment criteria of its Cinema Communication (see IP/01/1326) until 31 December 2012. Under the current criteria, state support for film production can be exempted from the EC Treaty's ban on state aid under certain conditions. In particular, such support must concern cultural films, while respecting certain thresholds regarding territorial requirements and aid intensity. Schemes must also comply with the EC Treaty rules and cannot focus on specific film-making activities. The Commission proposes to extend the validity of these criteria for three years and invites interested parties to submit their comments by 30 November 2008." [Europa]

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EU Commission: Enterprise and Industry Monitor - 29/08/08

Suggestions to reduce administrative burdens put on business by the EU
Published: 21/09/2007 19:17 CET Deadline: To be announced
This on-line questionnaire has been designed to register your problems and suggestions on administrative burdens. Your input will be taken into account in the preparation of EU measures reducing administrative burdens. Contributions and feedback from the Commission will be summarised in periodic reports published on the Enterprise and Industry website. [Europa]

Speech at EU conference: Reducing red tape for Europe (26/09/2008)
Vice President Günter Verheugen
Speech at EU conference: "Cutting Red Tape for Europe" [Europa]

Reducing burden for SMEs: Simplification of EU rules on mergers and divisions proposed (25/09/2008)
The European Commission has put forward a proposal for a directive that will further reduce the administrative burdens on European public limited-liability companies in the area of mergers and divisions. Under the proposal, companies would benefit from simplified requirements on reporting and on publication of draft terms. The proposal complements the two packages of "fast track" measures that were put forward by the Commission in March 2007 and April 2008. These measures will contribute to the objective of reducing administrative burdens on EU companies by 25% by the end of 2012. The total savings potential of the measures proposed so far in the area of company law, with the current proposal, is brought to 1 billion €/year. [Europa]

Open access to research results will boost business and innovation
The European Commission has launched a pilot scheme which will provide open access to research results funded under the EU’s Seventh Framework Programme for Research (FP7). The pilot includes fields worth about 20 per cent of the FP7 programme budget and will make it easier for researchers and businesses to access results in areas such as health, energy, environment and ICT. The aim is to ensure that results of publicly funded research can be disseminated and exploited as widely as possible. [Europa]

Venturing across borders to support innovative SMEs (25/09/2008)
Finding finance is one of the greatest challenges facing SMEs. The European Commission and Member States are working together to create the right conditions for cross-border venture capital funds and markets to develop. [Europa]

2009 to be the European Year of Creativity and Innovation (23/09/2008)
The European Commission welcomes the news that today the European Parliament, meeting in plenary session in Brussels, has, by adopting its report, supported the Commission proposal that 2009 be designated as the European Year of Creativity and Innovation. [Europa]

Helping entrepreneurs IMP3rove their innovation management (23/09/2008)
As its name suggests, IMP3rove helps boost the capacity of SMEs to manage innovation. This EU-funded project is developing a range of tools and practices to encourage SMEs to recognise the importance of innovation management and to apply its techniques to improve their firm’s competitiveness. The project covers a wide range of sectors, including information and communication technologies, knowledge-intensive services, biotechnology, space, and food and beverages. [Europa][Europa]

Open call for tenders - Reference No EACEA/2008/04
Study on the entrepreneurial dimension of cultural and creative industries
The aim of the study is to better understand the workings and specific needs of enterprises, particularly SMEs, in cultural and creative industries. The study must focus on environmental factors, especially regulatory, that influence the development of these enterprises, and also on the issue of access to funding and entry barriers. Particular attention must be given to research and development. Deadline: 14/10/2008 [Europa]

EU Commission: Competition - 12/08/08

The European Commission’s Reexamination of the SonyBMG Merger: A Precedent-Setting Attempt to Jump the Fence August 11, 2008
ABSTRACT: On July 13, 2006, the European Court of First Instance annulled the European Commission’s decision authorizing the creation of Sony BMG, a joint venture incorporating the worldwide recorded music businesses of Sony and Bertelsmann. In its 2004 clearance decision, the Commission had concluded that the merger would not create or strengthen a collective dominance position on the part of the majors (i.e., Universal, Sony BMG, Warner, and EMI). In Impala v. Commission, however, the CFI harshly criticized the decision because it found that the evidence relied on by the Commission was not capable of substantiating this conclusion. [LawProfessors]

Impala vs. Commission... and the alleged 'blow' for the Commission 12/08/06
It took me a while to go through the IMPALA vs. Commission judgment. Everyone knows the story: the CFI quashed down the Commission's clearance of the JV between Sony and Bertelsmann. The Commission, after having raised serious objections against the transaction (on the grounds that there was arguably tacit collusion on the market prior to the merger, and that this situation would be further strengthened following completion of the transaction) made a surprising U-turn and cleared the deal without further objections. [ProfessorGeradin]

The Commission's Non Contractual Liability in the Field of Merger Control - Don't Use a Hammer When You Need a Screwdriver 01/07/07
It has become conventional wisdom to view the rulings handed down by the CFI in Airtours, Schneider, Tetra Laval and Impala as unprecedented setbacks for the European Commission ("the Commission") that would usher in a new era of administrative accountability in the field of merger control. However, several commentators still consider that the Commission regretfully enjoys a de facto power of "life or death" over notified mergers, and that judgments striking down its decisions are unlikely to change much in practice. Parties to a blocked merger generally abandon their projects following the Commission's decision, irrespective of the outcome of the actions they may subsequently bring before the EC Courts (e.g. the Airtours/First Choice or Schneider/Legrand mergers). Third parties - competitors or consumers - to an illegally approved merger have little prospect of inducing the Commission to unscramble a consummated transaction (e.g. the Sony/BMG merger).

Commission again clears music giants' merger 3 October 2007
The European Commission has cleared, for a second time and without imposing any 'remedies', the joint venture between music companies Sony and BMG, which had been set aside by the European Court of Justice in 2006. [Euractiv]

EU Commission: Competition - 28/07/08

Rebalancing EC Merger Control: The ECJ’s Judgment in Case C-413/06 P (Bertelsmann and Sony) July 28th, 2008
"On July 10, 2008, the European Court of Justice overturned the European Court of First Instance’s Impala judgment, which had previously quashed the European Commission’s clearance decision of the Sony/BMG merger. Even though the ECJ judgment contains no groundbreaking novelties, it brings some important clarifications with regard to a number of procedural and substantive issues of EC merger control law.

The judgment is of particular interest because the ECJ commented for the first time on the CFI's Airtours criteria for the establishment of collective dominance. With regard to procedural issues, the ECJ largely restores the pre-Impala situation and reduces the uncertainty and imbalance caused by the CFI’s judgment as to the importance of the statement of objections (“SO”), the conduct of merger control proceedings before and after the adoption of a SO, and the standard of proof and of adequate reasoning that the Commission has to respect when drafting merger control decisions." [GlobalCompetitionPolicy]

The European Commission’s Reexamination of the SonyBMG Merger: A Precedent-Setting Attempt to Jump the Fence July 22nd, 2008
"On July 13, 2006, the European Court of First Instance annulled the European Commission’s decision authorizing the creation of Sony BMG, a joint venture incorporating the worldwide recorded music businesses of Sony and Bertelsmann. In its 2004 clearance decision, the Commission had concluded that the merger would not create or strengthen a collective dominance position on the part of the majors (i.e., Universal, Sony BMG, Warner, and EMI). In Impala v. Commission, however, the CFI harshly criticized the decision because it found that the evidence relied on by the Commission was not capable of substantiating this conclusion.

Notwithstanding the fact that the European Court of Justice has now set aside Impala because of a number of identified errors of law, the judgment continues to raise fundamental questions about the standard of proof incumbent on the Commission when dealing with merger cases. The 2004 Sony/BMG decision indeed should be seen in light of the CFI’s consecutive annulment of three prohibition decisions in 2002: Airtours v. Commission, Schneider Electric v. Commission, and Tetra Laval v. Commission. The resoluteness by which the CFI criticized the Commission for its analysis of the evidence and questioned the rigor of its decisions in these judgments was unprecedented. The three judgments, which were delivered over a five-month period, gave rise to a flood of criticism of the Commission’s merger analysis and opened a debate about the economic soundness of its decisions." [GlobalCompetitionPolicy]

Bertelsmann and Sony Judgment: Welcome Clarity for EC Merger Review from the EU’s Highest Court July 28th, 2008
"On July 10, 2008, the European Court of Justice gave judgment setting aside a ruling of the European Court of First Instance in an appeal brought by Impala, a third-party complainant, against the clearance of the SonyBMG joint venture by the European Commission in August 2004. The CFI’s judgment was the first (and so far, the only) time the CFI had overturned an unconditional merger clearance decision under the EC Merger Regulation.

As the ECJ Advocate General noted, the appeal presented the EU’s highest court with an opportunity to develop its case law in the field of merger control, in particular with regard to the extent of investigation and reasoning required of the Commission when it approves a merger transaction. Merger cases are only rarely considered by the ECJ and this judgment, which was delivered by a Grand Chamber of 13 judges, has emphasized a number of important procedural safeguards for parties to mergers, which had been called into question by the CFI’s earlier ruling." [GlobalCompetitionPolicy]

The Court of Justice sets aside the Judgment of the Court of First Instance relating to the Sony BMG Joint Venture July 10th, 2008
"The Court of First Instance committed errors of law in concluding that the Commission’s decision approving the joint venture was vitiated by manifest errors of assessment and was inadequately reasoned.

The following is an excerpt of the ECJ's judgment. To read the entire judgment on the ECJ's website, click on the URL link in the column on the left.

On 19 July 2004, the Commission approved the concentration of the global recorded music businesses of Bertelsmann AG and Sony (with the exception of Sony’s activities in Japan) into three newly-created companies to be operated under the name Sony BMG." [GlobalCompetitionPolicy]

IES Working Paper 4/2008
"One of the most important developments in EC competition policy during 2006 was the Court of First Instance’s (CFI) Impala v. Commission judgment annulling the European Commission’s approval of the merger between the music units of Sony and Bertelsmann. It harshly criticized the Commission’s Decision because it found that the evidence relied on was not capable of substantiating the conclusion. This was the first time that a merger decision was annulled for not meeting the requisite legal standard for authorizing the merger. Consequently, the CFI raised fundamental questions about the standard of proof incumbent on the Commission in its merger review procedures. On July 10, 2008, the European Court of Justice overturned Impala, yet it did not resolve the fundamental question underlying the judicial review of the Sony BMG Decision; does the Commission have the necessary resources and expertise to meet the Community Court’s standard of proof? This paper addresses the wider implications of the Sony BMG saga for the Commission’s future handling of complex merger investigations. It argues that the Commission may have set itself an impossible precedent in the second approval of the merger. While the Commission has made a substantial attempt to meet the high standard of proof imposed by the Community Courts, it is doubtful that it will be able to jump the fence again in a similar fashion under normal procedural circumstances." [IES]