Sony BMG Merger Back On

After spending millions on lawyers and lobbyists, the Sony BMG merger is back on with European Union regulators giving the proposal the green light.

European Union regulators gave their consent Wednesday for the second time to the merger of Sony Music Entertainment and BMG, clearing with no conditions an alliance that created the second-largest music group in the world, which has been the subject of legal attacks by independent music labels.

The creation of Sony BMG, which ranks behind only Universal Music, prompted a long-running, costly legal battle in the European courts even though the deal was approved by the European Commission in 2004.

Neelie Kroes, the EU competition commissioner, said Wednesday that the deal had been subject to “a long and very thorough investigation and I am confident in the conclusion reached that the merger poses no competition problems.”

The commission did not release its more than 300-page report backing its decision, but a lawyer involved with the case said that the regulators delivered an exhaustive report that appeared to be an attempt to fend off a future appeal by the Independent Music Publishers and Labels Association, or Impala, which represents about 3,500 record labels.

The European Court of First Instance annulled last year the commission’s original approval of the merger following an appeal by Impala. The court also took the rare step of scorning the work of commission regulators, criticizing the first review as “an extremely cursory examination.”

 After the commission’s ruling Wednesday, Impala issued a statement labeling the decision “bizarre” and “indefensible,” and vowed not to give up their legal battles.

Helen Smith, secretary general for Impala, based in Brussels, said the group could appeal the decision, or lodge a separate complaint with the European Ombudsman against the commission for “maladministration.”

“There is a question mark about whether the commission has conducted itself properly without imposing conditions despite a court judgment indicating there were problems the last time around,” Smith said.

Liz Young, a spokeswoman for Sony BMG, said the company and its corporate parents were pleased with the outcome of that investigation and “hope that Sony BMG can now devote its resources to address the challenges faced by the industry.”