The European Commission and its antitrust chief Mario Monti have decided to greenlight the proposed merger between Sony Music and BMG, The Post has learned.
The approval was given after two days of closed door hearings in Brussels this week, which included personal pleas to Monti from Sony Music chief Andrew Lack and BMG head Rolf Schmidt-Holtz, sources said.
A source close to the matter said the decision to approve the deal was made without demanding concessions from the two companies.
The approval marks a crowning achievement for both Lack and Schmidt-Holtz – two former television executives who have sometimes been underestimated in the clubby music industry.
Pursuing such a merger was a signficant gamble, given that in recent years regulators have blocked two major music deals.
An official announcement could come as early as today.
Spokespersons for BMG and Sony Music declined comment.
Ever since the proposal to merge was announced in November, the music industry has been eagerly anticipating the ruling from the EC.
As recently as last week, sources close to both Sony and BMG gave odds of approval at about 50-50. In late May, the EC issued a 60-page document detailing its objections to the deal.
In that document, the EC argued the merger would reduce consumer choice and strengthen existing price collusion among the major music companies.
A music industry executive said, “Is it surprising that they approved it? Yes, given the well thought out argument that further consolidation in a week market would hurt consumers.”
The new company will be called SonyBMG, and will be run by Lack. BMG Chief Operating Officer Michael Smellie will be Lack’s top deputy.
Schmidt-Holtz will be chairman of the board, and is likely to take on a new executive role at BMG’s parent company Bertelsmann.
Combined, Sony and BMG will have about 25 percent of the world’s market share in recorded music, just ahead of Universal music. In the key U.S. market, Universal remains the largest music company.