Sony, Bertelsmann appeal EU court annulment of JV

BRUSSELS, Oct 5 (Reuters) Japanese electronics giant Sony and Germany's Bertelsmann have appealed against an annulment of their joint venture that created the world's No.2 music company, Europe's top court said today.

In an unexpected judgment in July, the Court of First Instance -- Europe's second-highest court -- annulled the joint venture, saying the Commission had failed to give good reasons for changing its views on the deal during an investigation.

That decision sent shockwaves through the music industry, potentially forcing the venture, Sony BMG, to unravel and putting on ice a takeover deal between peers EMI Group and Warner Music.

The Luxembourg-based European Court of Justice will examine the appeal. Such cases usually last more than a year.

Bertelsmann said in a statement it and Sony had filed the appeal because ''the EU Commission's 2004 decision to clear the Sony BMG recorded music joint venture was correctly decided on both the law and the facts''.

Sony's Tokyo headquarters declined to comment for now.

In its July decision, the lower court focused on the ''statement of objections'', a complaint that lays out problems with a merger.

The court said the Commission had issued its statement of objections and then changed its mind based on filings by Sony and BMG ''without carrying out any fresh market investigations''.

An argument available to those appealing will be that there is almost no time to conduct fresh market investigations given the tight deadlines imposed by the four-month in-depth probe.

REVIEW REVISITED The appeal will have no impact on the Commission's fresh review of the tie-up, which it was forced to revisit as a consequence of the annulment.

The EU executive has to look into any competition concerns that the venture may raise and it can approve or reject it, or ask the companies to suggest remedies to any remaining concerns.

''In connection with that process, the parties will be providing current market data and other information requested by the Commission in the next few weeks,'' Bertelsmann said.

The review is the same procedure the joint venture -- when it was just a plan -- went through in 2004 before being approved.

The Commission will have to ensure that its review is vigorous enough to stand up in court should its decision be challenged. The July court decision upheld a challenge from independent record labels.

The Commission declined to comment.

REUTERS PB PM1750