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EU Regulators Clear Sony-BMG Deal
by Winter Casey
European Union competition regulators gave the green light Wednesday for the merger of the recorded music businesses of Sony and Bertelsmann after a court ordered a re-evaluation of the joint venture.
The European Commission, the EU's regulatory arm, concluded that the creation of "Sony BMG" would not "create or strengthen a dominant or collectively dominant position in the music markets" of EU member countries.
"This investigation represents one of the most thorough analyses of complex information ever undertaken by the commission in a merger procedure," EU Competition Commissioner Neelie Kroes said in a statement. "It clearly shows that the merger would not raise competition concerns in any of the affected markets."
The commission said it studied the net prices, discounts and wholesale prices for all compact disc chart albums sold by major record companies to their customers in the European region between 2002 and 2006 "in order to find evidence of any possible collusion between record companies."
The commission said it also had investigated "all national markets for recorded music in physical format and for the licensing of recorded music in digital format" before reaching its decision.
In 2004, the commission approved the merger of Sony and Bertelsmann. Two years later, however, the EU Court of First Instance said the commission made errors in its assessment and that the evidence the commission used to make its decision was insufficient to justify approving the deal. After the court annulled the commission's decision, the commission began a new investigation of the transaction beginning in January.
Qualcomm Accusers Pleased By EU Probe
A number of companies hailed the announcement Monday by the European Commission that it plans to investigate antitrust accusations against the U.S. chipset manufacturer.
Broadcom, Ericsson, NEC, Nokia, Panasonic Mobile Communications and Texas Instruments all have made individual complaints in the European Union against Qualcomm for allegedly engaging in anti-competitive practices. In a joint statement, the companies said they believe that these practices relating to licensing terms and conditions are harmful to the mobile telecommunications industry globally, undermine confidence in the standards-setting processes, threaten the supply of certain chipsets, stifle innovation, raise the costs of third-generation technology and handsets, and decrease consumer choices.
On Monday the European Commission announced it had opened formal antitrust proceedings against Qualcomm over concerns the company has abused its dominant market position.
"This initiation of proceedings does not imply that the commission has proof of an infringement," the commission said. "It only signifies that the commission will conduct an in-depth investigation of the case as a matter of priority."
Qualcomm said the "initiation of proceedings" language leaves "open the various courses of action the commission may choose at the end of the investigation, including rejection of the complaints, seeking a settlement with Qualcomm or issuing a statement of objections."
"We are pleased that the commission has decided to give the case priority status to move it forward swiftly to resolution," Qualcomm President Steve Altman said, in a statement. "We welcome the continuation of our dialogue with the commission in order to demonstrate that the complaints are without merit and are motivated by commercial considerations of the entrenched complainants who are trying to stifle the competition that Qualcomm brings to the market."
The companies that have filed complaints against Qualcomm praised the commission's decision to make the continuing investigation a priority.
Ericsson Vice President Kasim Alfalahi said Qualcomm has been "charging royalty rates much higher than other essential patent owners. If the other patent holders were to do as Qualcomm is doing, royalties could raise the cost of WCDMA [Wideband Code Division Multiple Access] handsets considerably -- thus raising the prices to consumers."
"It is essential for both current and future standards that companies which commit to license their technologies on fair, reasonable and non-discriminatory terms adhere to those commitments," said Yoshiaki Tokuda of Panasonic Mobile Communications, in a statement.
In addition to the European Union, Qualcomm faces a number of other legal problems. In the United States, the International Trade Commission has barred the import of new cellular telephone models that include certain chips made abroad by Qualcomm, but the case is on appeal. Nokia has filed an ITC complaint against Qualcomm that is being investigated. The company also faces litigation in California and Texas, while complaints have been filed against Qualcomm in South Korea and Japan as well.
Altman said Qualcomm has greatly contributed to the development and commercialization of the commonly used third generation cellular technology known as WCDMA. He also said the company has abided by its obligations to standards setting organizations and its business model "of extensively licensing our innovations" has resulted in lower prices and greater competition.
Mobile Operators Criticized For Poor Service In Nigeria
The Nigerian Communications Commission has ordered mobile service operators in the country to compensate subscribers for providing unacceptably low levels of service in Nigeria.
The commission has specifically sent letters reprimanding three mobile service operators in the country for offering poor customer service. The commission said on its Web site that these companies must pay compensation to "every subscriber on its network on [a] monthly basis as long as poor quality of service subsists on its network."
In the letters to the operators, the commission said it "is still being inundated with complaints from subscribers on the issue of poor and unacceptable level of quality of service on the networks of mobile services operators in Nigeria."
The commission further said in the letters, addressed to Celtel, MTN and GloMobile, that it is seriously concerned that the "quality of service in the Nigerian telecommunications industry has remained poor in spite of the directions issued to operators with the obvious implication that subscribers continue to suffer and incur losses owing to the poor and deteriorating quality of service." The commission said the companies will be required to compensate subscribers until they start meeting quality standards.
The companies have a week to respond to the commission's demands.
Celtel claims on its Web site to hold telecom licenses that cover more than a third of the population of Africa.
Indian Official: IT Can Address Poverty, Other Problems
A top telecom official in India said Wednesday that companies should focus on how they can use new communications technologies to address national problems in India such as poverty and unemployment.
Indian Minister of Communications and Information Technology Shri Raja suggested that the nation's Department of Telecom form a focus group to consider innovative methods on how to speed up broadband penetration in rural areas and develop telecom infrastructure more rapidly. Raja also said the group should establish a broadband penetration plan.
According to a posting on the Indian government's Web site, bridging the digital divide, especially in rural areas, is a key concern for the country.
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