Silent orchestration

Silent orchestration - Silent orchestration Can record...

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March 31, 2007 Silent orchestration Can record companies act in concert, even without agreeing to do so? LAST month Ian Gillan, lead singer with Deep Purple, an elderly heavy-metal band, made an angry attack on the group's record label, Sony BMG. His tirade against the company's "opportunistic fat cats" was provoked by the CD release of a 1993 live performance, which the rock star claimed was the band's "worst gig ever". On March 1st, two days after Mr Gillan's outburst, the European Commission announced its own re-release, saying it would look again at the merger that created Sony BMG in 2004. Europe's anti-trust authorities have until July 2nd to decide whether the merger should now be picked apart. Before the merger, there were five record "majors"--Universal, Sony, Bertelsmann, Warner and EMI-- which together accounted for 80-85% of recorded music sales in western Europe. Once Sony and Bertelsmann fused their record subsidiaries into Sony BMG, the merged entity had an average 20- 25% share in national markets. This is not enough clout on its own to trouble the trustbusters: in fact Sony BMG has a smaller European presence than Universal, the leading record company. At issue is whether the four majors together might now reach an unspoken understanding about prices. The evidence is not yet in. But what about the theory? Cartels--in which pacts among companies are formally agreed--are notoriously difficult to sustain, not to mention illegal in most instances. Witness the tensions that dog OPEC, the cartel of oil-producing countries. A tacit understanding faces even
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This note was uploaded on 04/21/2011 for the course ECON 1001 taught by Professor S.c during the Fall '10 term at HKU.

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Silent orchestration - Silent orchestration Can record...

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