Sony-BMG merger approved

The European Union’s competition chief has approved a merger between Sony Music and BMG after deciding it did not have enough evidence of potential harm to consumers to block the deal, sources familiar with the case said tonight.

The decision came after two days of closed-door hearings this week at which the companies faced competitors and the EU antitrust team.

Many small independent labels claimed the merger would lead to higher CD prices, less choice for music lovers and stifle the development of online music stores.

After reviewing the results, EU competition chief Mario Monti and his team decided they did not have ”sufficient evidence” to oppose the deal. An official announcement is expected tomorrow.

Sony refused to comment. A spokesman for BMG was unavailable.

The deal would leave four music industry companies controlling about 80% of the market. Sony-BMG and current number one, Vivendi Universal, would each have about a quarter.

In a sealed statement of objections sent last month, the European Commission expressed fears the deal could exacerbate “tacit collusion” in the industry, leading to higher CD prices and less choice for consumers in a market where there is already too little competition.

The EU, citing similar concerns, opposed a deal between music giants EMI and Warner four years ago.

Sony artists include Aerosmith, George Michael and Barbra Streisand, while the BMG stable has Avril Lavigne and Elvis Presley.