INDEPENDENT record companies yesterday pledged to consider a legal challenge to the European Commission’s approval of a €5 billion (£3.3 billion) merger between the recorded music divisions of Sony Music and Bertelsmann Music Group (BMG).

Legal advisers to Impala, the organisation representing more than 2,000 independent record labels, said there was a “good chance” that an appeal would be lodged with the European Court in Luxembourg.

The threat came after anti-trust regulators in Brussels formally approved the merger, excluding the music publishing businesses of Sony Music and BMG, which will create the second-largest record company in the world after Universal Music, with a market share outside Japan of 23 per cent.

The merger, which requires US regulatory approval, will result in about 2,000 job cuts as part of a plan to trim $350 million (£189 million) annual costs. The merged business is also expected to relinquish some properties and reduce its roster of artists, which includes Outkast, Bruce Springsteen, Britney Spears and George Michael, as well as Elvis Presley’s back catalogue.

European antitrust officials previously indicated that the major record companies engaged in alleged tacit collusion on pricing in the marketplace. But Mario Monti, Europe’s Competition Commissioner, said that he lacked “sufficiently strong evidence” to block the deal.

Opponents of the merger said that placing more than 75 per cent of the world’s music sales in the hands of four companies would limit diversity of choice for artists and consumers. Companies, including Apple Computer, which recently launched its iTunes Music Store in Europe, as well as independent record labels such as Britain’s Beggar’s Group testified that the planned merger would hurt competition in Europe’s music market.

Alison Wenham, the chairman of Britain’s Association of Independent Music, said: “The real tragedy would be for people who opposed the deal to do nothing.” Isabelle Wekstein-Steg, a lawyer for Impala, said: “It will take time for Sony and BMG to merge and I’m not sure they would want to take the risk if there was the risk of an appeal.”

However, Andy Lack, head of Sony Music, who will be chief executive of the merged group, said: “I am probably the only person who isn’t surprised that the deal was approved quickly and with no concessions.”

Sony and BMG executives said the marketplace had changed dramatically since regulators last examined the music industry. They said the deal was intended to offset the effects of music piracy, which have caused a sharp drop in sales in key markets such as the US and Germany.

IT’S NOW OR NEVER FOR THE BIG SHOTS’ SHOWDOWN

MUSIC industry insiders yesterday hinted at a potential power struggle over control of Sony-BMG as Sony Corporation and Bertelsmann, the parent companies, begin the process of filling the remaining board seats at the merged company.

The two parent companies are expected to nominate Gunter Thielen, Bertelsmann’s chairman and chief executive, and Sir Howard Stringer, chairman of Sony Corporation of America, as non-executives to two of the six board seats.

Rolf Schmidt-Holtz, chairman and chief executive of BMG, will bolster Bertelsmann’s representation as non-executive chairman.

But sources close to Sony have been quick to point out that Andy Lack, chairman and chief executive at Sony Music, will hold considerable sway as chief executive. Michael Smellie, chief operating officer of BMG, will retain his role at the new group, while Sony Music’s Kevin Kelleher will be finance director.

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