Europe's second highest court has struck down the decision made in 2004 to allow Sony and BMG to merge.
The Court of First Instance, in a release about the new ruling, said that the European Commission's arguments in support of the merger were not of "the requisite legal standard", and were, rather, "a manifest error of assessment".
The case against the merger was brought by Impala, an independent music association, which sought to have the approval overturned.
Impala president Patrick Zelnick said to Out-Law.com, "This is a watershed in European affairs, a landmark judgment for music".
"There is no doubt that it will block any further mergers and will transform how music and other creative sectors are treated."
The commission can now launch an appeal on points of law, but not the decision sa a whole.
Sony BMG chief executive Rolf Schmidt-Holtz said in a message to staff, "While we are not pleased with having to incur the cost and inconvenience of a reconsideration process, we are confident this re-examination will confirm the commission's original findings".
The ruling may put a damper on the plan for Warner Music and EMI to merge, although the two companies are still trying to hammer out a deal.
Via The Register http://www.theregister.co.uk/2006/07/17/sony_ruling_rocks_commission/