The Federal Trade Commission (FTC) has unconditionally approved the merger of Sony Music with Bertelsmann's BMG to create Sony BMG.
FTC commissioner Mozelle Thompson told The Hollywood Reporter: "While I concur with the commission's approval of the merger, my decision was a difficult one, in part because I am particularly concerned about the impact of media mergers on the prices and quantity of media, as well as the diversity of content, available to consumers. The history of facilitating practices in the music industry, coupled with the elimination of Sony and BMG as independent competitors, causes me concern."
The move will bring the number of big record companies down from five to four and make Sony BMG the second-largest music company in the world, behind Universal Music Group. The combined company is expected to save $300 million-$360 million a year.
A Sony Music representative said: "Now, with regulatory approvals behind us, we look forward to establishing a dynamic new company that will be deeply dedicated to serving the needs of its artists, while at the same time enriching the lives of music lovers around the world."
A BMG spokesman said: "We now look forward to creating a global recorded music company comprising many of the world's most successful artists as well as a vast catalogue of recordings."
The board of directors of the combined Sony BMG will include members of both companies. Sony Music Entertainment chairman and CEO Andrew Lack will helm the merged company as CEO, and BMG chairman and CEO Rolf Schmidt-Holtz will be chairman of the board.
The international restructuring will result in about 2,000 job losses, mostly affecting back-office operations, according to sources.
The new entity is owned 50 per cent by both groups and based in New York.