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The deal would reduce the number of major labels from five to four - one of the EC's main concerns that led to the collapse of EMI's previously proposed merger with Time Warner. On the announcement of the proposal last Friday, a source from the EC told reporters: "We would have a close look at any plans."

A combined BMG/EMI would control 25 per cent

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of the global music industry, putting it in joint first place with Universal.

EMI is playing a cautious game this time around and analysts believe that the EC will be more forgiving than it was with the Time Warner deal, as the companies do not have the same online presence.

Bertelsmann does have Internet interests, though, being the first to jump to the aid of Napster, with a subscription model allowing Napster users access to its catalogue. Present talks indicate that Bertelsmann would put its music assets into EMI in return for a controlling stake of the combined group and, presumably, opening EMI's catalogue to online access.

At the time, the proposed EMI/Time Warner merger was seen as the icing on the cake to the much larger AOL/Time Warner deal. The companies were not actually blocked by the EC, but withdrew from negotiations. So, this current battle may well be much harder fought, especially on the part of BMG and EMI.