After months of outcry from independent-music trade organizations, European regulators are officially preparing to investigate Universal Music Group‘s proposed $775 million acquisition of Downtown Music.
The European Commission confirmed on Friday that it has accepted official requests from Austria and the Netherlands to examine the deal’s adherence to the EU Merger Regulation; UMG trades on Amsterdam-based Euronext. The news was first reported by Financial Times and Music Business Worldwide.
Universal’s independent division, Virgin Music Group, announced in December that it had agreed to buy Downtown Music Holdings LLC, one of the largest indie companies in the world.
In a statement, the EC said: “The proposed transaction does not reach the turnover thresholds set out in the EUMR and therefore was not notified to the Commission. However, it was notified for merger control clearance in Austria and the Netherlands, where it met the relevant national turnover-based notification thresholds.
“This provision allows Member States to request the Commission to examine a concentration that does not have an EU dimension but affects trade within the Single Market and threatens to significantly affect competition within the territory of the Member State(s) making the request.” In short, although the deal did not set off antitrust alarms in all countries, it did in Austria and the Netherlands.
The news was first reported by Financial Times and Music Business Worldwide, which quoted a UMG statement as saying the company looks “forward to continuing to co-operate with the commission” and that “we are confident that we will close this acquisition in the second half of the year, on its original timeline.” (The statement appears in full below.)
Downtown was founded as a music publisher in 2007 and quickly grew to one of the largest indies in the industry, but sold its portfolio to Concord in 2021 for some $400 million and pivoted to become more of an artist-services company, with a clientele of more than 5,000 businesses and 4 million artists across nearly 150 countries.
Variety will have more on the situation as it develops.
“On the basis of the information at the Commission’s disposal, and without prejudice to the outcome of its full investigation, the Commission considers that the transaction meets the criteria for referral under Article 22 of the EUMR.
“In particular, the transaction threatens to significantly affect competition in certain markets of the music value chain, where both companies are active, in Austria and in the Netherlands, as well as in many other Member States.
“The Commission has therefore concluded that it is best placed to examine the transaction. The Commission has asked UMG to notify the transaction.
“UMG cannot implement the transaction before notifying and obtaining clearance from the Commission.”