European Commission Regulator to Investigate UMG’s Downtown Acquisition

Martina
29 April 2025, Tuesday

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In December 2024, Universal’s music division, Virgin Universal Music, revealed it was acquiring Downtown Music, a rights management and music services firm. Four months later, UMG faces more challenges in this acquisition than anticipated, as the European Commission (EC) has initiated an investigation into the transaction.

The EC Is to Assess Whether Umg’s Downtown Acquisition Can Affect Competition

UMG’s purchase of Downtown Music has been facing obstacles from the get-go. The acquisition announcement sparked another wave of criticism directed at UMG and its competition-related practices. Infamously, the European Independent Music Companies Association (IMPALA) has called the deal “another land grab,” raising concerns over how it could further limit indie artists in their chances and opportunities to break through the already oversaturated industry.

The news about a potential investigation into the sale, expected to close in the second half of 2025, first emerged at the beginning of April (2025), reporting that the acquisition has been referred to the EC for review by several competition watchdogs in the Netherlands and Austria.

Now, the EC has confirmed that it has officially accepted these requests to launch an investigation into the subject. “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,” the EC said in the statement.

According to the European competition regulator, the investigation will be carried out with reference to Article 22(1) EUMR, which allows the EC 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.”

As the Commission stated, without prejudice to the results of its full investigation, it considers the deal between UMG and Downtown Music to meet the criterion under Article 22. However, without the investigation, the transaction potentially 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," the EC concluded in its statement.

Impala Cheers on Ec’s Decision to Investigate, Umg Remains Unfazed

EC’s decision to investigate was cheered on by many industry insiders and organizations, including IMPALA. Prior to the announcement of the investigation, Helen Smith, IMPALA executive chair, had already celebrated the submitted referrals, labelling them as “a crucial step towards putting a stop to UMG’s juggernaut strategy.”

“It shows two things; that regulators see the threat that this strategy poses to the market, and that the consequences go beyond national borders. It’s Europe’s competition, Europe’s diversity as a whole that is at stake,” Smith expressed.

In the meantime, UMG appears unfazed by the investigation, as it claims to be looking “forward to continuing to co-operate with the Commission.” The record company also stated that it is confident it will close the “acquisition in the second half of the year, on its original timeline.”

Since the investigation was just announced, it is safe to say we will have to wait for its outcome. For reference, Downtown Music Holding owns a total of eight subdivisions, including the music distributor CD Baby and the music publishing services company Songtrust. Becoming part of the UMG family could mean significant changes for a company that was once known as one of the largest independent music ecosystems in the world.

Selling to a major record label like UMG might diminish the bargaining power of independent artists and labels, potentially resulting in fewer options for smaller companies to secure equitable terms, along with new opportunities in the music industry.