Following EU decision to investigate Downtown acquisition, UMG ‘confident’ deal will close in 2025 | Labels

The European Commission has decided to investigate Universal Music Group’s proposed acquisition of Downtown Music Holdings.

Downtown is home to companies such as Fuga, CD Baby, Songtrust, Curve and AdRev, as well as other key businesses in the sector. The deal was valued at $775 million.

The proposed transaction does not reach the turnover thresholds set out in EU merger regulations and 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 thresholds.

“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,” stated the European Commission. “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.”

“We look forward to continuing to co-operate with the European Commission in the weeks ahead,” said a UMG statement in response. “We are confident that we will close this acquisition in the second half of the year, on its original timeline.”

IMPALA, the European association of independent music companies, has welcomed the European Commission’s investigation.

This deal must be blocked entirely

Helen Smith

“IMPALA agrees that the deal poses serious competition threats that are incompatible with the functioning of the internal market,” said a statement. “The acquisition would further entrench UMG’s position across European music markets, squeezing out competition, narrowing opportunities for independents and the artists they work with and allowing UMG to exercise more control over streaming services. 

“The impact would hit both consumers, who risk facing higher prices, as well as independent labels and artists and other parts of the music sector. Concentration in services markets is something regulators take very seriously as they understand the impact that it has on the ecosystem and of course the bargaining power of the market leader.”

This proposed deal follows UMG acquisitions of PIAS and 8Ball Music.

“IMPALA is committed to ensuring a fair and competitive market where balance is essential and believes this acquisition must be stopped,” added the statement. 

Helen Smith, IMPALA executive chair, said: “We welcome this news and stand ready to collaborate fully with the European Commission throughout its assessment of the merger. The scale of disruption across Europe means it’s right for the EU to do the assessment. This follows concerns raised by both regulators who were notified by UMG and Downtown at national level. 

“Like any sector, the music market needs big companies, of course, as we already flagged, [but] there is simply a point at which big is too big. In this case, UMG clearly exceeded the maximum even before adding Downtown. This deal must be blocked entirely.”

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