The European Commission has confirmed it will now carry out an in-depth investigation into Universal Music Group’s proposed Downtown acquisition.
The decision – widely expected in recent days – has been made based on the EC’s duty "to prevent concentrations that would significantly impede effective competition in the EEA or a substantial part of it."
The $775 million deal for Downtown was agreed via UMG’s Virgin Music Group in December 2024.
UMG aims to close the Downtown deal in the second half of 2025.
But there has been a concerted lobbying campaign against it from parts of the independent sector, which has led to the phase II investigation by the European Commission.
Earlier this month, Virgin Music co-CEOs JT Myers and Nat Pastor defended their plans for Downtown and hit out at “juvenile, offensive” insinuations about the company’s role in the independent sector.
“We remain confident that the combination of Virgin and Downtown will create an improved offering in the growing and highly competitive label services category that currently consists of roughly 100 companies, one that will provide a wide range of services to help independent artists, labels and entrepreneurs achieve their commercial and creative goals,” said a UMG spokesperson.
“We look forward to continuing to work constructively with the Commission to convey the benefits this transaction will bring to the independent community, as well as to address the wilful misrepresentation of market data by self-interested parties who represent a tiny fraction of the thousands of independent labels that make up the independent community globally. Our initial projected timeframe for the completion of the transaction remains unchanged.”
IMPALA, the European association of independent music companies, has welcomed the European Commission’s decision to open a detailed investigation.
It comes amid concerns about UMG’s market power following the acquisition of PIAS and other European deals.
Earlier this month, an open letter saw over 200 hundred founders and business leaders across the independent music industry publicly confirm their opposition.
Helen Smith, IMPALA executive chair, said: “The European Commission’s decision confirms the gravity of this case. All sectors need strong big companies as leaders, and all businesses deserve good options if the founders want to exit. However, there is a point when big is too big for the ecosystem. Our view is that the EC is right to dig deeper, and we believe blocking this deal is the only way to safeguard competition and diversity.”
Martin Mills, founder of Beggars Group, said: “Universal’s power, reach and influence has been very visible in the last few weeks, even as they have sought to deny it. The EC is right to feel the need to look further into where this could end up.”
Gee Davy, CEO of AIM in the UK, said: “The Commission’s move to open a detailed investigation addresses the concerns of many across the industry: that unchecked consolidation poses a systemic threat to the future of an open music sector with plenty of choice for consumers and artists. This isn’t just about one deal, it’s about stemming a tide that will stifle diversity and limit opportunities. This is a global issue with consequences in many local markets, and we look to other regulators, including the CMA in the UK, to follow the EC’s lead to ensure a balanced and competitive music market.”
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