The European commission has started its formal investigation into UMG’s acquisition of Downtown, with a provisional deadline of July 22 to reach an initial conclusion.
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 for UMG’s Virgin Music Group to acquire Downtown was valued at $775 million.
This marks the beginning of its assessment of the case, following the EC’s decision last month to investigate the deal on the grounds that “…the transaction threatens to significantly affect competition in certain markets of the music value chain…” in certain countries across Europe.
French economist and European parliamentarian Aurore Lalucq recently tabled a formal written question to the European Commission’s executive vice president in charge of competition matters, Teresa Ribera.
Responsibility for the case lies with Ribera, who is the EC’s competition chief. She recently imposed large fines on Apple and Meta in April, following her appointment in December last year.
Professor Amelia Fletcher, former chief economist of the UK competition authority, as well as an artist and independent music label co-founder, last week sent an open letter urging the EC to go to an in-depth investigation.
“We look forward to continuing to co-operate with the European Commission in the weeks ahead,” UMG said when the investigation was confirmed in April. “We are confident that we will close this acquisition in the second half of the year, on its original timeline.”
Helen Smith, IMPALA executive chair, said: “We welcomed the news last month that the EC had decided to investigate and we have been keen to see the assessment get started, so this is great news. There is only one outcome to prevent harm and that is for the EC to block this outright, to secure balance, harmony and diversity in the ecosystem.”
Dario Draštata, chair of IMPALA, president of regional association RUNDA Adria and executive director of Dallas Records, said: “Once again the EC is taking the lead in these cases and we know how important music and diversity are to the European economy. We look forward to providing further input to the EC’s examination of the implications of what the market leader is attempting to get through.”
Gee Davy, CEO of AIM, Association of Independent Music, said: "We repeat our call for the EC to stop this acquisition outright and put an end to UMG’s ‘juggernaut’ strategy. This is essential to ensure an open, inclusive and competitive music market in Europe which is needed to ensure a broad range of participants and a diversity of music. Music fans, artists and future entrepreneurs all need this."
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