Universal Music Group’s acquisition of Downtown Music could face EU scrutiny by regulators. It follows a referral request from an EU member state, the Netherlands.
The deal for Downtown – via the Virgin Music subsidiary – is one of several completed or agreed acquisitions by UMG including PIAS and 8Ball Music, all announced within a few months of each other.
Downtown is home to two independent distributors, Fuga and CD Baby, which have a global reach for independents.
“IMPALA has consistently called on regulators to take action against UMG’s ‘juggernaut’ strategy of serial acquisitions to gatekeep market access and exert power over digital services, as well as control a whole host of essential services across the music market, from publishing to recording, distribution and royalty accounting,” said a statement from the European independent labels trade body. “This threatens music fans, as well as independent artists and labels.”
IMPALA has also raised concerns about issues around who has access to data following the Downtown deal.
The trade body has been encouraging national competition authorities and the EU to scrutinise UMG's acquisition of Downtown. It described the latest development as a “crucial step to ensure that Europe’s music market is open and competitive”.
UK trade body AIM is urging the Competition & Markets Authority to investigate the proposed deal for Downtown.
Music Week has requested a comment from Universal Music Group.
Helen Smith, executive chair of IMPALA, said: “This referral is 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. More acquisitions are expected, a good illustration of the juggernaut nature of UMG’s strategy, along with the impact of digital service changes, as we reported recently”.
We are encouraging the CMA to inspect the impact in the UK and take a tough stance
Gee Davy
Gee Davy, CEO of AIM and board member of IMPALA, added: “This referral to the EC is only right and to be expected, and we look to authorities in other regions that are affected by UMG's aggressive strategy to take action. We are encouraging the CMA to inspect the impact in the UK and, similarly, take a tough stance. They already concluded that further consolidation would be grounds for investigation when they assessed the market in relation to streaming, so we call on them to act now to protect the UK market for the benefit of all – music consumers, artists and independent SME music businesses alike”.
Dario Drastata, chair of IMPALA, president of regional association RUNDA Adria and executive director of Dallas Records, said: “Downtown Music is a key player. Its takeover by UMG would mean giving the world’s largest music company unprecedented control over the crucial pathways through which artists and labels reach their audiences, as well as visibility of their competitors’ data. This referral by a national competition authority is a key step towards blocking the deal.”
“We’re talking about near-total control over access and data,” said Francesca Trainini, IMPALA president and vice president of Italian association PMI. "When you live in a building, you need to know who controls the pipes, the wiring, the lifts. When that company is already the market leader, the consequences are clear, it's something that would be unacceptable in any other market. The EU now has the opportunity to assess this and ensure a fair music ecosystem. We look to the EU to take the lead once again, just as it did successfully when it ruled that UMG’s acquisition of EMI would make it simply too big. We know consolidation is going to continue otherwise”.
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