Brussels-based IMPALA, which represents over 6,000 independent music companies in Europe, has welcomed the European Commission’s decision to investigate Universal Music Group‘s proposed $775 million acquisition of Downtown Music Holdings.
“We welcome this news and stand ready to collaborate fully with the European Commission throughout its assessment of the merger,” said Helen Smith, IMPALA Executive Chair.
The probe was triggered by requests submitted by Austria and the Netherlands to assess the deal that would see UMG’s Virgin Music Group take control of Downtown’s portfolio of music services.
“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,” Smith said in a statement on Friday (April 25).
UMG, however, maintains that the deal remains on track to complete later this year despite facing regulatory scrutiny.
“We look forward to continuing to co-operate with the European Commission in the weeks ahead. We are confident that we will close this acquisition in the second half of the year, on its original timeline,” UMG said in a statement issued to MBW.
The Commission’s decision to investigate comes after concerns raised at national level, according to Smith.
In its announcement on Friday (April 25), the EU regulator cited concerns that “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.”
“We are confident that we will close this acquisition in the second half of the year, on its original timeline.”
Universal Music Group
“The Commission has therefore concluded that it is best placed to examine the transaction. The Commission has asked UMG to notify the transaction,” it said.
IMPALA argued that the Downtown acquisition is part of UMG’s broader pattern of acquisitions including its recent purchases of [PIAS] and 8Ball Music. The organization had earlier accused UMG of committing a “land grab” in the indie sector, and is now characterizing UMG’s moves as a “’juggernaut’ strategy of serial acquisitions rolling up strategic businesses and pushing its streaming agenda onto DSPs.”
The organization noted that the EU investigation represents them most significant regulatory hurdle for UMG after the Commission banned UMG from making a wide range of deals in Europe in 2012 following its acquisition of EMI Music. The Commission at the time required UMG to divest Parlophone Label Group, excluding The Beatles catalogue.
“Considering market developments since the EC stripped UMG back in 2012, and all the evidence available today, we believe the EC is likely to conclude that the maximum it already set, which may have seemed reasonable to some, would now be considered lenient as IMPALA argued at the time and that remedies just don’t work in the modern music market,” IMPALA said.
Downtown’s portfolio of businesses — including FUGA, Downtown Artist & Label Services, Curve Royalties, CD Baby, Downtown Music Publishing and Songtrust — serve over 5,000 clients and more than 4 million creators in 145 countries.
“Like any sector, the music market needs big companies of course, as we already flagged, there is simply a point at which big is too big. In this case, UMG clearly exceeded the maximum even before adding Downtown.”
Helen Smith, IMPALA
Francesca Trainini, IMPALA President and Vice President of Italian association PMI, said, “This deal has far-reaching implications not only for record labels but also for music publishers, distributors, and other sectors. It’s the kind of acquisition behavior that raises immediate red flags for any regulator.”
“We urge the European Commission to conduct a thorough investigation and take decisive action to prevent further consolidation that could harm consumers as well as competition, diversity, and innovation across the music ecosystem.”
Gee Davy, CEO of the UK’s Association of Independent Music, highlighted some concerns raised by Ruth Barlow, Chair of AIM, in an op-ed published on MBW about two weeks ago. “This isn’t just a challenge for independent labels; it’s an existential threat to artistic diversity, fair competition, and the music landscape itself,” Barlow said in the article.
“The news about the EU shows the way for other jurisdictions to intervene. We call on the UK to follow, given the importance of the music market to the UK economy. The music sector deserves to remain innovative and accessible to all,” said Davy.
Universal’s confidence that the deal will proceed as planned suggests the company may be prepared to address regulatory concerns. However, IMPALA’s Smith said, “Like any sector, the music market needs big companies of course, as we already flagged, 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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