Notified by the Dutch and Austrian authorities, the European Commission opened a Phase I: preliminary investigation into the planned acquisition of Downtown Music Holdings by Universal Music Group. On indications of possible negative effects on competition in the European music market, the Commission announced proceeding to a Phase II: in-depth investigation. While the deal has triggered controversy, Commission's outcomes are expected by 26 November 2025.
By Eirini PolydorouTuesday 22 July - Having concerns after preliminary investigation, the European Commission announced the opening of an in-depth investigation into the planned taking “sole control” of Downtown Music Holdings by the Virgin Music Group of the Universal Music Group (UMG). The deal of $775 million (approximately €737 million) was initially announced in December 2024.
Concerns of the Commission include that “Downtown processes commercially sensitive data of third-party record labels” and that “After the acquisition, UMG would likely have the ability and incentive to use commercially sensitive data of third-party record labels for its own business activities notably related to recorded music”. “UMG's access to such data may harm rival record labels and may ultimately have the effect of further strengthening UMG, that already is the leader in the market for the wholesale distribution of recorded music in the EEA”, as noted by the Commission.
“By acquiring Downtown, UMG would purchase a large provider of services for labels that compete with UMG and for artists. Opening an in-depth investigation will allow us to assess more carefully whether this acquisition would have a negative impact on artists, labels and, ultimately, European consumers” said Valdis Dombrovskis, Commissioner for Economy and Productivity; Implementation and Simplification.
UMG representatives asserted their confidence on the benefits of the proposed deal for the market of label services and for independent artists, labels and entrepreneurs. They stated to Music Business Worldwide: “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”.
Downtown's CEO, Pieter Van Rijn commented in a post on LinkedIn on the Commission’s announcement along the same lines with UMG’s announcement. He added “While the merger with Virgin has sparked considerable discussion, including some outside viewpoints that don't always align with Downtown’s values or accurately reflect how we operate as a business, our commitment to the independent community has been, and will always be, unwavering. It has always been at the heart of who we are, and that will never change”.
Music advocacy organisations, having already taken initiatives against the planned merger, welcomed the Commission's decision to open a relevant detailed investigation. IMPALA (Independent Music Companies Association) representing over 6000 independent music companies in Europe published a statement suggesting that this is the latest in a series of acquisitions, including PIAS and 8Ball, posing not only serious but also incompatible competition threats to the functioning of the internal market. “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”, commented Helen Smith, IMPALA Executive Chair.
The investigation is set under the EU Merger Regulation. The Commission's action was initiated in response to a relevant legal notification received by the Dutch Competition Authority (16 June), where UMG is incorporated and listed on Euronext Amsterdam. According to the deal, Downtown is about to be incorporated into UMG’s Virgin Music Group, "a standalone division providing A&L (artist and label) services to third party record labels and artists". The referral was subsequently joined by the Austrian Competition Authority. The deal would exceed the national competition thresholds of the Netherlands and Austria, while not exceeding the Regulation’s relevant threshold requiring investigation.
On preliminary examination, the Commission had found that the notified transaction “could fall within the scope of the Merger Regulation” and invited the interested third parties to submit their possible observations on the proposed concentration. On 22 July the Commission replied with the opening of an in-depth investigation. According to the Regulation, results of the in-depth investigation are expected within 90 working days, with a possibility of a 15 days extension, that is 26 November 2025, at the earliest. The two companies have expressed their confidence that the deal will be completed during the second half of 2025, as initially planned.
Before the Commission's recent decision, on the 4th of July, more than 200 CEOs, founders and company leaders of the independent music industry had urged the Commission to proceed to a Phase II investigation, over serious concerns on the EU’s music industry competition, innovation, and growth. In their letter, they highlighted that Downtown would be added to the "long line" of independent music firms, including PIAS, 8Ball Music, Hyperion, Outdustry and Oriental Star Agencies, recently acquired by UMG, which is already the “world’s largest music company, controlling more than 40% of the recorded music market in Europe – nearly twice the share of its nearest competitor” .
ECSA (European Composer and Songwriter Alliance) representing over 30.000 music creators across the EU, had urged the Commission (2 July) to block Universal Music Group’s acquisition of Downtown Music as it would be "detrimental to composers and songwriters – as well as a healthy music market" because it would further exacerbate the concentration of a market “already dominated by a handful of global players”.
In May, IMPALA had included the blocking of the planned merger into its twelve EU music policy recommendations.
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Image of Universal Music Group building in Berlin © Rakesh A, licensed as CC BY-NC-ND 2.0.
