The independent music community has welcomed the news that European Union competition regulators will investigate Universal Music’s deal to buy Downtown Music. The indie sector has been calling for such an investigation ever since the deal was announced, urging the EU regulator to block the transaction on competition law grounds.
Announcing the investigation earlier today, the European Commission said that this 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”.
National regulators in both Austria and the Netherlands had been reviewing the deal, which will see Universal acquire Downtown and its FUGA, CD Baby, Songtrust and Curve businesses, which together provide distribution, infrastructure, and rights and royalty management services to a significant portion of the independent music sector. It was the Dutch regulator who asked the EU to step in.
Welcoming the announcement, IMPALA, the pan-European trade body for the indie sector, said it agrees that the Downtown deal “poses serious competition threats that are incompatible with the functioning of the internal market”.
“The acquisition”, it added, “would further entrench UMG’s position across European music markets, squeezing out competition, narrowing opportunities for independents and the artists they work with and allowing UMG to exercise more control over streaming services”.
It went on, “The impact would hit both consumers, who risk facing higher prices, as well as independent labels and artists and other parts of the music sector. Concentration in services markets is something regulators take very seriously as they understand the impact that it has on the ecosystem and of course the bargaining power of the market leader”.
The Downtown deal follows Universal’s recent acquisitions of other independent music businesses PIAS and 8Ball Music, which are all part of what IMPALA has dubbed a “juggernaut strategy” via which Universal wants to “roll up strategic businesses and push its streaming agenda onto digital service providers”.
IMPALA’s Executive Chair Helen Smith adds: “We welcome this news and stand ready to collaborate fully with the European Commission throughout its assessment of the merger”.
According to Reuters, the EU has now asked Universal to officially report its deal to the Commission so the investigation can begin.