By Foo Yun Chee
BRUSSELS (Reuters) -Universal Music Group unit Virgin Music Group’s $775 million acquisition of Downtown Music may hinder competition and remove an important competitor, EU antitrust regulators warned on Tuesday, a move which may require concessions from the world’s largest music company.
Virgin announced the deal in December last year which subsequently generated pushback from a wide swathe of European independent labels.
The European Commission set out its concerns on Tuesday as it opened an in-depth investigation into the deal, confirming a Reuters story last week.
“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,” the EU executive said in a statement.
It said UMG’s access to such data may harm rival record labels and may ultimately further strengthen UMG, already a leader in the market for the wholesale distribution of recorded music in Europe.
The EU competition watchdog said the deal may remove Downtown as a rival in the market for artist and label services.
Virgin Music Group said it would work constructively with the Commission and criticised what it said is “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”.
“Our initial projected timeframe for the completion of the transaction remains unchanged,” a spokesperson said, referring to the estimated timeline of the second half of 2025 for closing the deal.
The Commission set a November 26 deadline for its decision.
Downtown owns a major music publisher and a number of other businesses that help musicians collect royalties.
The deal has triggered criticism from the European independent music label group Impala, the European Composer and Songwriter Alliance and the Worldwide Independent Network, with some even calling for a regulatory veto.
“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,” Impala Executive Chair Helen Smith said in a statement.
(Reporting by Foo Yun Chee; Editing by Sudip Kar-Gupta and Jan Harvey)
