European regulators are officially preparing to investigate Universal Music Group‘s proposed $775 million Downtown Music acquisition.
The Financial Times first reported that an announcement about a probe into the deal was expected today (April 25). The official announcement has now arrived.
The European Commission confirms that it has accepted requests submitted by Austria and the Netherlands to assess the proposed acquisition of Downtown by UMG under the EU Merger Regulation (EMMR).
The FT quoted UMG in the initial report as stating that the company looks “forward to continuing to co-operate with the commission” and that “we are confident that we will close this acquisition in the second half of the year, on its original timeline.”
UMG’s Virgin Music Group revealed in December that it had agreed to buy Downtown Music Holdings LLC.
The FT’s initial report indicated that the EC’s probe will be carried out in response to a referral from the Dutch competition regulator, the Netherlands Authority for Consumers and Markets. UMG trades on Euronext in Amsterdam.
“We are confident that we will close this acquisition in the second half of the year, on its original timeline.”
Universal Music group
According to the official announcement from the EC on Friday (April 25): “The proposed transaction does not reach the turnover thresholds set out in the EUMR and therefore was not notified to the Commission.
“However, it was notified for merger control clearance in Austria and the Netherlands, where it met the relevant national turnover-based notification thresholds.”
According to the European competition regulator, the Netherlands “submitted a referral request to the Commission pursuant to Article 22(1) EUMR”.
The official announcement continued: “This provision allows Member States to request the Commission to examine a concentration that does not have an EU dimension but affects trade within the Single Market and threatens to significantly affect competition within the territory of the Member State(s) making the request.”
The EC said that “other countries of the European Economic Area (‘EEA’) had the opportunity to join the original referral request” and that Austria joined the initial referral request.
“UMG cannot implement the transaction before notifying and obtaining clearance from the Commission.”
European Commission
You can read the rest of the EC’s statement below:
“On the basis of the information at the Commission’s disposal, and without prejudice to the outcome of its full investigation, the Commission considers that the transaction meets the criteria for referral under Article 22 of the EUMR.
“In particular, 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.
“The Commission has therefore concluded that it is best placed to examine the transaction. The Commission has asked UMG to notify the transaction.
“UMG cannot implement the transaction before notifying and obtaining clearance from the Commission.”
Downtown works with over 5,000 business clients and more than 4 million creators in 145 countries across its various businesses. Its portfolio of businesses includes FUGA, Downtown Artist & Label Services, Curve Royalties, CD Baby, Downtown Music Publishing and Songtrust.
The company started life as a music publisher in 2007 but today acts as a ‘pure’ services company that operates across recorded music, publishing, and other areas.
It hasn’t owned copyrights since selling a portfolio to Concord for approximately $400 million three-and-a-half years ago.
Independent label representatives have criticized UMG’s proposed deal to buy the company and urged regulators to investigate.Music ComeOn
