The European Commission recently announced that it opened an in-depth investigation into the proposed acquisition of Downtown Music Holdings LLC by Universal Music Group (“UMG”). The Commission launched Phase 2 of its investigation amid concerns that the merger might reduce competition in the market for the supply of artist and label (“A&L”) services and the wholesale market for the distribution of recorded music in the European Economic Area (“EEA”). A&L services generally refer to distribution services provided to third-party labels and artists that include the marketing and promotion of music, the payment and distribution of royalties, and rights management.
The Commission reported that UMG, which is based in the Netherlands, is a global leader in the market for wholesale distribution of recorded music in the EEA, specializing in the recording, publishing, and merchandising of music and related audio-visual content. U.S.-based Downtown is a global music company that delivers A&L services to independent record companies and artists, providing Downtown with access to the commercially sensitive data of third-party record labels. During its preliminary investigation, the Commission determined that UMG’s acquisition of Downtown might affect competition in the EEA by removing the competitive force Downtown provides in the A&L services market, while also providing UMG with access to sensitive data that the company could leverage to harm rival record labels.
According to the Commission, Phase 2 of its investigation will focus on the merger’s effect on competition in the EEA as well as its impact on the Netherlands and Austria (jurisdictions that submitted the referral request to the Commission) in an effort to confirm or deny these initial concerns. Because the parties were notified by the Commission on June 16, 2025, the Commission has 90 working days, or until November 26, 2025, to take a decision.