Brussels Welcomes Investigation into UMG Acquisition
Brussels Impala, representing 6000 independent musical companies in Europe, has praised the European Commission’s decision to investigate the proposed acquisition of Universal Music Group by Music Holdings for $775 million.
“We welcome this news and are ready for complete cooperation with the European Commission throughout the assessment of the merger,” said Helen Smith, Impala Executive Chair.
The investigation was prompted by requests from Austria and the Netherlands to evaluate the deal, which would allow UMG’s Virgin Music Group to take control of the City Center portfolio of music services.
“The scale of failures throughout Europe means that the EU has the right to conduct an assessment. This follows the problems raised by both regulators that were notified by UMG and Downtown at the national level,” said Smith’s statement on Friday (April 25).
UMG Remains Confident in Acquisition Timeline
UMG, however, maintains that the transaction is on track for completion by the end of this year, despite the regulatory review.
“We are looking forward to continuing cooperation with the European Commission in the coming week. We are confident that we will close this acquisition in the second half of the year, according to the initial schedule,” UMG stated in a release published by MBW.
According to Smith, the Commission’s decision to evaluate the deal follows concerns raised at the national level.
In its announcement on Friday (April 25), the EU regulator noted that “the deal threatens to significantly affect competition in certain markets of the music creation chain, where both companies are active in Austria and the Netherlands, as well as many other member states.”
“We are confident that we will close this acquisition in the second half of the year, on its original schedule.”
Universal Music Group
“Therefore, the Commission concluded that it was best to review the deal. The Commission instructed UMG to formally notify the transaction,” the report stated.
Impala asserted that the City Center acquisition is part of a broader strategy by UMG, including recent purchases of (Pias) and 8Ball Music. Previously, the organization accused UMG of engaging in “land grabbing” in the indie sector and now describes UMG’s actions as a Jaggernaut strategy that aims to expand its strategic enterprises and promote its streaming services on DSPs.
The organization emphasized that the EU investigation poses a significant regulatory hurdle for UMG, especially after the Commission prohibited UMG from concluding a wide range of transactions in Europe in 2012 following its acquisition of Amy Music. At that time, the Commission required UMG to divest the Parlon Label Group, excluding the Beatles catalog.
“Given market developments since the EU intervened with UMG in 2012, and all the available evidence today, we believe the EU is likely to determine that the maximum previously established, which might have seemed reasonable at the time, is now considered inadequate, as Impala claimed back then. The regulations simply do not work in the modern music market,” said Impala.
The City Center portfolio includes Fugue, Downtown Artist & Label Services, Curve Royalties, CD Baby, City Center Music Publishing, and Songtrust, serving 5000 customers and over 4 million creators in 145 countries.
“As in any sector, the music market needs large companies. However, as we have previously noted, there comes a point when ‘big’ becomes too big. In this case, UMG has clearly exceeded that threshold even before adding City Center.”
Helen Smith, Impala
Francesca Training, PMI Impala President and Vice President of PMI, stated: “This deal has far-reaching consequences not only for recording but also for music publishers, distributors, and other sectors. This type of acquisition behavior raises immediate red flags for any regulator.”
“We urge the European Commission to conduct a thorough investigation and take decisive action to prevent further consolidation, which can harm consumers as well as competition, diversity, and innovation in the music ecosystem.”
Ji Davy, General Director of the British Independent Music Association, highlighted issues raised by Ruth Barlow, Chairman of AIM, in an article published on MBW about two weeks ago. “This is not just a problem for independent labels; this is an existential threat to artistic diversity, fair competition, and the music landscape itself,” Barlow stated.
“The EU news sets a precedent for other jurisdictions to intervene. We urge Great Britain to follow suit, considering the importance of the music market to the UK economy. The music sector deserves to remain innovative and accessible for everyone,” Davy remarked.
Universal’s confidence that the transaction will proceed as planned suggests that the company is ready to tackle regulatory challenges. Nevertheless, Impala’s Smith reiterated, “As in any sector, the music market needs large companies, but there is indeed a moment when ‘big’ becomes too big.”
