Universal Music-Downtown Deal Investigation Paused by European Commission

The European Commission (EC) has paused its investigation into the acquisition of Downtown Music Holdings by Universal Music Group (UMG) because documents were not submitted in a timely manner, the EC announced on Thursday (Sept. 4).

According to the EC’s Competition Policy website, the investigation into UMG-owned Virgin Music Group’s bid for Downtown was suspended on Thursday under Article 11(3) of the EU Merger Regulation, which allows the Commission to “stop the clock” if parties fail to provide complete and accurate information. By hitting pause, the Commission suspends the statutory deadlines for the merger review. News of the suspension was first reported by Reuters.

The Commission’s investigation deadline was announced on July 21 and given a 90-day timeline, meaning the Commission would need to make a decision by Nov. 26. Three days later, on July 24, the investigation was extended by 10 days under Article 10(3)2. 

The size of the deal — $775 million — did not meet the threshold for review under European Union Merger Regulation but was notified for merger control clearance in the Netherlands and Austria, “where it met the relevant national turnover-based notification thresholds,” according to an April 25 announcement. “In particular,” the statement added, “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’s preliminary investigation found that the acquisition “may allow UMG to acquire upstream commercially sensitive data of its rival record labels,” according to a July 21 press release. “UMG’s access to such data may harm rival record labels and may ultimately have the effect of further strengthening UMG, that already is the leader in the market for the wholesale distribution of recorded music in the EEA,” it stated.