The indie label community has welcomed the news that the Dutch competition regulator has asked European Union officials to review Universal Music’s controversial acquisition of Downtown Music.
The move comes as the UK’s Association Of Independent Music encourages the Competition And Markets Authority to also review the impact of the deal, which will significantly increase the major’s hold over record industry infrastructure and its dominant position when it comes to setting the rules that govern the streaming business model.
The Dutch regulator referring the acquisition to EU officials “is a crucial step towards putting a stop to Universal’s juggernaut strategy”, says Helen Smith, Executive Chair of pan-European indie label trade group IMPALA. She adds, “it shows two things; that regulators see the threat that this strategy poses to the market, and that the consequences go beyond national borders”.
“It’s Europe’s competition, Europe’s diversity as a whole that is at stake”, she continues. Universal has also acquired European indies [PIAS] and 8Ball Music in the last six months and, Smith says, “more acquisitions are expected, a good illustration of the juggernaut nature of Universal’s strategy”.
Universal has formally sought approval of its deal - which would also see the major acquire Downtown businesses FUGA, Songtrust and CD Baby - from multiple national competition regulators within the EU.
According to MLex, last week the Austrian regulator revealed that it had paused its review of the deal because another EU member state had submitted a referral request to the European Commission. The Dutch regulator then confirmed it had requested the referral.
MLex explains, “Under article 22 of EU merger rules, member states can ask the Commission to investigate a deal that doesn’t meet its review thresholds, if it threatens to affect trade between member states and competition within a national market”.
The indie sector has been very critical of Universal’s Downtown deal specifically - and its wider current acquisition spree more generally - and has urged competition regulators in multiple countries to step in, investigate and ultimately block the Downtown transaction.
That includes in the UK. AIM CEO Gee Davy says of the latest developments, “This referral to the EC is only right and to be expected”, before adding “we are encouraging the CMA to inspect the impact in the UK and similarly take a tough stance”.
Alluding to the CMA's 2022 study of the music streaming market, Davy notes that the regulator “already concluded that further consolidation would be grounds for investigation, so we call on them to act now to protect the UK market for the benefit of all - music consumers, artists and independent SME music businesses alike”.
Expanding on why the indie sector believes Universal’s bid to buy Downtown will be so damaging for the wider recorded music sector, IMPALA Chair Dario Draštata, also Executive Director of Dallas Records, says, “Downtown Music is a key player. Its takeover by Universal would mean giving the world’s largest music company unprecedented control over the crucial pathways through which artists and labels reach their audiences, as well as visibility of their competitors’ data”.
IMPALA President Francesca Trainini, also Vice President of Italian indie label association PMI, adds that the consequences of the Downtown deal going ahead are clear and “the EU now has the opportunity to assess this and ensure a fair music ecosystem”.
She adds, “We look to the EU to take the lead once again, just as it did successfully when it ruled that Universal’s acquisition of EMI would make it simply too big. We know consolidation is going to continue otherwise”.
News of potential regulatory intervention around its acquisition strategy will only increase pressure on Universal’s share price which has struggled to recover from an analyst downgrade last summer.
Despite an uptick after the Downtown deal was announced at the end of 2024, shares have slumped again, and at the time of publication are down 14% against this time last year. With US markets in turmoil, the company’s upcoming US stock market listing may apply further pressure - and means the next tranche of CEO Lucian Grainge’s €100 million megabonus slips further out of reach.