By Edith Hancock

The European Commission is set to investigate Universal Music Group's $775 million bid for Downtown Music Holdings over fears the deal could hinder competition for services for artists and independent record companies.

The EU's executive arm said on Friday the deal "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."

Universal Music needs the commission's approval to close the deal. The regulator could also ask the companies to offer concessions, such as divesting certain business units or making investment commitments.

The commission decided to look into the takeover, which falls below typical EU merger review thresholds, after authorities in the Netherlands, where Universal Music is headquartered, and Austria flagged it to the EU's executive arm for investigation.

Virgin Music, a division of Universal Music, announced its plan to buy U.S.-based Downtown Music in December, saying it expects to close the deal in the second half of 2025. Universal Music and Downtown Music didn't immediately responded to requests for comment.

The deal has raised concerns from independent record labels, which say it will make it even harder for them to compete with Universal, the dominant player in the industry. Music lobby group Impala said in February that Universal "could increase its stranglehold over the music market if it is allowed to buy up key distribution companies and other services labels and artists need to reach fans."

Write to Edith Hancock at edith.hancock@wsj.com

(END) Dow Jones Newswires

By Edith Hancock

The European Commission is set to investigate Universal Music Group's $775 million bid for Downtown Music Holdings over fears the deal could hinder competition for services to artists and independent record companies.

The EU's executive arm said on Friday the deal "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."

Universal Music needs the commission's approval to close the deal. The regulator could also ask the companies to offer concessions, such as divesting certain business units or making investment commitments.

The commission decided to look into the takeover, which falls below typical EU merger review thresholds, after authorities in the Netherlands, where Universal Music is headquartered, and Austria flagged it to the EU's executive arm for investigation.

Virgin Music, a division of Universal Music, announced its plan to buy U.S.-based Downtown Music in December, saying it expects to close the deal in the second half of 2025. "We are confident that we will close this acquisition in the second half of the year, on its original timeline," Universal Music said in a statement Friday.

Downtown Music didn't immediately respond to requests for comment.

The deal has raised concerns from independent record labels, which say it will make it even harder for them to compete with Universal, the dominant player in the industry. Music lobby group Impala said in February that Universal could increase its dominance in the sector at the expense of smaller players.

Helen Smith, Impala's executive chair, said in a statement the group wants the commission to block the deal. "We welcome this news and stand ready to collaborate fully with the European Commission throughout its assessment of the merger," she said.

Write to Edith Hancock at edith.hancock@wsj.com

(END) Dow Jones Newswires

April 25, 2025 09:42 ET (13:42 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.