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More than 200 executives from independent labels and trade associations have written to EU regulators to complain that Universal Music Group’s $775mn acquisition of music services company Downtown poses a “clear threat” to competition and growth in the industry.
In a letter sent on Friday evening to Teresa Ribera, the EU’s competition chief, the groups urged the European Commission to carry out a more detailed investigation of the deal, which they argue will give Universal too much power.
The commission is currently probing the deal, which is being carried out by Universal’s Virgin Music group division, with a decision expected this month about whether to clear the purchase, demand concessions or open a more detailed investigation.
Signatories of the letter include independent label chiefs such as Martin Mills, chair of Beggars Group, Jeremy Lascelles, chief executive of Blue Raincoat Music, Martin Goldschmidt, chair of Cooking Vinyl, Darius Van Arman, co-owner of Secretly Group, and Tony Kiewel, co-president of Sub Pop.
UMG is the world’s largest music company, while Downtown operates leading distribution platforms FUGA and CD Baby, as well as service providers Curve and Songtrust.
Independent labels, publishers and artists rely on such services to distribute their music to streaming platforms, track royalties, manage rights and get paid.
The letter warns that the deal would place “a significant chunk of essential infrastructure under the control of the market leader”, forcing independent companies to rely on their biggest rival to reach fans.
Executives are concerned that larger labels are buying up rival independent labels, which they argue will stifle competition and innovation.
The letter raises “serious concerns” about the proposed deal given Downtown’s “distribution, royalty accounting, and rights management capabilities — services used by thousands of companies and artists across the independent sector”. The deal would “further entrench [UMG’s] already significant market power”, signatories warn.
In a statement, Virgin said that “independent entrepreneurs have an abundance of choice for how they access resources and capital that they require for success”.
It added: “We respect the decision of certain entrepreneurs who choose not to work with Virgin or other major-affiliated partners. But the artist and label services market should not be designed around the personal preference of a minority of the label community, especially when dozens of other viable routes to market exist.”
This week, the co-chief executives of Virgin sent a memo to staff, seen by the Financial Times, explaining that they planned to invest in and expand the wide range of services to independent labels by Downtown. They said that Virgin would uphold and strengthen Downtown’s data privacy policies to safeguard its clients.
The commission did not immediately respond to a request for comment on the letter’s contents on Sunday evening.