Photo Credit: Guillaume Périgois
As expected, the European Commission (EC) has signed off on Universal Music’s Downtown deal – albeit with some “conditions.”
That long-awaited decision surfaced in a brief release today, a couple weeks ahead of the Commission’s self-imposed February 27th deadline to approve or block the buyout. And for those who’ve been following the $775 million purchase and the corresponding regulatory scrutiny, the mentioned conditions won’t come as a surprise.
In keeping with recent months’ rumblings, the EC has instructed the parties to offload Downtown’s Curve Royalty Systems in order to close the acquisition, which it believes won’t “lead to a significant impediment of effective competition in the markets where UMG and Downtown’s activities overlap.”
Supporting the latter determination, the Commission cited the existence of “several viable competitors,” among them the other majors, Believe, ONErpm, and, on the straight distribution side, DistroKid.
“The investigation also confirmed that the switching between these alternative service providers is already happening, and is neither costly nor time-consuming,” the Commission added for good measure.
Even so, in the EU branch’s view, scooping up Curve would afford UMG “access to commercially sensitive data of rival record labels,” thereby giving the company an unfair advantage over the same competitors.
As Downtown and UMG had themselves offered to divest the royalty processor – which has only been part of the former’s portfolio since 2023 – this doesn’t appear to be a huge setback.
Regarding Curve’s future, the Commission said it would “approve a suitable purchaser…in a separate procedure.” Though that line is easy to gloss over, in effect, it means the London-based royalties specialist is about to find its second owner in three years and change.
Furthermore, many Curve employees are heavily involved in operations across various Downtown divisions – with multiple seemingly holding roles at Curve as well as Downtown. Nevertheless, the Commission’s green light is contingent upon “the full divestment of Curve,” including but not limited to a split from “[a]ll of Curve’s personnel.”
Time will, of course, reveal precisely where the cards fall for Curve and its employees. Closer to the present, it probably won’t come as a surprise that UMG and Downtown are satisfied with the outcome.
Finally, Valdis Dombrovskis, the EU’s commissioner for economy and productivity, summed up the decision’s reasoning and emphasized an overarching “dedication to promoting fair competition.”
“The music industry plays an important role in bringing artists’ creations to audiences,” Dombrovskis added, “and it is essential to uphold the availability of diverse service providers for consumers. Our in-depth investigation confirmed that a large number of companies will continue to offer their distribution services to European music labels and artists.
“By requiring the divestment of Curve, we are taking a decisive step to protect sensitive data and prevent it from being controlled by a large competitor. Today’s decision reflects the Commission’s dedication to promoting fair competition and supporting a thriving and diverse music landscape in Europe,” he concluded.
