The European Fee is planning to open a “full-scale” investigation into Common Music Group‘s proposed acquisition of Downtown Music Holdings.
That’s in response to a report printed by Reuters this morning (July 16), citing “three individuals with direct data of the matter”.
UMG’s Virgin Music Group revealed in December that it had agreed to purchase Downtown Music Holdings LLC in a $775 million deal.
The EC introduced in April that it was making ready to examine the proposed acquisition.
Final month, after UMG formally notified it of the deal, the EC set a provisional deadline of July 22 (Tuesday subsequent week) to decide in an preliminary Section 1 investigation.
If competitors considerations have been recognized throughout this preliminary 25-day Section 1 assessment of the proposed deal, the case might progress to a extra intensive Section II investigation lasting as much as 90 working days, which is what Reuters‘ report seems to counsel will occur.
In a press release issued to Music Enterprise Worldwide in response to the Reuters report, a Common spokesperson mentioned: “On condition that the European Fee has not introduced a call, we’re unable to remark.”
“Our preliminary projected timeframe for the completion of the transaction stays unchanged.”
Common Music Group
They added: “We do, nonetheless, stay assured that the mix of Virgin and Downtown will create an improved providing within the rising and extremely aggressive label companies class that as we speak consists of roughly 100 firms, one that can present a variety of companies to assist unbiased artists, labels and entrepreneurs obtain their industrial and inventive objectives.
“We look ahead to persevering with to work intently and constructively with the Fee to convey the advantages this transaction will carry to the unbiased neighborhood, in addition to to deal with the wilful misrepresentation of market information by self-interested events who symbolize a tiny fraction of the hundreds of unbiased labels that make up the broader unbiased neighborhood globally.
“Our preliminary projected timeframe for the completion of the transaction stays unchanged.”
As beforehand reported by MBW, the UMG-Downtown deal didn’t meet the EU’s normal turnover thresholds that will usually require notification to Brussels, however it did set off notification necessities in each the Netherlands and Austria based mostly on their respective nationwide thresholds.
The EC determined to look into the deal as a result of the Netherlands triggered a authorized mechanism in EU competitors legislation referred to as Article 22. Austria subsequently joined the referral.
The European Fee describes a Section II investigation as “an in-depth evaluation of the merger’s results on competitors.” A Section II investigation is opened “when the case can’t be resolved in Section I”.
The EC explains on its web site that “from the opening of a Section II investigation, the Fee has 90 working days to make a ultimate determination on the compatibility of the deliberate transaction with the EU Merger Regulation” and that “extensions of both 15 or 20 working days could be granted”.
If the EC does announce that it has determined to launch a Section II investigation into the deal, that 90-day deadline means that it’ll have till round November 22 to make its determination except a 15 or 20-day extension is granted.
In accordance with European Fee statistics, “greater than 90% of all circumstances are resolved in Section I, typically with out cures,” which suggests that lower than 10% of circumstances proceed to Section II.
On the conclusion, the Fee can both clear the merger (with or with out circumstances), or prohibit it totally if competitors considerations can’t be adequately addressed.
Because the investigation continues behind closed doorways in Europe, the worldwide music trade debate concerning the deal’s implications has been getting louder.
Earlier this month, Virgin Music Group’s bosses slammed what they referred to as “juvenile and offensive falsehoods” unfold by opponents of VMG’s deliberate Downtown acquisition.
Final week, over 200 individuals signed a letter objecting to UMG’s proposed takeover of Downtown, together with 20 workers from Beggars Group and Secretly Group firms.
On July 2, the European Composer & Songwriter Alliance (ECSA) issued an open letter to the European Fee on Wednesday (July 2) urging it to dam the deliberate acquisition.Music Enterprise Worldwide
