LONDON – Independent label trade body IMPALA is calling on regulators to investigate its takeover of Universal Music Group [PIAS] due to concerns that the deal limits competition in the global record business and “restricts choice for artists and record companies”.
[PIAS] co-founders Kenny Gates and Michel Lambot announced earlier this week that they were selling their remaining stake in the indie label to Universal Music Group (UMG), which already owns 49% of the company, for an undisclosed sum.
The deal gives UMG full ownership [PIAS]of the service department [Integral]which provides physical and digital distribution services to more than 100 indie label partners including ATO, Beggars Group and Secretly Group and will henceforth merge with Virgin Music Group.
Also under the control of UMG due to the sale of shares is the [PIAS] Label Group, home to indie imprints Play It Again Sam, harmonia mundi, Spinefarm, Source and partner labels such as ATO, Heavenly, Mute and Transgressive. Despite the change in ownership, [PIAS] says its label group business will remain completely autonomous.
In response, IMPALA and several of its affiliated national trade groups are calling on competition regulators to launch an investigation into what it described as “uncontrolled concentration in the music market [which] continues to be a serious problem.”
“The bottom line is the acquisition of UMG [PIAS] will increase his power [UMG] across Europe and beyond, including in the UK and US, and IMPALA expects regulators in these jurisdictions to take action,” said the Brussels-based organisation, which represents more than 6,000 indie music companies in Europe, in a press release on Friday (Oct. 18).
Helen Smithexecutive chairman of IMPALA, said she “expects” regulators to review the [PIAS] acquisition “and answer the question the industry is asking about how is it possible for UMG to gain more market share after it was already considered too big?”
“A stock deal is one thing, this is another,” said Smith, who is calling on competition officials to assess how the deal affects the physical and digital music markets, including distribution services, “as well as the impact on competitors , digital services, artists and fans.”
Geert de Blaerethe president of the Belgian association BIMA, said that while the Belgian market owes gratitude to [PIAS] To show entrepreneurs what's possible, the impact of UMG's acquisition of the company “will be structural, significant and long-lasting” for the independent music business.
“This is completely different from an equity deal as UMG is taking its market share [PIAS]. Scale and stability will be lost across the independent sector. The gradual changes in the market between the big companies are putting disproportionate influence in the hands of a few companies. Whenever this happens, the result is more control over how the market develops,” de Blaere said in a statement.
Support appeals for research, IMPALA president Dario Draštata said the deal boosts UMG in terms of market share, “eliminates a major competitor” and “limits options for artists and labels.”
Representatives for UMG and [PIAS] did not respond to requests for comment when contacted by Bulletin board.
His acquisition [PIAS] from the world's largest music company further increases the dominant market share enjoyed by UMG and follows the end of a 10-year ban on the music giant from acquiring certain music companies or catalogs in Europe.
These restrictions were placed on UMG in 2012 by the European Commission as one of the conditions for the company's $1.9 billion takeover of EMI. As part of this process, the European Union's executive branch forced UMG to divest Parlophone Label Group, which was bought by Warner Music Group (WMG) for around $750 million, as well as offloading several EMI entities in Europe and Chrysalis Labels , Mute, Sanctuary and Co-op Music.
To obtain regulatory approval to buy EMI, UMG pledged not to reacquire any of the assets sold or re-sign any artists signed to labels it had divested for a period of 10 years. Just a few months after that ten-year ban ends in September 2022, Universal has acquired a 49% minority stake in [PIAS]which owns some of these previously off-limits catalogues, including Co-op Music.
On Tuesday (October 15), UMG announced it had increased its minority stake to full ownership, following the decision by Gates and Lambot to sell their controlling stake.
His acquisition [PIAS] UMG is part of a growing trend of major labels looking to the independent sector to increase their market share, either by bolstering their distribution offerings for indie artists and labels or by investing in or buying independent music labels.
In 2019, UMG acquired independent distribution and marketing company Ingrooves Music Group. A year later, Sony Music bought J. ErvingDigital distribution and label company Human Re Sources from Q&A, followed in 2021 by the purchase of artist services company AWAL and Kobalt Neighboring Rights from Kobalt Music Group.
Notable indie label acquisitions in the past decade include WMG's purchase of Netherlands-based Spinnin' Records in 2017 and Sony Music's purchase of UK dance label Ministry of Sound in 2016.
On a smaller scale, WMG has been steadily growing its recorded music interests in Central and Eastern Europe, buying minority stakes in Croatia's Dancing Bear Music, Slovenian independent label NIKA and Serbia's Mascom. And this week, WMG Benelux announced the acquisition of Dutch label Cloud 9 Recordings.
Referring to major labels' pursuit of major indie labels, Draštata, who is also president of the Balkan trade association of indie labels RUNDA, said the practice was becoming “a problem across Europe”.
“The loss of such major players to the independent sector intensifies the competitive impact and the risk is that this trend will continue,” Draštata said in a statement. “We have flagged the problem of creeping dominance for many years and it is time for a new approach to competition to address this issue.”
from our partners at https://www.billboard.com/pro/umg-pias-acquisition-european-trade-groups-investigation/
