Universal Music Group has proposed divesting Downtown’s Curve royalty accounting business to address European Commission competition concerns over its $775 million acquisition of Downtown Music Holdings.<\/p>\n
UMG submitted formal commitments to the EC on December 11, outlining a plan to sell Curve Royalty Systems as a standalone business to an independent buyer approved by the Commission.<\/p>\n
The EC sent out letters last week to potential buyers as part of the proposed divestment process.<\/p>\n
A document outlining the remedies package, seen by MBW, commits UMG to divesting the entire Curve business, including all employees (except two retained engineers), customer contracts, and the Curve Platform software and related assets.<\/p>\n
The divestiture aims to address the EC’s primary competition concern about the transaction. In November, when the Commission issued its Statement of Objections<\/a>, it said it was “concerned that UMG may have the ability and incentive to gain access to commercially sensitive data that is stored and processed by Downtown’s Curve.”<\/p>\n The Commission warned that “such information advantage for UMG would hamper rival labels’ ability and incentive to compete with UMG.”<\/p>\n On Friday (December 12), UMG told MBW<\/a> that it had submitted “a robust remedy” to the EC to address its “only remaining concern,” but didn’t specify what the remedy was, and hasn’t commented further beyond the following statement issued on Friday:<\/p>\n “Following constructive conversations with the European Commission, we have submitted a robust remedy that comprehensively addresses the Commission’s only remaining concern.<\/p>\n \u201cThis deal is about offering independent music entrepreneurs access to world-class tools and support to help them succeed. We are confident that the Commission will recognize the benefits of the transaction for artists, labels, independent music, and fans in Europe, and clear the transaction swiftly.”<\/p>\n According to the commitments document, the divestment business comprises Curve’s “cloud-based royalty accounting software platform” and its processing, accounting, payment and distribution services for both record labels and music publishers.<\/p>\n The Curve business is currently managed by Richard Leach, President of Curve, and employs staff across engineering, technical support, development, customer management, product management, and sales.<\/p>\n Under the proposal, UMG would retain a duplicate copy of the Curve Platform software. However, this retained version would be “sanitized” – containing no data from Curve’s standalone customers or shared customers who choose to remain with Curve under its new owner.<\/p>\n The commitments document specifies that “neither the Purchaser nor the Committing Parties will have to account to the other, meaning neither will have any obligation to share improvements, revenue and\/or expenses with the other.”<\/p>\n The document states that “the duplicate retained version shall remain segregated from the instance of Curve operated by the Divestment Business” and “there shall be no reciprocal access between the two instances in terms of data, or customer information.”<\/p>\n The commitments outline specific handling for “Downtown Shared Customers” – i.e. those who currently use Curve’s royalty accounting services alongside Downtown’s distribution, publishing or neighboring rights services.<\/p>\n According to the doc, each customer will be notified of the divestment prior to closing and informed that “the default position is that the customer will transition to receiving their royalty-accounting services from Curve under the Purchaser’s ownership,” unless they elect to receive services from Downtown’s new offering instead.<\/p>\n UMG’s remedy proposal includes strict safeguards to maintain Curve’s viability during the sale process. The company must preserve the business’s “economic viability, marketability and competitiveness” and implement “hold-separate obligations” to keep Curve operationally independent from UMG’s retained businesses.<\/p>\n According to the document, UMG commits “not to carry out any action that might have a significant adverse impact on the value, management, viability or competitiveness of the Divestment Business or that might alter the nature and scope of activity, or the industrial or commercial strategy or the investment policy of the Divestment Business.”<\/p>\n The commitments also require the appointment of a Monitoring Trustee to oversee compliance and, if UMG fails to find a buyer within an initial divestiture period, a Divestiture Trustee who would be granted an exclusive mandate to sell the business “at no minimum price.”<\/p>\n The document sets strict criteria for potential purchasers. Any buyer “must fulfil the following criteria”: independence from UMG, sufficient financial resources to “maintain and develop the Divestment Business as a viable and active competitive force,” and “proven expertise, ability and incentive” to compete with UMG and other competitors.<\/p>\n Additionally, “the acquisition of the Divestment Business by the Purchaser must neither be likely to create, in light of the information available to the Commission, prima facie competition concerns nor give rise to a risk that the implementation of the Commitments will be delayed.”<\/p>\n UMG must also implement “ring-fencing obligations” to ensure it does not “obtain any Confidential Information relating to the Divestment Business and that any such Confidential Information obtained by the Committing Parties before the Effective Date will be eliminated and not be used.”<\/p>\n The document specifies that “all personnel in the Committing Parties’ remaining business who have had access to Confidential Information relating to the Divestment Business shall sign non-disclosure agreements preventing them from using or disclosing any such information.”<\/p>\n Under the commitments, UMG would face a 10-year non-reacquisition clause, preventing it from regaining control over Curve unless “the structure of the market has changed to such an extent that the absence of influence over whole or part of the Divestment Business is no longer necessary.”<\/p>\n The company would be required to refrain from soliciting Curve’s standalone customers for royalty accounting services for a specified period after closing.<\/p>\n The European Commission has until February 27, 2026, to reach a final decision on the proposed acquisition.<\/p>\n At the conclusion of its Phase II investigation, the Commission can clear the merger with or without conditions, or prohibit it entirely if competition concerns cannot be adequately addressed. The EC opened its in-depth\u00a0Phase II<\/strong>\u00a0investigation into the proposed acquisition in July, following a 25-day initial\u00a0Phase I<\/a>\u00a0review.<\/p>\n The proposed Downtown acquisition, announced in December 2024<\/a>, would see UMG acquire Downtown’s other subsidiaries, including FUGA music distribution, CD Baby, and Songtrust publishing administration alongside the now-proposed divestiture of Curve.<\/p>\n The deal has attracted fierce opposition from independent music organizations. In July, over 200 people signed<\/a>\u00a0a letter objecting to the acquisition, including 20 employees from\u00a0Beggars Group<\/a>\u00a0and\u00a0Secretly Group<\/a>\u00a0companies, while a \u201c100 Voices<\/a>\u201d campaign launched in October featuring testimonies from indie reps urged the EC to block the deal.<\/p>\n
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