Hours after IPO, Universal Music faces competition inquiry
Hours after its shares surged by more than a third on its trading debut, Universal Music and other major record labels have been threatened by an official investigation into their dominance of the music market.
Government ministers have called on the UK’s competition watchdog to take the first step towards regulatory action and conduct a market study of the music industry, over concerns that the benefits of the music streaming boom were not trickling down to musicians.
It follows a recommendation by MPs on the culture select committee for an urgent probe by regulators to “reset” the music streaming market, aimed at tackling “pitiful returns” for artists.
The committee’s report called for the Competition and Markets Authority (CMA) to examine whether the UK’s major labels – Universal Music, Warner Music and Sony Music – were causing harm through their dominant market position through deals with streaming giants like Spotify that meant musicians lost out.
“Our report laid bare the unassailable position these companies have achieved,” said Julian Knight, chair of the DCMS committee that examined the industry. “We provided evidence of deep concern that their dominance was distorting the market.”
The committee will publish a new report on what Knight called the “pitiful earning of creators in this digital age” within days, but did not comment on a market intervention.
The CMA said it would “give careful consideration to this important recommendation” and its staff were developing initial proposals for its board to consider at its October meeting.
It said its two options included a year-long market study that would rely on the government to execute its recommendations or a full 18-month market investigation, after which it could address any competition problems with legally binding remedies.
It comes hours after Universal, the world’s largest music label, made a triumphant debut on Amsterdam’s Euronext stock exchange that delivered a $140m payday to CEO Lucian Grainge.
Universal was valued at €45.5bn on its debut, and while shares were initially listed for €18.50 each, they closed at €25.10 yesterday.