A UK regulator referred Sony Music Entertainment's purchase of London-based independent record label AWAL for an in-depth probe on Thursday, after the buyer refused to divest any undertakings to allay competition concerns.
The Competition and Markets Authority (CMA) has said the wholesale distribution of recorded music in the UK was highly concentrated at present, and if the deal had not gone ahead, Sony and AWAL could have competed more strongly with each other.
The regulator on Sept. 7 gave Sony five days to address its concerns.
Sony Music, which then called CMA's decision "perplexing" and said it was based on an incorrect understanding of AWAL's position in the UK, did not immediately respond to Reuters' request for a comment on Thursday.
CMA Senior Director Colin Raftery was concerned the deal could potentially worsen terms for many artists in the UK and lead to less innovation across the industry.
Earlier this year, Sony Music Entertainment, owned by Sony Group, entered into an agreement with Kobalt Music Group to buy its recorded music operations, including AWAL & Kobalt neighbouring rights.
(Reporting by Priyanshi Mandhan in Bengaluru; Editing by Maju Samuel and Shinjini Ganguli) ((Priyanshi.Mandhan@thomsonreuters.com; +91 9650985606;))