Competition authorities in the United Kingdom have begun an investigation into Sony Music Entertainment’s purchase of the AWAL and Kobalt Neighboring Rights businesses, even after the deal has been completed.

Sony announced on Wednesday that it had completed the purchase that was first announced in February this year. The U.K.’s Competition & Markets Authority, does not challenge the deal’s closure, instead saying that it is “investigating the completed acquisition.”

The $430 million deal represents the transfer of Kobalt Music Group’s recorded music operations and leaves Kobalt Music Group continuing to hold its music publishing business and global digital collection agency AMRA.

AWAL, which has released music by Billie Eilish’s brother and collaborator Finneas, Nick Cave and the Bad Seeds, Little Simz and others, will continue to sign, develop and market its own artists. AWAL services include global marketing, creative, synch and brand partnerships, radio promotion and distribution as well as access to its analytics.

“The CMA has served an initial enforcement order under section 72(2) of the Enterprise Act 2002 in relation to the completed acquisition,” the regulator said, identifying Monday (17 May 2021) as the date of issue.

Section 72 of the act gives the CMA the power to intervene in an in-progress or completed deal if it believes that a merger may breach sections 22 or 33 of the same act. These both concern “creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.”

The CMA move triggers a call for written representations about competition or public interest issues. That could be followed by a “Phase 1 Decision.” If that is unfavorable to the deal, a formal “Merger Inquiry” would be launched. As the enforcement order is so recent, the CMA said that it was unable to give any dates for the possible phase one or merger inquiry steps.

The CMA said that it had granted Sony five derogations or exceptions to the enforcement order, which otherwise requires the Sony’s businesses and the target companies to be kept separate.

Most significant is one concerning directors and senior management. As Kobalt requires the resignation of certain directors of AWAL and Neighboring Rights when the deal is completed, Sony sought permission for the appointment of AWAL CEO Lonny Olinick and CEO of Neighboring Rights Ann Tausis to take up similar roles at the target companies. It argued that that this “will ensure that the boards’ functions are discharged by personnel who will remain part of the AWAL or Kobalt Neighboring Rights businesses and have an ongoing interest in their success.” They are to be regarded as employees of the acquired companies, rather than post-merger Sony Music.

All other directors of AWAL and Neighboring Rights, with the exception of Bert Hazelaar, are to resign. Hazelaar, an employee of the Kobalt Group, will remain in post as a director of Kobalt Music Netherlands Artists and Kobalt Music Netherlands OH Records due to the fact that Dutch corporate law requires 50% of the boards of directors of Dutch companies to be Dutch resident.

The other four exceptions cover matters such as: staff pay, holidays and pension payments; exclusion of Sony’s unconnected Japanese businesses from the enforcement order; establishment of a management team that maintains the acquired businesses as a going concern and only refers to Sony Music’s Delaware headquarters in the case of “non-standard acts”; and the provision of office space in Los Angeles that is exclusively used by the AWAL and Kobalt Neighboring Rights staff.

The regulator goes as far as to specify that Sony Music staff must not be granted passes to the AWAL and Neighboring Rights buildings.

In a regulatory filing on Wednesday, the Sony parent group said: “This transaction is not anticipated to have a material impact on Sony’s forecast for its consolidated financial results for the fiscal year ending March 31, 2022.”