BRUSSELS, July 22 (Reuters) - Universal Music Group

unit Virgin Music Group's $775 million acquisition of

Downtown Music may hinder competition and remove an important

competitor, EU antitrust regulators warned on Tuesday.

Virgin announced the deal in December last year which

subsequently generated pushback from a wide swathe of European

independent labels.

The European Commission set out its concerns on Tuesday as

it opened an in-depth investigation into the deal, confirming a

Reuters story last week.

"After the acquisition, UMG would likely have the ability

and incentive to use commercially sensitive data of third-party

record labels for its own business activities notably related to

recorded music," the EU executive said in a statement.

It said UMG's access to such data may harm rival record

labels and may ultimately further strengthen UMG, already a

leader in the market for the wholesale distribution of recorded

music in Europe.

The Commission set a Nov. 26 deadline for its decision.

Universal is the world's biggest music company, while

Downtown owns a major music publisher and a number of other

businesses that help musicians collect royalties.