BRUSSELS (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.