use strict;
use warnings;

my $text = do {local $/; <DATA>;};

$text =~ s/\n\n/\n/g;
print $text;

__DATA__
line 1

line 2

line 3
[download]

Prints:

line 1
line 2
line 3
[download]

which is what I would expect. What are you doing that is different?