The European Commission has opened an in-depth antitrust investigation into Liberty Global’s €4.9bn acquisition of the Netherlands’ largest cableco, Ziggo.
The Commission said it is concerned that the tie-up could lessen competition in a number of…
The European Commission has opened an in-depth antitrust investigation into Liberty Global’s €4.9bn acquisition of the Netherlands’ largest cableco, Ziggo.
The Commission said it is concerned that the tie-up could lessen competition in a number of pay-TV and telecommunications markets in the Netherlands where Liberty’s local cableco UPC operates.
The antitrust regulator now has 90 working days to examine the deal, which was struck in January, meaning that the review could last until 18 September.
In a statement the regulator laid out the issues that its initial investigation had identified. It has concerns over how competition for acquisitions of individual Dutch language audio visual content and TV channels could be affected.
The EC is also worried about the wholesale supply of premium TV film channels and the retail provision of fixed internet access, TV and fixed telephony services.
The Commission said the first phase of its investigation indicated that even though Liberty Global and Ziggo’s cable networks do not overlap geographically, they exert indirect competitive pressure on each other.
The regulator said that a merger between the two could create a high level of concentration and high barriers to entry. It could therefore increase the likelihood that the merged entity and KPN – who will be the only large operators following the merger – coordinate their competitive behaviour and increase prices or delay investments.
The merged entity could also have the potential to strangle ‘over-the-top’ TV service providers from effective access to its internet network, the Commission said.
In late March, Dutch regulator Authority for Consumers and Markets (ACM) filed a referral request with the EC to review the deal. It argued that it should investigate the deal instead of the EC because of its effects on competition in regional and national telecoms, internet and TV markets and only “limited” cross-border and wider European consequences.
The EU’s antitrust chief, Joaquin Almunia, dismissed the request at the time, describing the merger as an obvious EU case.
The combination of Ziggo and UPC would create a company which reaches about 7 million customers – 90% of Dutch households – and generates about €2.5bn in total revenue. UPC Netherlands is the nation’s second largest cableco. The deal values Ziggo at 11.3x its 2013 EBITDA.
Liberty’s CEO Mike Fries said the deal will create “a nationwide cable champion that will drive investment and innovation for the benefit of Dutch consumers and businesses alike”.
