In a landmark ruling the German Federal Cartel Office (FCO) has today given the green light for the takeover of German cableco Kabel BW (KBW) by Liberty Global subject to far-reaching conditions.
The FCO said the clearance decision is based on the…
In a landmark ruling the German Federal Cartel Office (FCO) has today given the green light for the takeover of German cableco Kabel BW (KBW) by Liberty Global subject to far-reaching conditions.
The FCO said the clearance decision is based on the improved remedy package offered by Liberty in late November, which included not only proposals to provide unencrypted digital free to air TV, to waive any exclusivity in contracts with housing associations and to forego ownership rights of their in-building network, but also included an extraordinary termination right for a specified number of housing associations with longer-term multi-dwelling unit (MDU) contracts in the Unitymedia and KBW footprints.
FCO president Andreas Mundt stated: “This merger could only be cleared with far-reaching commitments by the companies involved. We now see the chance of more competition in the cable markets. With the obligation to open up large long-term contracts with the housing industry and give up further contractual rights as well as the basic encryption of digital free TV programmes, the negative effects of the merger are compensated.”
The FCO conceded that the merger would strengthen the retail oligopoly of existing regional cable providers by reducing the number of players from three to two. It would also have a negative impact on the feed-in market, the regulator concluded. But the remedies offered by Liberty would address anti-competitive effects of the transaction.
As part of the remedies package, housing associations in the network areas of Liberty’s Unitymedia and Kabel BW will be granted a special contract termination right. This will offer them an earlier opportunity to look for a less expensive network operator for their housing units, the FCO said. The special termination right applies to contracts for retail TV services with more than 800 housing units and remaining contract terms of more than three years.
The decision not to encrypt digital free TV programmes would make it easier for rival companies to compete for retail TV service contracts and will thus also have a positive impact on the feed-in market.
