The German Federal Cartel Office (FCO) has stated its concerns about the proposed €3.16bn (US$4.4bn) acquisition of cableco Kabel BW by US media giant Liberty Global.
The regulator said that the deal could reinforce Liberty’s position in the…
The German Federal Cartel Office (FCO) has stated its concerns about the proposed €3.16bn (US$4.4bn) acquisition of cableco Kabel BW by US media giant Liberty Global.
The regulator said that the deal could reinforce Liberty’s position in the country, where it already owns number two player Unitymedia. Kabel BW is the third largest German cable operator.
The merging parties as well as third parties affected by the transaction now have the opportunity to comment on these concerns.
More specifically, the FCO explained that the deal would strengthen a dominant oligopoly on Germany’s licensing market, although acknowledging that its main players do not currently directly compete with each other.
It said: “In its preliminary assessment the Bundeskartellamt concluded that this market is collectively dominated by the three German cable network operators (KDG, Unitymedia and Kabel BW). […] They do not compete with one another for licences outside their respective distribution areas. As a result of the merger the oligopoly would be reduced from three to two companies. Under these circumstances it would be even more unlikely for the remaining companies KDG and Unitymedia/Kabel BW to engage in competition with one another.”
The regulator added there are also concerns with regards to the signal delivery market, “i.e. in the relationship between the cable network operators and TV channels, which are dependent on signal delivery to each of the regional networks.”
The parties involved have already offered concessions aimed at easing regulatory concerns. The Cartel Office has yet to comment on them but said the remedies will be subject to a market test “in order to assess whether they are appropriate to dispel the competition concerns.”
In an interview with German weekly Welt am Sonntag, Unitymedia CEO Lutz Schüler outlined some of the remedies.
He was quoted saying that Unitymedia was prepared to distribute digital signals from free-to-air private channels unencrypted over its network to third parties. This would enable small cable TV providers and telcos to access the signals, therefore allowing them to compete with the company.
Schüler reportedly added that Unitymedia promised not to increase prices for TV stations that require access to the cable network in order to even out potential losses from the access remedy.
A decision on the takeover was originally scheduled for 11 November but has now been pushed back to 15 December.
