EC clears Liberty’s Virgin Media acquisition

As revealed by advanced-television.com, the European Commission has cleared under the EU Merger Regulation the proposed acquisition of UK quad-play operator Virgin Media in the US, by cable MSO Liberty Global.

The EC notes that the transaction, with a value of €17.2 billion, would bring together the second largest pay-TV operator in the UK (Virgin Media) and the largest cable operator in Europe (Liberty Global). The Commission’s investigation confirmed that the transaction would not raise competition concerns, in particular because the parties operate cable networks in different Member States and because of the merged entity’s limited market position in the wholesale of TV channels in the UK and Ireland.

The EC said that both Liberty Global and Virgin Media acquire audio visual content, such as individual TV programmes and entire TV channels, which they then offer to their subscribers. The Commission examined, in particular, the market for the acquisition of TV content in the UK, Ireland and the European Economic Area (EEA) as a whole. The Commission concluded that the proposed acquisition would not restrict competition in these markets because TV content is licensed mainly on a national basis or for linguistically homogeneous areas and because the merged entity would still face sufficient competitive constraint from other players, such as TV content providers and competing pay-TV retailers.

Moreover, the Commission investigated the vertical link between Liberty Global’s activities in the wholesale supply of pay-TV channels (e.g. Extreme Sports Channel, CBS Reality, Horror Channel, etc.) and Virgin Media’s activities in the acquisition of these channels and the retail of pay-TV services to customers in the UK. The Commission concluded that the merged entity is unlikely to shut out competing pay-TV retailers by withholding its TV channels from them, given its very limited presence in the wholesale supply of TV channels and the incentive to license its TV channels as broadly as possible. Similarly, it is unlikely that the merged entity would shut out competing TV channel broadcasters from access to the retail pay-TV market, given the number of alternative distribution platforms to Virgin Media’s cable network (e.g. BSkyB’s satellite platform) and the importance of offering a large variety of TV channels in order to attract pay-TV subscribers.

The Commission therefore concluded that the transaction would not raise competition concerns. The transaction was notified to the Commission on 6 March 2013.

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