Court threatens German cable M&A

A higher regional court in Germany has reversed an approval by the country’s cartel office for Liberty Global’s €3.16 billion acquisition of KabelBW, throwing the merger into doubt.

The Duesseldorf court ruled that the antitrust regulator will have to look at the case again, to either block it or approve the purchase applying stricter conditions than previously. It could ultimately mean that the whole merger, which was approved in 2011 and completed in early 2012, has to be unwound.

Some observers think the ruling could have repercussions for the Vodafone agreed deal to buy Kabel Deutschland for €7.7 billion and KPN’s recent deal to sell its German to Telefonica for €8 billion.

The cartel office, which said it would study the ruling before deciding about any next steps, had approved the acquisition at the end of 2011 only after imposing far-reaching conditions because Liberty already owns Germany’s second-largest cable operator UnityMedia.

Germany’s biggest telecoms group Deutsche Telekom had challenged the approval decision. The court did not allow for an appeal of the decision, but UnityMedia can file a complaint with a higher court, Germany’s Federal Court of Justice, to be allowed to appeal.

“The merger implies that KabelBW as the only potential competitor has been taken out of the market,” the court’s presiding judge Juergen Kuehnen said. “Potential competition has been eliminated.”

UnityMedia pledged to use all legal means available to fight the court’s decision.

In February, Germany’s competition regulator blocked Kabel Deutschland’s bid to take over smaller Berlin-based cable group Tele Columbus for €618 million.

 

 

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