EC (re-)approves Liberty Global Ziggo acquisition
May 31, 2018
The European Commission has once more approved, with conditions under the EU Merger Regulation, the acquisition of Ziggo by Liberty Global. The merger was first approved in 2014. Following the annulment of this approval by the General Court in 2017, the Commission has reassessed the merger.
Before the transaction, Ziggo and Liberty Global were separate cable TV operators providing mainly fixed telecommunications services, with non-overlapping activities in the Netherlands. In particular, they operated in different parts of the Netherlands and did not compete for the same customers. The merger between both companies was notified to the Commission in March 2014 and approved in October 2014, subject to conditions. This approval was then annulled by the General Court in October 2017 for procedural reasons.
Following a new investigation, the European Commission has confirmed its approval.
In 2014, the Commission had concerns that the merger, as initially notified, would have hindered competition by removing two close competitors and important competitive forces in the Dutch market for the wholesale of premium pay-TV film channels. In order to maintain effective competition for the wholesale of premium pay-TV film channels in the Netherlands, Liberty Global committed to divest its Film1 channel to a third party purchaser. The channel was divested to Sony.
In its new assessment, the Commission confirmed its concerns that the merger, as initially notified, would have increased Liberty Global’s negotiating power vis-à-vis TV channel broadcasters, hindering innovation in the delivery of audio visual content over the Internet (the so-called over-the-top or ‘OTT’ services). To address the Commission’s competition concerns, Liberty Global offered commitments similar to those offered in 2014, in particular:
- to terminate clauses in channel carriage agreements that limit broadcasters’ ability to offer their channels and content over the Internet, and
- not to include such clauses in future channel carriage agreements for eight years from the decision;
- to maintain adequate interconnection capacity through at least three uncongested routes into its Internet network in the Netherlands, helping to ensure sufficient capacity for competing OTT services, also for eight years from the date of the decision (May 30th, 2018);
- not to re-acquire the Film1 channel, to ensure that this divestment is a structural change to the market.
The EC concluded that the proposed transaction, as modified by the commitments, would no longer raise competition concerns. The decision is conditional upon full compliance with the commitments.
In October 26th 2017, the General Court annulled the Commission’s original decision, on the ground that the Commission did not fully state the reasons for its conclusion that the merger would not lead to vertical anti-competitive.