Mergers: Commission approves acquisition of German cable operator Kabel Deutschland by Vodafone

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The European Commission has cleared under the EU Merger Regulation the acquisition of Kabel Deutschland Holding AG, a German cable operator, by Vodafone Group Plc. of the United Kingdom. The Commission’s investigation confirmed that the activities of the merging parties were mainly complementary. While Kabel Deutschland primarily offers cable TV, fixed line telephony and Internet access services, Vodafone’s core business consists of mobile telephony services. To a certain extent, it also offers fixed line telephony and Internet access, as well as IPTV. The Commission found that in markets where the parties’ activities overlap, the increase in market share resulting from the proposed transaction is insignificant and will therefore not appreciably alter competition.

The Commission examined in particular the effects of the proposed transaction on competition in the markets for (i) the wholesale and retail supply of TV infrastructure and content services, (ii) the retail supply of mobile telephony services and wholesale supply of mobile telephony access and call origination services, (iii) the retail supply of fixed voice telephony and fixed Internet access services, and (iv) a possible market for multiple play offerings.  As Vodafone’s demand of wholesale pay TV channels and its share in the retail supply of pay TV services are very limited, the Commission concluded that the transaction would not lead to anti-competitive effects.  Further, the Commission found that the merged entity would not be in a position to leverage Kabel Deutschland’s market power in the wholesale market for TV signal transmission by cable into the IPTV market, where Vodafone has only limited activities.  Moreover, the Commission found that Vodafone does not compete with Kabel Deutschland for the retail supply of signal transmission to multiple-dwelling-units and for single-dwelling-units, the increment to the already strong position of Kabel Deutschland would be insignificant, even under the narrowest possible market definition including the activities of both parties (the TV signal transmission via cable and IPTV in the network area of Kabel Deutschland). In these markets, Vodafone is not a close competitor of Kabel Deutschland, and a number of closer competitors, including Deutsche Telekom and regional cable operators, will remain in the market post transaction. Here to read more.

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