Mergers: Commission approves acquisition of NDS by Cisco in pay-TV sector

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The European Commission has cleared under the EU Merger Regulation the proposed acquisition of the UK-based NDS Group Limited, which provides technology and software to the pay-TV sector, by the internet company Cisco Systems, Inc. of the US. The Commission’s investigation confirmed that the merged entity would continue to face competition from a number of strong competitors and that customers, namely pay-TV providers, would continue to have alternative suppliers in all markets concerned.

The Commission examined the effects on competition of the proposed acquisition in the sector of pay-TV technical services. The Commission’s assessment focused in particular on the provision of hardware components, such as set-top-boxes (STBs), and software components. These include Conditional Access Systems (CAS), Digital Rights Management (DRM) software, middleware software, application software including digital video recording (DVR), electronic programme guides (EPG), content management systems (CMS) and home provisioning software (HPS).

There are only limited overlaps between the parties’ activities in relation to each of these hardware and software products at the worldwide level and these overlaps are even smaller in the European Economic Area (EEA).

There are, however, certain vertical and conglomerate relations, particularly between NDS’ pay-TV software activities and Cisco’s STB activities. However, the Commission’s investigation confirmed that the merged entity would not have market power in the relevant markets and would therefore not have the ability nor the incentive to raise the costs for its competitors in STB or pay-TV software or to exclude them through bundled offers of the different components of pay-TV technical services.

The Commission therefore concluded that the transaction would not raise competition concerns.

The transaction was notified to the Commission on 18 June 2012. Here to read more.

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