Bundeskartellamt takes critical view of intended takeover of Tele Columbus by Kabel Deutschland - final decision pending

07.12.2012

The Bundeskartellamt is currently examining plans by Kabel Deutschland Holding AG (KDG) to acquire the cable network operator Tele Columbus GmbH.

Andreas Mundt, President of the Bundeskartellamt: „The companies were informed yesterday of our preliminary legal assessment of the proposed acquisition. In its statement of objections the Bundeskartellamt expressed competition concerns about the project. The parties to the merger and third parties summoned to the proceedings now have the possibility to comment. The parties to the merger also still have the option to offer commitments. The time limit for a final decision in this matter ends on 16 January 2013."

With about 8.5 million customers, KDG is the largest cable network operator in Germany. Tele Columbus operates cable networks in the new Länder and to some extent in North Rhine-Westphalia and Hesse. In its preliminary assessment the Bundeskartellamt comes to the conclusion that the German retail TV services market is jointly dominated by the two companies KDG and Unitymedia. The acquisition of Tele Columbus would further strengthen this joint market dominance. On the retail TV services market, the cable network operators compete for agreements permitting the transmission of TV signals to residential premises with multiple housing units, in particular housing associations, via a broadband cable network.

At the end of 2011 the Bundeskartellamt cleared the merger between the parent company of Unitymedia, Liberty Global, with a smaller regional cable network operator, Kabel Baden-Württemberg, only subject to extensive conditions and obligations (cf. Bundeskartellamt press release of 15 December 2011).

The investigations in the present case have revealed that - unlike in the Liberty/Kabel BW case - the TV cable networks of Tele Columbus often overlap with the networks of its competitors, in particular KDG. The companies are constantly competing for retail TV service contracts with the housing industry. In the preliminary assessment of the Bundeskartellamt, this competition would be eliminated by the merger. Tele Columbus is the largest of the remaining competitors of KDG and Unitymedia.

Since Tele Columbus also operates in several locations within Unitymedia's incumbent coverage area, the Bundeskartellamt is also investigating whether competition between KDG and Unitymedia could be stimulated by the merger. However, an analysis of company data and business plans of the companies has so far not indicated that possible positive effects of the merger project would compensate for its anti-competitive effects. The same applies to potential improvements in the offer of telephony and internet access via the cable network.

There is also cause for competition concerns in the so-called feed-in market, i.e. in the relationship between cable network operators and TV channels, due to the extension of range of operation which KDG would gain from the acquisition; the same applies, albeit to a lesser extent, to the market for the provision of TV signals by so-called network level 3 operators to network level 4 operators. Logo: Offene Märkte | Fairer Wettbewerb

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