The Bundeskartellamt is currently examining plans by Liberty Global Europe Holding (Liberty), to acquire the cable network operator Kabel Baden-Württemberg (Kabel BW). Today the authority informed the parties of its preliminary legal assessment of the project, in which it expressed competition concerns. The companies involved and third parties summoned to the proceedings now have the possibility to comment. Liberty has already submitted a commitment proposal to the Bundeskartellamt in order to dispel its concerns. The authority is now obtaining further opinions on what effect these commitments might have on competition. The deadline for a final decision has been extended to 15 December 2011.

Liberty is already active in Germany via its subsidiary Unitymedia (cable networks in North Rhine-Westphalia and Hesse). After conducting a preliminary assessment, the Bundeskartellamt is of the view that the acquisition of Kabel BW would strengthen a dominant oligopoly on the nationwide licensing market. This market involves the transmission of TV signals to residential premises with multiple housing units, in particular housing associations, via a broadband cable network. In its preliminary assessment the Bundeskartellamt concluded that this market is collectively dominated by the three German cable network operators (KDG, Unitymedia and Kabel BW). The authority's investigations have revealed that it would be technically possible as well as economically viable for these operators to supply these premises throughout Germany. However, the three regional operators do not operate on this basis. They do not compete with one another for licences outside their respective distribution areas. As a result of the merger the oligopoly would be reduced from three to two companies. Under these circumstances it would be even more unlikely for the remaining companies KDG and Unitymedia/Kabel BW to engage in competition with one another.
There are also competition problems on the signal delivery market, i.e. in the relationship between the cable network operators and TV channels, which are dependent on signal delivery to each of the regional networks.

The Bundeskartellamt has received a commitment proposal from the parties to the merger, on which it has yet to comment. It will now subject these commitments to a market test in order to assess whether they are appropriate to dispel the competition concerns. To this effect the Bundeskartellamt will obtain opinions from the third parties summoned to the proceedings and other market participants.

Further information:
In view of the aggregate turnover of the companies involved the project was initially subject to European merger control. However, at the Bundeskartellamt's request and in agreement with the Federal Ministry of Economics and Technology, the case was referred to Germany for examination (cf. Bundeskartellamt press release of 17 June 2011).

The respective referral decision of the European Commission contains further information about the relevant markets and the competition problems raised by the merger project (Decision of 16.6.2011 - COMP/M.5900-LGI/KBW).