Germany to probe Liberty/Kabel BW, deal

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3 Nov 2010
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In a move which could considerably reduce Liberty Global's chances to expand its foothold in the German cable market, the European Commission has transferred the probe of the planned acquisition of Germany's third-largest cable operator Kabel BW by the US media company to Germany's domestic anti-trust authority the Bundeskartellamt.
After a preliminary investigation, the EU Commission found that the transaction could significantly affect competition in the market for the provision of free-to-air TV services to housing associations, where contracts with tenants are negotiated collectively, the competition authority announced in Brussels.

The deal could also affect competition in the national market for the wholesale supply of TV signal transmission services, the EU Commission said.

Due to the total turnover volumes of the companies involved the transaction was initially declared in Brussels. In May 2011, the German cartel office asked the EU Commission to transfer the case to Germany. The German authority argued that the effects of the merger would be restricted to Germany. Also, the local watchdogs said that they were familiar with the affected markets and market players through their own investigations in several cases.

The transfer of the probe to Germany is considered by observers to be a severe setback for Liberty Global as the German watchdogs have so far implied far stricter rules on mergers in the cable industry than their colleagues in Brussels. A cartel office spokesman said that the probe would take at least four months and therefore would be completed in mid-October 2011 at the earliest. According to industry insiders, the outcome of the case is unclear.

Liberty Global announced in March 2011 to purchase Kabel BW from Swedish financial investor EQT for €3.16 billion. In conjunction with Unitymedia, which it acquired in November 2009, the US company wants to create a strong counterweight to market leader Kabel Deutschland.

With Unitymedia and Kabel BW, Liberty Global would reach around 7 million customers in Germany while Kabel Deutschland has almost 9 million customers.
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