Brussels, 24 July 2012
Mergers: Commission approves acquisition of NDS by Cisco in pay-TV sector
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.
Companies and products
Cisco is active in the development and sale of networking products for the Internet. Cisco develops a wide range of products and services including switches used in local and wide area networks, routers, enterprise unified communications, network and content security systems, STBs and digital media technology products.
NDS supplies digital technology and services to pay-TV service providers and content providers. It offers solutions for satellite, cable, terrestrial, IPTV, mobile devices and hybrid TV systems, which are used to manage subscriber access to pay-TV content and enable the viewer to choose, navigate, store and interact with such content.
Merger control rules and procedures
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).
More information on the case is available at: