Brussels, 15 April 2013
Mergers: Commission approves acquisition of UK cable operator Virgin Media by Liberty Global of the US
The European Commission has cleared under the EU Merger Regulation the proposed acquisition of UK cable operator Virgin Media Inc., registered in the US, by the US-based company Liberty Global, Inc. The transaction, with a value of €17.2 billion, would bring together the second largest Pay TV operator in the UK (Virgin Media) and the largest cable operator in Europe (Liberty Global). The Commission's investigation confirmed that the transaction would not raise competition concerns, in particular because the parties operate cable networks in different Member States and because of the merged entity's limited market position in the wholesale of TV channels in the UK and Ireland.
Both Liberty Global and Virgin Media acquire audio visual content, such as individual TV programmes and entire TV channels, which they then offer to their subscribers. The Commission examined, in particular, the market for the acquisition of TV content in the UK, Ireland and the European Economic Area (EEA) as a whole. The Commission concluded that the proposed acquisition would not restrict competition in these markets because TV content is licensed mainly on a national basis or for linguistically homogeneous areas and because the merged entity would still face sufficient competitive constraint from other players, such as TV content providers and competing Pay TV retailers.
Moreover, the Commission investigated the vertical link between Liberty Global's activities in the wholesale supply of Pay TV channels (e.g. Extreme Sports Channel, CBS Reality, Horror Channel, etc.) and Virgin Media's activities in the acquisition of these channels and the retail of Pay TV services to customers in the UK. The Commission concluded that the merged entity is unlikely to shut out competing Pay TV retailers by withholding its TV channels from them, given its very limited presence in the wholesale supply of TV channels and the incentive to license its TV channels as broadly as possible. Similarly, it is unlikely that the merged entity would shut out competing TV channel broadcasters from access to the retail Pay TV market, given the number of alternative distribution platforms to Virgin Media’s cable network (e.g. BSkyB's satellite platform) and the importance of offering a large variety of TV channels in order to attract Pay TV subscribers.
The Commission therefore concluded that the transaction would not raise competition concerns. The transaction was notified to the Commission on 6 March 2013.
Background on companies and products
Liberty Global is a cable network operator, providing TV, broadband internet and telephony services in 10 EU Member States including Ireland, but not in the United Kingdom. Liberty Global consumer brands include Telenet, Unitymedia and UPC. In addition, through its content division Chellomedia, Liberty Global produces and supplies a number of TV channels to TV operators, including in the United Kingdom.
Virgin Media is an entertainment and communications company, which owns and operates a cable network in the United Kingdom. Virgin Media provides Pay TV, broadband internet and fixed and mobile telephony services.
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).