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European Commission

Press release

Brussels, 20 September 2013

Mergers: Commission approves acquisition of German cable operator Kabel Deutschland by Vodafone

The European Commission has cleared under the EU Merger Regulation the acquisition of Kabel Deutschland Holding AG, a German cable operator, by Vodafone Group Plc. of the United Kingdom. The Commission's investigation confirmed that the activities of the merging parties were mainly complementary. While Kabel Deutschland primarily offers cable TV, fixed line telephony and Internet access services, Vodafone's core business consists of mobile telephony services. To a certain extent, it also offers fixed line telephony and Internet access, as well as IPTV. The Commission found that in markets where the parties' activities overlap, the increase in market share resulting from the proposed transaction is insignificant and will therefore not appreciably alter competition.

The Commission examined in particular the effects of the proposed transaction on competition in the markets for (i) the wholesale and retail supply of TV infrastructure and content services, (ii) the retail supply of mobile telephony services and wholesale supply of mobile telephony access and call origination services, (iii) the retail supply of fixed voice telephony and fixed Internet access services, and (iv) a possible market for multiple play offerings.

As Vodafone's demand of wholesale pay TV channels and its share in the retail supply of pay TV services are very limited, the Commission concluded that the transaction would not lead to anti-competitive effects.

Further, the Commission found that the merged entity would not be in a position to leverage Kabel Deutschland's market power in the wholesale market for TV signal transmission by cable into the IPTV market, where Vodafone has only limited activities.

Moreover, the Commission found that Vodafone does not compete with Kabel Deutschland for the retail supply of signal transmission to multiple-dwelling-units and for single-dwelling-units, the increment to the already strong position of Kabel Deutschland would be insignificant, even under the narrowest possible market definition including the activities of both parties (the TV signal transmission via cable and IPTV in the network area of Kabel Deutschland). In these markets, Vodafone is not a close competitor of Kabel Deutschland, and a number of closer competitors, including Deutsche Telekom and regional cable operators, will remain in the market post transaction.

The Commission also dismissed any competition concerns relating to the retail market for mobile telecommunication services, because Kabel Deutschland only has a very limited market share, while other mobile network operators, mobile virtual network operators and mobile service providers will remain in the market after the transaction. Kabel Deutschland has no mobile network and is therefore not active in the wholesale market for mobile access and call origination services; its very limited market shares in the retail market would be unlikely to modify Vodafone's current incentives to host mobile virtual network operators.

With regard to the retail supply of fixed voice telephony services and of fixed Internet access services, the Commission found that the combined market share of the parties is limited and that the merged entity would continue to face competition from a number of other competitors.

Finally, regarding a possible market for multiple play offerings combining fixed voice telephony, fixed line Internet access, mobile telephony and/or television, the Commission found that Kabel Deutschland is currently not a competitor to Vodafone, as it does not offer triple and quadruple play. Furthermore, other operators already offer or will be able to offer multiple play including mobile telephony after the transaction. As a result, it is unlikely that the proposed transaction would trigger anticompetitive effects. On balance, the Commission therefore considers that the possibility for the merged entity to offer more attractive triple or quadruple play bundles based on its own infrastructure (including Vodafone's mobile network and Kabel Deutschland's cable activities) may have a pro-competitive dimension.

The Commission therefore concluded that the transaction would not raise competition concerns. The transaction was notified to the Commission on 16 August 2013.

Companies and products

Vodafone is active globally in the telecommunication sector and has its core business in the operation of mobile telecommunication networks and the provision of related telecommunication services, including voice telephony, messaging, data and content services, radio paging and further network services.

Kabel Deutschland owns and operates cable networks in all German Federal States, except Baden-W├╝rttemberg, North Rhine-Westphalia and Hesse. Via its cable networks, it provides TV and telecommunication services, such as analogue and digital cable TV, pay TV, broadband internet and fixed line 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).

More information will be available on the Commission's competition website, in the public case register under the case number M.6990.

Contacts :

Antoine Colombani (+32 2 297 45 13, Twitter: @ECspokesAntoine )

Marisa Gonzalez Iglesias (+32 2 295 19 25)

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