Brussels, 11 September 2014
The European Commission has authorised under the EU Merger Regulation the proposed acquisition of Sky Deutschland AG and Sky Italia S.r.l. by Sky Broadcasting Group plc ("BSkyB") of the UK. All three companies are media companies, active primarily in the pay TV sector. Sky Deutschland and Sky Italia are currently owned by 21st Century Fox of the US. The Commission concluded that the transaction would not raise competition concerns, since the activities of the three companies are geographically complementary.
The Commission's investigation showed that the geographic scope of the markets for the licensing or acquisition of audio-visual programming for free to air (FTA) and for pay TV, the wholesale supply of TV channels for free to air (FTA) and for pay TV, the retailing of audio-visual programming (free to air (FTA) and pay TV) to consumers and the sale of TV advertising airtime is national or along linguistically homogeneous areas. The Commission found that the transaction would not lead to any material overlaps in the parties' activities, as they are mainly active in different national markets. BSkyB's activities are mainly focused in the UK and Ireland, Sky Deutschland's activities are mainly focused in Germany and Austria and Sky Italia's activities are mainly focused in Italy.
The transaction brings together the leading pay-TV operators in the UK, Ireland, Germany, Austria and Italy. Therefore, the Commission also assessed whether the merged entity would enjoy increased bargaining power vis-à-vis rights holders for the acquisition of rights to audio-visual content - in particular "premium" content (i.e. certain sport events and films) - or for the acquisition of pay TV channels for its pay TV programmes, to the detriment of its pay TV competitors.
The Commission found that it was unlikely that the merged company would be able to impose a change from current licensing practices, which are focused on national territories or language areas, towards the joint purchase or simultaneous negotiations for premium content across several countries. First, there are practical obstacles, such as different timelines for the negotiations of certain rights licensing. Second, rights holders would not deviate from their current preferred model of licensing, unless it is in their interest in terms of maximising revenues. The Commission notes that although there are already a number of broadcasters that operate across various territories in the European Economic Area (EEA), rights holders have not accepted the practice of multi-territorial licensing to any meaningful extent. Finally, even assuming that rights owners were to license rights on a pan-European basis, the merged entity would in any event face competition for multi-territory rights from a number of multinational groups which already operate in the EEA.
The Commission therefore concluded that the transaction would raise no competition concerns.
The transaction was notified to the Commission on 6 August 2014.
Through the present transaction, BSkyB, will be acquiring control over Sky Deutschland and Sky Italia, which are currently controlled by 21st Century Fox. In 2010, the Commission had approved the acquisition of BSkyB by News Corporation ("News Corp"), a global media and communications company, which controlled Sky Deutschland and Sky Italia (see IP/10/1767). In that case, the Commission had therefore also investigated whether the proposed acquisition combining the three pay TV operators would give the new company increased bargaining power vis-à-vis content rights holders by purchasing premium content jointly for several territories, to the detriment of its pay-TV competitors. As in the present decision and for largely the same reasons, the Commission found that this was unlikely. However, the News Corp/BSkyB transaction was ultimately abandoned and never completed.
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 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 is available in the public case register on the Commission’s competition website under case number M.7332.