Following an in-depth investigation, the European Commission has cleared under the EU Merger Regulation Liberty Global's acquisition of a stake in the Belgian media company De Vijver Media NV (“De Vijver”). The decision is subject to commitments. The Commission had concerns that, after the transaction, De Vijver would refuse to license its channels to TV distributors that compete with Telenet, a cable company controlled by Liberty Global. The commitments address these concerns by obliging De Vijver to license its channels – Vier, Vijf and any other similar channel it may launch – to TV distributors in Belgium under fair, reasonable and non-discriminatory terms.
Commissioner Margrethe Vestager, in charge of competition policy, commented: “It is important that consumers can choose among TV distributors competing on equal and fair basis. The commitments will ensure this since Telenet’s competitors will be able to distribute Vier and Vijf and offer these channels to their customers.”
The transaction will give Liberty Global joint control over De Vijver and therefore over its two TV channels Vier and Vijf. The other two controlling shareholders of De Vijver will be Waterman & Waterman and Corelio Publishing.
The Commission found that TV distributors in Flanders and Brussels must have Vier and Vijf in their offer to compete on equal footing with Telenet. Moreover, it would be profitable for Telenet and De Vijver to withhold Vier and Vijf from competitors such as Belgacom and TV Vlaanderen. These competitors would find it harder to attract and retain customers without Vier and Vijf while new players, such as Mobistar, would not be able to enter the market at all. The result would be less competition in the TV distribution market and ultimately higher prices and less innovation for consumers.
The Commission also investigated whether the transaction would give Telenet the incentive to remove the channels of Medialaan and VRT from its cable platform. Medialaan and VRT are two Flemish broadcasters that compete directly with De Vijver. The Commission concluded that this would not be a profitable strategy for Telenet, as it would make Telenet’s offer less attractive and lead to a loss of subscribers. Moreover, Telenet is obliged to carry VRT’s channels by law. However, the investigation found that Telenet could disadvantage the channels and programmes of Medialaan and VRT in more subtle ways, for instance by displaying their video-on-demand content less prominently than that of De Vijver.
Agreements signed during the investigation
The Commission’s concerns were partly removed by the fact that De Vijver and Telenet entered into several agreements with other market participants during the investigation. Specifically, De Vijver concluded agreements with some TV distributors to license Vier and Vijf and offered to prolong its agreements with others. Telenet amended its agreement with VRT to ensure that VRT’s content would not be disadvantaged compared to that of De Vijver Media. Telenet offered to amend its agreement with Medialaan in the same way.
To address the Commission’s remaining competition concerns, the parties committed to offer the following under fair, reasonable and non-discriminatory terms to any interested TV distributor in Belgium:
- To license the channels Vier and Vijf.
- To license any new basic pay TV channel that De Vijver may launch in the future. Basic pay TV channels are those that are part of Telenet’s basic channel package and that all or most subscribers receive.
- De Vijver must also license to distributors linked services such as catch-up TV and PVR (a service that allows users to record programs and view them at a later stage).
The commitments will be in place for seven years. They ensure that Telenet’s competitors are able to offer Vier and Vijf to their subscribers and have no competitive disadvantage vis-à-vis Telenet.
In addition, Telenet also committed to maintain its offer to amend its agreement with Medialaan for at least six months.
These commitments, together with the agreements signed by Telenet and De Vijver Media during the investigation, removed the Commission’s competition concerns. The Commission therefore approved the transaction, as modified by the commitments.
De Vijver is a media company based in Vilvoorde, Belgium. It broadcasts channels Vier and Vijf. Vier is a generalist channel, while Vijf is a channel specifically aimed at female viewers. Both channels target Belgium’s Dutch-speaking population. De Vijver also owns TV production house Woestijnvis.
Liberty Global is an international cable operator that has a controlling stake in Telenet, which owns and operates a cable network in Flanders and parts of Brussels.
After the transaction, Liberty Global will share control over De Vijver with two other companies, Waterman & Waterman and Corelio Publishing, both of which are already shareholders of De Vijver today. Waterman & Waterman is a company controlled by Wouter Vandenhaute and Erik Watté, the founders of Woestijnvis. Corelio Publishing publishes newspapers, online news and sells advertising space.
Merger control rules and procedure
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).
There are currently eight on-going phase II merger investigations:
- the planned acquisition of Jazztel by Orange in the Spanish telecommunications market. The deadline for a decision is 30 April 2015;
- the planned acquisition of Biomet by Zimmer, both of the US, with a decision deadline on 26 May 2015;
- the proposed joint venture between two of the world's leading coffee manufacturers, Douwe Egberts Master Blenders 1753 B.V. of the Netherlands, and Mondelēz International Inc. of the US. The Commission's deadline for a final decision is 1 June 2015;
- the proposed joint venture between the three collective rights management organisations PRSfM, STIM and GEMA for the online licensing of musical works, with a deadline on 26 June 2015;
- the proposed acquisition of US-based rotating equipment manufacturer Dresser-Rand by Siemens of Germany, with a deadline on 30 June 2015;
- the proposed acquisition of ADM's industrial chocolate business by Cargill, with a deadline on 8 July 2015;
- the proposed acquisition of Alstom's energy related divisions by General Electric with a deadline on 8 July 2015;
- the proposed acquisition of the Greek gas transmission system operator DESFA by the Azeri state oil company SOCAR.