LGI offers concessions for Kabel BW acquisition
09.47 Europe/London, October 31, 2011 By Robert Briel

Liberty Global is willing to make considerable concessions in order to make the acquisition of German cable operator Kabel BW possible. Last Friday, the monopoly commission Bundeskartelamt issued its preliminary findings raising competitive concerns about the takeover.

In its preliminary assessment, the monopoly commission came to the conclusion that this market is controlled jointly by the three major German cable network operators (KDG, Unitymedia and Kabel BW). Technically and commercially, these three operators could roll out their services across all of Germany and compete with each other.

As a result of the merger, it would narrow the oligopoly of three to two companies. Under these circumstances it would be in the future even more unlikely that the remaining companies KDG and Unitymedia/KabelBW enter into competition with each other.

The second issue is the wholesale market for channel distribution: broadcasters rely on a single distributor in each regional network.

The Bundeskartelamt said it has not yet taken a decision and has extended the deadline until December 15. Until that time, a market test should evaluate the concessions promised by Liberty Global.

Competitive concerns also exist in the input market, ie in proportion to the cable operator to the TV stations that rely on the supply in each regional network.

In a market test, the competition watchdog will now seek the views of the various parties involved and determine whether the commitments are appropriate to address the competition concerns.

One of the concessions is the fact that Unitymedia will distribute all of its digital signals of German free-to-air private channels unencrypted over its network to make thrd party distribution possible.

Speaking to Welt am Sonntag Unitymedia CEO Lutz Schüler said he hoped this would solve one of the main concerns. “In this way, even small cable-TV companies and telecom providers would be able to access these signals.”