European Commission issues warning on Telefónica-Canal+ buyout
Juan Fernandez Gonzalez
| 25 November 2014
Although it's leaving the final and official decision to the Spanish competition watchdog, the European Commission (EC) has warned about potential damage to competition within the telecoms and TV sectors if Telefónica's attempt to buy Canal+ is successful.

Earlier in the year, the commission said the decision regarding the move was down to the Comisión Nacional de los Mercados y la Competencia (CNMC), as the buyout was strictly framed within a national market. But in a valuation document sent to the CNMC, the Brussels-based organisation requested that special attention be paid to the process, as it could seriously damage competition.

"The commission considers that the operation will probably have significant effects on competition in several markets, especially pay-TV, in which the combined share after the operation would be over 80%," said the European authority in the document.

The report stated that the four markets which would be the most damaged are: pay-TV retail operations; broadcasting rights; wholesale distribution of TV channels; and retail sales of added-value telecoms services. In addition, the commission said that the broadcasting of pay-TV content, both linear and on-demand, as well as the broadcasting rights of blockbusters and big sporting events, would also be affected.

The document supports CNMC's statements made two weeks ago that it fears the move could damage the already fragile competition in a pay-TV market as small as that in Spain.

Telefónica's Movistar TV is at the top of the pay-TV sector in the country, along with Canal+, both with 1.6 million subs, while the next nearest competitor is Vodafone's ONO with around 800,000 subscribers. As a result of Telefónica's offer, the telco would own over three million subs in a market which has less than five million in total.