German cartel office forbid cable merger

Jörn Krieger

Germany's three largest cable operators will have to shelve their merger aspirations after the federal cartel office said it sees no competitive leeway for such a move.

"The bottom line is that under our assessment so far competitive objections would outweigh the move", the cartel office's president Bernd Heitzer told German newspaper Frankfurter Allgemeine Zeitung, adding that this applied not only to Germany's largest cable operator Kabel Deutschland's (KDG) favoured three-way merger with Unitymedia and Kabel BW, but for plans involving a fusion of any of the two. "That would only be a slight difference", said Heitzer.

The announcement shatters the hopes held by the companies that the cartel office would change its mind regarding a merger while also ending a possible exit scenario for the financial investors who own the cable operators. "It is not our job to the secure business affairs of private equity companies", asserted Heitzer.

From the viewpoint of KDG, Unitymedia and Kabel BW, cable companies, which each cover one or several individual federal states, suffer from competition disadvantages in the battle with nationwide ADSL providers such as Deutsche Telekom for broadband internet and telephone customers.

The cartel office does not deny the argument that a joint, nationwide cable network would have benefits for the broadband market. "But this opportunity could also be realised without a merger. We would be open for discussions regarding a joint German brand for cable internet as well as marketing and sales co-operations", said Heitzer.