The European Commission has cleared under the EU Merger Regulation the proposed acquisition of the German cable network operator Unitymedia GmbH by Liberty Global Europe Holding B.V. (LGE) of The Netherlands. The Commission concluded that the concentration would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

The Transaction, whose previous communication to the Commission was published in the OJEU on December 29th 2009, consists of the acquisition by LGE of sole control over Unitymedia through the purchase of all the registered share capital of Unitymedia.

Following this communication, the Commission examined the effects of the proposed transaction on the markets for licensing of broadcasting rights and pay-TV channels in German-speaking countries, on the markets for wholesale and retail signal transmission in the German Federal States of North Rhine-Westphalia and Hesse, as well as the markets for pay-TV, voice telephony, broadband Internet access and triple-play (TV, internet, phone) services in Germany.

The Commission did not find any competition concerns related to the vertical relationship between the merging companies of the markets for wholesale termination of calls on their fixed networks due to lack of incentives of the merged company to restrict access to its networks and the high level of state regulation.

Liberty Clobal Europe (LGE) and Unitymedia

• Liberty Global Europe, LGE is a European holding company that belongs to Liberty Global, Inc. (Public, NASDAQ:LBTYA), an international broadband cable operator offering video, voice and internet-access services to its customers. LGE is currently active in nine member states including Austria, but not in Germany. Its division, Chellomedia is active in the production of three pay-TV channels broadcast in Germany: Extreme Sports Channel, Zone Reality and Zone Club. Unitymedia is a German cable network operator active only in the German Federal States of North Rhine-Westphalia and Hesse.
• Unitymedia is a German holding company, currently controlled by private equity investors., operating a broadband cable network in Germany (in the federal states of North Rhine-Westphalia and Hesse), including the provision of cable television services, pay TV services, broadband internet access and telephony services.

Both LGE and Unitymedia license TV content for their TV platforms in Austria and Germany. The Commission found that the horizontal overlap in the market for licensing of TV content in German-speaking countries is unlikely to lead to competition problems due to the parties' limited market share and the presence of strong competitors such as Sky, Canal+ and RTL-Group.

LGE provides pay-TV channels produced by its division, Chellomedia. Unitymedia is active on the downstream market as a licensee of pay-TV channels. The Commission therefore also investigated the effects of the proposed concentration on access to LGE's pay-TV programmes by competitors of Unitymedia. The Commission found no competition concerns because the merged company would not be able to negatively impact other TV-platform operators by refusing access to its pay-TV channels because of the availability of competing channels. The merged company would also lack the ability to deny operators of TV-channels access to customers, because of the merged company's limited share of demand for TV-content and the presence of strong competitors operating other TV-platforms.