Watchdog details competition concerns over German cable deal

FRANKFURT Fri Dec 7, 2012 6:23am EST

FRANKFURT Dec 7 (Reuters) - Plans by Germany's largest cable company to take over the No.3 player would cement a duopoly and crimp competition, the country's antitrust watchdog said, putting pressure on the two companies to offer concessions to ease those fears

Kabel Deutschland, said on Thursday Germany's cartel office expressed concerns about its planned purchase of smaller rival Tele Columbus.

The regulator followed up on Friday by saying the deal would eliminate an important competitor of Kabel Deutschland and of No.2 Unitymedia in the regions of Germany where they are the incumbent players.

"The takeover of Tele Columbus would aggravate the joint dominant market position," the Cartel Office said, adding this applied to both competition for contracts from residential property companies and to the cable companies' purchasing power over TV broadcasters.

The German cable market was once one of Europe's most fragmented, with a proliferation of smaller regional players offering television, broadband and phone services.

Following a buying spree, Liberty Global's Unitymedia and Kabel Deutschland have emerged as the dominant players.

A year ago, the antitrust regulator approved the contested merger of Unitymedia and Kabel BW after the companies agreed to concessions.

The cartel office said on Friday the problem with a Kabel Deutschland-Tele Columbus tie-up would be the regional overlap, which was not the case in the Unitymedia purchase of Kabel BW.

The merger parties can now make their case again and offer concessions, said the watchdog, which has until Jan. 16 to make a final decision.

Kabel Deutschland agreed this year to buy Tele Columbus for about 618 million euros ($803 million), including debt of around 600 million.

Tele Columbus provides cable services to 1.7 million customers, mainly in Berlin, Dresden, Magdeburg and Potsdam.

($1 = 0.7700 euros) (Reporting by Ludwig Burger; Editing by Mark Potter)

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