* Court refers decision back to cartel office
* UnityMedia says will fight decision
* Ruling means merger may need to be unwound
* Liberty Global shares down 1.6 pct
By Harro Ten Wolde
DUESSELDORF, Germany, Aug 14 A German court
threw in doubt Liberty Global's completed 3 billion
euro ($4 billion) purchase of KabelBW after reversing a 2011
antitrust approval, deepening uncertainties in a rapidly
changing telecoms sector.
A regional court in Duesseldorf on Wednesday ruled that the
cartel office must re-examine the case to either block it or
force the firms to offer more concessions to protect competition
in the cable television market.
The ruling, which ultimately could lead to the unwinding of
a merger that bolstered Germany's second-largest cable operator
UnityMedia in 2012, comes during sweeping competitive changes in
the German telecom market where more large deals are pending.
Vodafone in June agreed to buy Germany's largest
cable group Kabel Deutschland for 7.7 billion euros and Dutch
telecoms group KPN last month agreed to sell its German
unit to Telefonica for 8.1 billion euros.
The cartel office had approved the acquisition at the end of
2011 only after imposing far-reaching conditions because Liberty
already owned Germany's second-largest cable operator
UnityMedia, which then absorbed KabelBW.
Germany's biggest telecoms group Deutsche Telekom
challenged the approval and the court already voiced concerns
over the deal in a June hearing.
The decision is a victory for Telekom, struggling to keep up
with services offered via broadband cable, and a setback for
Liberty, which may have to offer more concessions to assuage
concerns about potential market dominance.
"The merger implies that KabelBW as the only potential
competitor has been taken out of the market," the court's
presiding judge Juergen Kuehnen said. "Potential competition has
The court did not allow for an appeal of the decision, but
UnityMedia can file a complaint with a higher court, Germany's
Federal Court of Justice, to be allowed to appeal.
UnityMedia said it would use all legal means available to
fight the court's decision.
Liberty Global shares were down 1.6 percent at 1415 GMT.
According to antitrust lawyer Frederik Wiemer of German law
firm Heuking Kuehn Lueer Wojtek, who is not involved in this
case, the court looked at several regional markets within
Germany while the cartel office had mainly considered the
"Certainly this ruling will have dramatic consequences," he
said. "If this decision is upheld by a higher court, the merger
will have to be unwound. I wonder whether this is actually
Liberty Global and Kabel Deutschland have been winning
customers from Deutsche Telekom with their expansion into
Their cable lines, designed to deliver TV to homes, have
been upgraded to carry voice calls and Internet at speeds often
five times faster than competing services offered by Deutsche
Telekom and others.
Liberty has been the most active buyer in Europe in the last
few months, snapping up Britain's Virgin Media in February and
increasing its stake in Dutch group Ziggo.
In February, Germany's competition regulator blocked Kabel
Deutschland's bid to take over smaller Berlin-based cable group
Tele Columbus for 618 million euros, in a sign of rising
In prior German cable deals, regulators required remedies to
consolidation such as making it easier for housing associations
to switch TV providers and ending the encryption on cable
delivery of free-to-view terrestrial television programmes.
"This is a stage win for Deutsche Telekom," said analyst
Wolfgang Specht at German broker Bankhaus Lampe.
He said the cartel office could ask for more remedies if it
decides to have a look at the case again. "A strong competitor
for Deutsche Telekom will be impaired," he said. "More remedies
will cost them extra. A reversal of the deal would be dramatic."
The court ruling should not, however, be seen as boding ill
for Vodafone's offer for Kabel Deutschland, according to lawyer
"Vodafone's offer for Kabel Deutschland is complementary,
which will put them on par with Deutsche Telekom."
The cartel office said it would study the ruling before
deciding any next steps.