The European Commission has green-lit Liberty Global’s planned buyout of Virgin Media, claiming the deal would not raise competition concerns.
The €17.2 billion (US$22.5 billion) acquisition, which will bring together Europe’s largest cable operator and the second-largest pay TV operator in the UK, was cleared today under EU merger regulations.
The commission said that the deal would not raise competition concerns as the firms operate cable networks in different European member states and the merged entity has a “limited market position” in the wholesale of TV channels in the UK and Ireland.
“The Commission examined, in particular, the market for the acquisition of TV content in the UK, Ireland and the European Economic Area as a whole. The Commission concluded that the proposed acquisition would not restrict competition in these markets because TV content is licensed mainly on a national basis or for linguistically homogeneous areas and because the merged entity would still face sufficient competitive constraint from other players, such as TV content providers and competing pay TV retailers,” the commission said in a statement.
Even though Liberty Global is involved in the wholesale supply of pay TV channels like Extreme Sports Channel, CBS Reality, Horror Channel, the commission said that the merged firm was unlikely to shut out competing pay TV retailers by withholding channels, “given its very limited presence in the wholesale supply of TV channels and the incentive to license its TV channels as broadly as possible.”
It added that the merged Virgin-Liberty was also unlikely to shut out competing channel broadcasters because of to the number of alternative distribution platforms – like BSkyB’s satellite platform – and due to the importance of offering a large variety of TV channels in order to attract subscribers.