The initial investigation of the acquisition found competition concerns in the Dutch markets for retail TV, internet access and fixed telephony services, as well as the wholesale supply of premium pay-TV film channels. Liberty and Ziggo are both shareholders in premium channels, respectively Film1 and HBO Netherlands, the only premium film channels in the country. At the wholesale level, the Commission found that the proposed acquisition also could significantly increase the merged entity's negotiating power vis-a-vis content owners and TV channel suppliers. This could, in turn, negatively affect its competitors in retail pay-TV and Dutch consumers.
At the retail level, the Commission found that Liberty Global and Ziggo exert some indirect competitive pressure on each other, despite the fact that their cable networks do not overlap geographically. The transaction could therefore reduce existing competition in the Dutch market, where the operators already have significant market shares. According to research by Telecompaper, the combined operator would have consumer market shares of 56 percent in TV, 43 percent in broadband and 41 percent in fixed telephony, based on customer numbers for the end of 2013.
Furthermore, the merger could lead to a de facto duopoly on the Dutch market. According to the EC, the high level of concentration and high barriers to entry in the Netherlands raise the risk that the removal of Ziggo as an autonomous player leads the remaining competitors, in particular the merged entity and KPN, to coordinate their competitive behaviour and increase prices or delay investments.
Finally, the Commission's investigation provided indications that the merged company might have the ability and incentive to shut out or otherwise hinder over-the-top TV service providers from effective access to its internet network, in order to strengthen its own competitive position in various TV-related markets. The merged entity could also shut out its competitors in the Dutch retail TV market from access to its premium film channels.
Dutch regulator ACM had asked for a say on the merger, but the case has been kept at the EU level. The regulator said it will provide data and expertise to help the EC in its decision. It is also monitoring the process as part of its own investigations, including KPN's proposed takeover of FTTH operator Reggefiber and a number of market analyses underway.
