Judgments nº T-370/17 of Tribunal General de la Unión Europea, May 23, 2019

• Resolution Date: May 23, 2019
• Issuing Organization: Tribunal General de la Unión Europea
• Decision Number: T-370/17

(Competition - Concentrations - Netherlands market for television services and telecommunications services - Full-function joint venture - Decision declaring the concentration compatible with the internal market and the EEA Agreement - Commitments - Relevant market - Vertical effects - Manifest error of assessment - Duty to state reasons)

In Case T-370/17,

KPN BV, established in The Hague (Netherlands), represented by P. van Ginneken and G. Béquet, lawyers,

applicant,

v

European Commission, represented by H. van Vliet, G. Conte, J. Szczodrowski and F. van Schaik, acting as Agents,

defendant,

supported by

VodafoneZiggo Group Holding BV, established in Amsterdam (Netherlands),

Vodafone Group plc, established in Newbury (United Kingdom),

and

Liberty Global Europe Holding BV, established in Amsterdam,

represented by W. Knibbeler, E. Raedts and A. Pliego Selie, lawyers,

interveners,

APPLICATION pursuant to Article 263 TFEU for the annulment of Commission Decision C(2016) 5165 final of 3 August 2016 declaring the concentration involving the acquisition by Vodafone Group and Liberty Global Europe Holding of joint control of a full-function joint venture to be compatible with the internal market and the EEA Agreement (Case COMP/M. 7978 - Vodafone - Liberty Global - Dutch JV),

THE GENERAL COURT (Eighth Chamber),

composed of A.M. Collins (Rapporteur), President, M. Kancheva and R. Barents, Judges,

Registrar: N. Schall, Administrator,

having regard to the written part of the procedure and further to the hearing on 29 November 2018,

gives the following

Judgment

Background to the dispute

The entities concerned

1 The applicant, KPN BV, is active in the sector of cable networks for television, broadband Internet, fixed telephony and mobile telecommunications services in the Netherlands.

2 Vodafone Group plc is an international telecommunications group active in the mobile telecommunications services sector in the Netherlands through Vodafone Libertel BV (‘Vodafone’). Moreover, Vodafone is also active in the sector of television services, broadband Internet and fixed telephony via the applicant’s network.

3 Liberty Global Europe Holding BV (‘Liberty Global’), which is part of the international group Liberty Global plc, is a cable operator which owns and operates cable networks offering television, broadband Internet and fixed telephony services in the Netherlands. It also offers mobile telecommunications services to its fixed customers via Vodafone’s network.

Administrative procedure

4 On 14 June 2016, pursuant to Article 4(1) of Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (OJ 2004 L 24, p. 1), Vodafone and Liberty Global (‘the notifying parties’) notified to the European Commission a proposed concentration consisting of the acquisition of joint control of a newly-created full-function joint venture, to which the notifying parties would transfer their business activities in the Netherlands. After the concentration, the notifying parties would each hold 50% of the shares in the joint venture and would have equal voting rights and equal rights to appoint directors to the supervisory board.

5 In order to eliminate the serious doubts identified by the Commission during the initial examination, on 12 July 2016 the notifying parties proposed commitments under Article 6(2) of Regulation No 139/2004.

6 Those initial commitments were market-tested by the Commission. In the light of the outcome of that market test and of the Commission’s analysis of the proposed commitments, the notifying parties proposed their final commitments on 26 July 2016.

Contested decision

7 On 3 August 2016, the Commission adopted Decision C(2016) 5165 final declaring the concentration involving the acquisition by Vodafone and Liberty Global of joint control of a full-function joint venture to be compatible with the internal market and the EEA Agreement (Case COMP/M.7978 - Vodafone - Liberty Global - Dutch JV) (‘the contested decision’).

Definition of the relevant markets

8 According to the contested decision, the proposed transaction would combine the notifying parties’ activities in the Netherlands. It is apparent from that decision that the Commission took the view that the proposed transaction gave rise to certain horizontal overlaps and vertical relationships between the parties’ activities in a number of markets along the chain for the distribution of television content and the provision of telecommunications services (fixed and mobile telephony and broadband Internet) in the Netherlands.

9 For the purpose of defining the relevant markets, the Commission made a distinction between the following markets relating to television services, all of which it regarded as being of national geographic scope:

- the market for the licensing and acquisition of broadcasting rights for television content;

- the market for the wholesale supply and acquisition of television channels; and

- the market for the retail supply of television services.

10 First, as regards the market for the licensing and acquisition of broadcasting rights for television content, the Commission considered that it could be further segmented, namely, into free-to-air rights and pay TV rights, linear and non-linear broadcasting rights, and also segmented by exhibition window, premium and non-premium content, and by type of content, namely, films, sport, etc.

11 Second, as regards the market for the wholesale supply and acquisition of television channels, the Commission likewise considered it could be further segmented, namely, into free-to-air and pay TV channels, basic pay TV channels and premium pay TV channels, premium pay TV film channels and premium pay TV sports channels, and according to distribution infrastructure. However, as regards those other segmentations, and, in particular, the segmentation between premium pay TV film channels and premium pay TV sports channels, the Commission considered that the question whether the market could be further segmented could be left open, since the proposed transaction did not raise competition concerns however the market might be segmented. In particular, as regards premium pay TV sports channels, the Commission observed, in recital 176 of the contested decision, that, according to some of the respondents to the market investigation carried out by the Commission, the channels Ziggo Sport Totaal and Fox Sports were competing for similar content and customer bases and were increasingly becoming substitutable. A distinction was made between Ziggo Sport Totaal and Ziggo Sport, a channel which broadcasts less sports content than Ziggo Sport Totaal and is offered by Liberty Global only to its subscribers, free of charge.

12 Third, as regards the market for the retail supply of television services, the Commission considered that the question of further segmentation into free-to-air television services and pay TV services, and into linear pay TV services and non-linear pay TV services could be left open, since the assessment of the proposed transaction would remain the same. As regards possible segmentation according to the type of distribution technology used, the Commission noted that there were some indications that the retail supply of television services via mobile technologies (3G and 4G) was not substitutable with other distribution technologies, namely terrestrial analogue television, cable, Internet Protocol television (or ‘IPTV’) and satellite. However, it considered that that question could be left open, as the assessment of the proposed transaction would remain the same.

13 Moreover, the Commission set out a series of considerations concerning the markets for the retail supply of fixed telephony, mobile telephony and Internet access services, as well as other neighbouring markets, which are irrelevant to the present dispute.

14 Last, in the contested decision, the Commission examined whether ‘multiple play’ bundles supplied on a retail basis to end users, that is, bundles comprising two or more types of services (mobile telecommunications services, fixed telephony, Internet access or television services), constitute, in themselves, markets which are distinct from each of the underlying services. The Commission noted that ‘multiple play’ services were very popular, with the fixed services ‘triple play’ bundle, comprising fixed telephony, internet access and television services, being the most popular. However, the Commission considered that the question of the precise definition of the market could be left open since, in any event, the proposed transaction raised serious doubts.

The effects of the concentration on competition

15 So far as concerns the analysis of the effects of the proposed transaction on competition, the Commission examined the horizontal, vertical and conglomerate effects on competition, together with the coordinated effects.

- Horizontal effects

16 In its analysis of the horizontal effects on competition as regards, first, the market for the licensing and acquisition of broadcasting rights for television content, the Commission noted in the contested decision that only Liberty Global was active on the demand side of that market as a buyer, whereas Vodafone did not purchase or hold any content directly. Therefore, according to the Commission, the proposed transaction would not give rise to any increase in buyer power.

17 Second, as regards the market for the wholesale supply and acquisition of television channels, the contested decision noted that only Liberty Global was active on the supply side of that market, that it had a market share below 40% under all possible market segmentations and, in particular, a market share below 10% in the market for the wholesale supply of premium pay TV sports channels. Given that Vodafone was not active as a wholesale supplier of pay TV channels, the proposed transaction did not give rise to any...