Case M.10456 - SKY / VIACOMCBS / JV REGULATION (EC) No 139

EUROPEAN COMMISSION

DG Competition

Case M.10456 - SKY / VIACOMCBS / JV

Only the English text is available and authentic.

REGULATION (EC) No 139/2004

MERGER PROCEDURE

Article 6(1)(b) NON-OPPOSITION

Date: 01/12/2021

In electronic form on the EUR-Lex website under

document number 32021M10456

Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE

Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË

Tel: +32 229-91111. Fax: +32 229-64301. E-mail: COMP-MERGER-REGISTRY@ec.europa.eu.

EUROPEAN COMMISSION

Brussels, 01.12.2021

C(2021) 8881 final

PUBLIC VERSION

ViacomCBS Inc.

1515 Broadway

10036 New York

United States of America

Sky Limited

Grant Way, Isleworth

Middlesex TW7 5QD

United Kingdom

Subject: Case M.10456 – SKY/ViacomCBS/JV

Commission decision pursuant to Article 6(1)(b) of Council Regulation

No 139/2004

1

and Article 57 of the Agreement on the European Economic

Area

2

Dear Sir or Madam,

(1) On 25 October 2021, the European Commission received notification of a proposed

concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004

3

by

which Sky Limited (“Sky”), part of Comcast Corporation ("Comcast") (together,

"Comcast/Sky"), and Paramount Pictures International Limited (“Paramount”),

1

OJ L 24, 29.1.2004, p. 1 (the ’Merger Regulation’). With effect from 1 December 2009, the Treaty on the

Functioning of the European Union (‘TFEU’) has introduced certain changes, such as the replacement of

‘Community’ by ‘Union’ and ‘common market’ by ‘internal market’. The terminology of the TFEU will

be used throughout this decision.

2

OJ L 1, 3.1.1994, p. 3 (the ‘EEA Agreement’).

3

OJ L 24, 29.1.2004, p. 1 (the ‘Merger Regulation’).

In the published version of this decision,

some information has been omitted

pursuant to Article 17(2) of Council

Regulation (EC) No 139/2004 concerning

non-disclosure of business secrets and other

confidential information. The omissions are

shown thus […]. Where possible the

information omitted has been replaced by

ranges of figures or a general description.

2

part of the group headed by ViacomCBS Inc. (together, "ViacomCBS") will acquire

joint control of a newly created JV (the “JV”) within the meaning of Article 3(1)(b)

and 3(4) of the Merger Regulation (the “Transaction”). Sky and ViacomCBS are

together referred to as the “Notifying Parties” (together with the JV, the “Parties”).

1. THE PARTIES

(2) Sky is the (indirect) holding company (UK) of a number of subsidiaries carrying on

business across the audio-visual (“AV”) value chain, predominantly in the UK,

Ireland, Germany, Austria and Italy. Sky is ultimately owned by Comcast, a global

media, technology and entertainment company (US). Comcast is present in Europe

almost entirely through Sky and NBCUniversal (“NBCU”). NBCU is a media and

entertainment company active in the AV sector as well as in the home entertainment

sector through the direct to consumer (“DTC”) distribution of DVDs, Blu-rays and

music discs.

(3) ViacomCBS is a global media and entertainment company (US) that creates AV

content and experiences for audiences worldwide. ViacomCBS's portfolio currently

consists of three segments: TV Entertainment, Cable Networks, and Filmed

Entertainment. ViacomCBS is controlled by National Amusements Inc (US).

(4) The JV will establish and operate a subscription video on demand (“SVOD”)

streaming service that comprises AV content and is distributed DTC on an over the

top (“OTT”)

4

basis as well as via third party platforms and connected devices. The

JV will also wholesale some of ViacomCBS' and NBCU's linear pay TV channels

via third party multichannel video programming distributors in 22 European

countries, including the following 15 countries within the EEA (the “JV EEA

Territories”): Bulgaria, Croatia, Czech Republic, Denmark, Finland, Hungary, the

Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and

Sweden.

2. THE CONCENTRATION

(5) The Transaction will be implemented by means of an agreement, entered into by Sky

and Paramount on 16 August 2021 (the “Investment Agreement”). Subject to

satisfaction of all the conditions precedent in the Investment Agreement, including

receipt of regulatory approvals, Sky and Paramount will each purchase 50% of the

shares in the newly created JV.

5

2.1. Joint control

(6) Sky and ViacomCBS will each own 50% of the shares of the JV and have the ability

to exercise decisive influence over the JV. In particular, the Notifying Parties will

each appoint an equal number of directors in the JV’s board of directors, and will

4

I.e. the content is delivered via the internet.

5

Form CO, paragraphs 91 – 93 and 96.

3

also jointly appoint the JV’s Chief Executive Officer, Chief Financial Officer and

Chief Operating Officer.

6

(7) The executive officers will have executive and day-to-day responsibility for the

operation of the JV, except for the matters that must be referred to the JV’s board of

directors and to the JV’s shareholders pursuant to the joint venture agreement that

will be entered into upon completion of the Transaction.

7

[Reference to the JV's

corporate governance]. The approval of these matters requires a favourable vote by

at least two appointed directors of each of the Notifying Parties or written consent of

both shareholders.

8

(8) Therefore, as a result of the Transaction, Sky and ViacomCBS will jointly control

the JV within the meaning of Article 3(1)(b) of the Merger Regulation.

2.2. Full-functionality

(9) The JV will be fully functional. First, the JV will employ its own management

dedicated to its day-to-day operations, and have access to sufficient resources,

including finance, staff and assets that will enable it to operate independently on the

market for the retail supply of AV services.

9

10

[Reference to strategic decisions

regarding the JV]. This will allow the JV to become (both financially and

operationally) independent and self-financing.

(10) Second, the JV is intended to operate as an autonomous entity with independent

access to the market. Its activities will not be limited to the distribution or sale of its

parent companies' products, as the JV will supply its own SVOD offering as a fully

independent company with its own personnel and dedicated management. Therefore,

the JV will not rely on sales to its parents.

11

In addition, the JV has negotiated

agreements with its parents on an arm’s length basis, reflecting normal market

conditions.

12

(11) Third, the JV will not only purchase from its own parents. It will also source SVOD

licenses to content from third party content providers and may also commission new

content.

13

(12) Finally, the JV is intended to operate on a lasting basis. [Reference to the JV's

corporate strategy].

14

6

Form CO, paragraphs 97 – 98.

7

The Notifying Parties have already agreed on the terms of such joint venture agreements (the “Agreed

Form Joint Venture Agreement”). Other agreements that the Notifying Parties will enter into upon

completion of the Transaction include the Initial Annual Business Plan and the Initial Annual Budget. See

Form CO, paragraph 94.

8

Form CO, paragraphs 99 – 103.

9

Form CO, paragraph 111.

10

Form CO, paragraphs 114, 118 and 120 – 125.

11

Form CO, paragraph 126 – 127.

12

Form CO, paragraphs 117, 119, 121, 123 and 125.

13

Form CO, paras. 73 and 178. The Notifying Parties estimate that spend on third party content will

represent up to [proportion] of all spend on content whereas content acquired from the parents would

account for between approximately [proportion] and [proportion] of the overall spend value. These

percentages will be reviewed periodically as part of the budget review and may vary year on year based on

the specific content output of each of the parents.

4

(13) Therefore, the Transaction will lead to the creation of a full-function joint venture

within the meaning of Article 3(4) of the Merger Regulation.

3. UNION DIMENSION

(14) In the last financial year, Comcast/Sky and ViacomCBS achieved a combined

aggregate worldwide turnover of more than EUR 5 000 million.

15

Each of the

undertakings concerned achieved an EU-wide turnover in excess of EUR 250

million, but they did not achieve more than two-thirds of their aggregate EU-wide

turnover within one and the same Member State. The Transaction therefore has an

EU dimension within the meaning of Article 1(2) of the Merger Regulation.

4. RELEVANT MARKETS

(15) This Transaction concerns all three levels of the AV value chain (from upstream to

downstream):

a) The production and supply of AV content (including the supply of pre-produced

AV content and commissioned AV content), where Comcast/Sky and

ViacomCBS are active on the demand- and supply-side of the market, and the JV

will be active on the demand-side of the market only;

b) The wholesale supply of TV channels, where Comcast/Sky, ViacomCBS and the

JV

16

will be active mainly on the supply-side of the market; and

c) The retail supply of AV services to end customers, where the JV will be active

both (i) DTC, and (ii) via third-party multichannel video programming

distribution (“MVPD”) platforms, and Sky and ViacomCBS will also remain

independently active (mostly) outside the territories where the JV will operate.

(16) In addition, the Transaction concerns the sale of advertising on TV channels, where

both Comcast/Sky and ViacomCBS will remain independently active from the JV,

while the JV will not be active in the supply of advertising space.

4.1. Production and supply of AV content

4.1.1. Relevant product market

4.1.1.1. The Commission’s previous practice

(17) In previous decisions, the Commission has concluded that there are separate markets

for: (i) the production and supply of commissioned AV content (also referred to as

14

Form CO, paragraphs 136 – 137.

15

Turnover calculated in accordance with Article 5 of the Merger Regulation.

16

Form CO, paras. 213-215. The JV will distribute ViacomCBS's and NBCU's linear pay TV channels to

third party multichannel video programming distribution platforms. In the Nordics, the JV will

complement its on-demand offer with two linear TV channels on its own retail service to promote movies

and series with the potential for further TV channels to be added to the service and made available in other

JV Territories in future. The JV will also wholesale its SVOD offering to other retailers.

5

ad hoc or new content); and (ii) the licensing of broadcasting rights for pre-produced

AV content (available off-the-shelf).

17

(18) With regard to the market for the production of commissioned AV content, the

Commission has found the product market to be limited to non-captive AV

production, thereby excluding captive AV production (i.e., AV content produced by

broadcasters for use on their own TV channels), as this AV content is not offered on

the market.

18

(19) With regard to the market for the licensing of pre-produced AV content, the

Commission has considered that it may be subdivided by content type, in particular:

(i) films, (ii) sports, and (iii) other AV content (i.e., all non-sport, non-film content),

but ultimately left the market definition open.

19

In addition, the Commission had

assessed whether AV content could be further sub-divided by distinguishing

between: (i) US and non-US films; (ii) premium and non-premium content; or (iii)

scripted and non-scripted content. This sub-segmentation has been left open in

previous decisions.

20

(20) The Commission has also considered further sub-dividing the market for the

licensing of pre-produced AV content by exhibition window:

21

(i) SVOD; (ii)

transactional video on demand (“TVOD“);

22

(iii) pay-per-view (“PPV”);

23

(iv) first

pay TV window; (v) second pay TV window; and (vi) free-to-air (“FTA”), but has

ultimately left this question open.

24

4.1.1.2. The Notifying Parties’ view

(21) The Notifying Parties agree with the Commission’s previous practice that the market

for the production and supply of AV content should be segmented between (i) the

production and supply of commissioned AV content, and (ii) the licensing of

exploitation rights for pre-produced AV content.

25

(22) However, the Notifying Parties do not consider it appropriate to further segment

these relevant markets, in particular by: (i) content type, (ii) scripted vs non-scripted

17

Commission decision of 7 April 2017 in Case M.8354 – Fox / Sky, para. 54; Commission decision of 24

February 2015 in Case M.7194 – Liberty Global/Corelio / W&W / De Vijver Media, para. 69; Commission

decision of 6 November 2018 in Case M.8785 - The Walt Disney Company / Twenty-First Century Fox,

para. 67; Commission decision of 26 August 2020 in Case M.9299 – Discovery / Polsat / JV, para. 50.

18

Commission decision of 22 September 2006 in Case M.4353 – Permira / All3Media Group, paras. 11-12;

Commission decision of 9 October 2014 in Case M.7360 - 21st Century Fox/Apollo / JV, para. 36;

Commission decision of 20 June 2016 in Case M.7865 – Lov Group / De Agostini / JV, para. 18; M.9299

– Discovery / Polsat / JV, para. 50.

19

Commission decision of 21 December 2011 in Case M.6369 HBO / Ziggo / HBO Nederland.

20

M.8354 – Fox / Sky, para. 55; M.6369 – HBO / Ziggo / HBO Nederland, para. 18; M.7194 – Liberty

Global / Corelio / W&W / De Vijver Media, para. 52; M.8785 - The Walt Disney Company / Twenty-First

Century Fox, para. 68.

21

The use of the term exhibition windows is not applicable to non-film AV content. Non-film AV content

may be broadcast through different exploitation fields (e.g. pay TV, FTA) but the rights do not pass

through each method in the same way a newly released film does.

22

TVOD designates a product where a consumer obtains the right to watch a single title within a designated

time frame (for example 48 hours) through a single payment.

23

PPV designates a product where a consumer obtains the right to watch a single title during a specific time

frame (for example Sunday between 2.00 pm and 3.45 pm) through a single payment.

24

M.8354 – Fox / Sky, para. 56; M.8785 - The Walt Disney Company / Twenty-First Century Fox, para. 68.

25

Form CO, paragraph 194.

6

content, (iii) premium vs non-premium content, or (iv) exhibition window. In this

regard, the Notifying Parties submit that the above distinctions do not reflect the

economic reality of competition in the AV sector.

26

(23) More specifically, with reference to content type, the Notifying Parties argue that

production companies are active in the production of content across different types

and genres. Furthermore, a producer that supplies only one type of content could

start supplying content of a different type swiftly and at no significant costs. The

Notifying Parties also argue that, from a demand-side perspective, there is no

material difference between content of different types and genres, as they all

compete to attract the same audience.

27

(24) With reference to scripted and non-scripted content, the Notifying Parties submit

that, from a supply-side perspective, production companies produce both scripted

and non-scripted content based on demand and, if they are specialised in the supply

of either of the two, they could in any case start producing the other type of content

timely and at no significant costs. Moreover, from a demand side, content acquirers

do not target scripted or non-scripted content in particular, but source content based

on its attractiveness to their audience, regardless of the type.

28

(25) Moreover, the Notifying Parties argue that a segmentation between premium and

non-premium content would be artificial, as it is not clear what constitutes premium

and non-premium content, and the success and commercial value of any specific

content is not dependent on the production budget, nor can it be predicted.

29

(26) Finally, with reference to the different exhibition windows, the Notifying Parties

note that suppliers of AV content do not produce different types of AV content

designed for different exhibition windows. Moreover, the Notifying Parties argue

that the distinction between exhibition windows has become increasingly blurred due

to the uptake of OTT VOD platforms and non-linear services.

30

(27) In any event, the Notifying Parties consider that, for the purpose of this decision, it is

not necessary to reach a conclusion as to the exact product market definition of the

market for the production and supply of AV content, as the Transaction does not

raise competition concerns regardless of how such market is defined.

31

4.1.1.3. The Commission’s assessment

(28) The Commission focused its investigation in relation to this market on Spain, given

that only the Spanish production and supply of AV content market is affected (see

below Section 5.2). Respondents to the market investigation agree that there is a

relevant product market for the production and supply of AV content.

32

26

Form CO, paragraph 195.

27

Form CO, paragraph 196.

28

Form CO, paragraph 197.

29

Form CO, paragraphs 199 – 200.

30

Form CO, paragraph 201.

31

Form CO, paragraph 202.

32

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 6.

7

(29) However, the results of the market investigation are inconclusive as to the

identification of two separate relevant product markets for (i) the production and

supply of commissioned AV content and (ii) the licensing of broadcasting rights

for pre-produced AV content, with only a slight majority of respondents

considering that such separation is accurate.

33

In this regard, some respondents

pointed out that these activities are not always clearly distinguishable, as production

costs are similar and they represent alternative options for customers to source

content.

(30) With reference to a distinction of pre-produced AV content by content type, in

particular (i) films; (ii) sports; and (iii) other AV content, the majority of respondents

to the market investigation consider such differentiation not accurate, as different

content types compete with each other for viewers’ attention. A few respondents also

suggested alternative separations, taking into account, for example, TV series or

general entertainment.

34

(31) As regards pre-produced film content, the results of the market investigation are

overall inconclusive as to whether separate relevant product markets exist for (i) US

and (ii) non-US film content. A small majority of respondents consider that this

distinction is not accurate because different types of AV content, including US and

non-US films, compete for viewership, and because the geographic origin of a

production does not determine per se the quality or the success of a film. However,

other respondents stress that US films have an important value for attracting viewers,

and should be distinguished from other films on grounds of volume and general

quality.

35

(32) With reference to other AV content (i.e. excluding films and sports), the market

investigation is inconclusive as to whether a separation between (i) scripted and (ii)

unscripted AV content is appropriate. According to a number of respondents, the

argument that different types of AV content all compete for viewership applies to

scripted and unscripted content as well. However, on the other hand, a similar

number of respondents believes that scripted and unscripted content should form

separate relevant product markets and note that AV content producers usually

specialize in either type of content.

36

(33) Similarly, the market investigation yield no clear results as to whether other AV

content should be separated between (i) premium and (ii) non-premium content.

However, a small majority of respondents consider that the production of premium

and non-premium content do not form separate relevant product markets as they both

compete for viewership and are substitutable from a consumers’ perspective.

37

(34) With reference to a distinction of the possible relevant markets for the production

and licensing of pre-produced AV content according to exhibition windows, the

results of the market investigation are overall inconclusive.

38

A small majority of

33

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 7.

34

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 8.1.

35

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 8.2.

36

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 8.3.

37

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 8.4.

38

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 9.1.

8

respondents is of the opinion that such separation would not be relevant for the

market for the production and supply of commissioned AV content in Spain.

39

Market participants provided different views as regards possible distinctions they

consider appropriate. For instance, a few market participants submit that there is a

single market for AV services in Spain and that customers may use pay TV

channels, FTA TV channels and SVOD services as a complementary source.

40

(35) Market participants that provide both linear and non-linear services at retail level

usually acquire the broadcasting rights for such services together when it comes to

tailor-made content, but replies by market participants are mixed in relation to pre-

produced content.

41

Furthermore, a small majority of respondents considers that

there are differences in terms of content, pricing or contract terms when content is

licensed to pure OTT providers compared to other licensees, although most

respondents answered that they do not know. However, explanations provided do not

allow to clearly identify such differences.

42

(36) In light of the above, the Commission concludes, for the purpose of this decision,

that the production and supply of AV content forms a relevant product market. The

Commission also considers that, for the purpose of this decision, the question

whether within this product market further distinctions could be made (i) between

commissioned and pre-produced AV content; (ii) between different content types;

and (iii) based on the exhibition window, can be left open, since the Transaction

does not raise serious doubts as to its compatibility with the internal market or the

functioning of the EEA Agreement under any such plausible product market

definitions.

4.1.2. Relevant geographic market

4.1.2.1. The Commission’s previous practice

(37) In past decisions, the Commission has defined the market for the production and

supply of AV content (and its relevant segments) to be either national or regional,

based on linguistically homogeneous areas.

43

4.1.2.2. The Notifying Parties’ view

(38) The Notifying Parties consider that the appropriate geographic market is national or

regional in scope, given that the majority of content is licensed on that geographic

basis. While it is not uncommon to conclude deals that span multiple territories,

there would usually be different terms for different territories (e.g., with respect to

titles, licence period, price, etc.).

44

(39) In any event, the Notifying Parties submit that it is not necessary for the Commission

to reach a conclusion as to the precise geographic market definition for the

39

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 9.2.

40

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 9.3.

41

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 10.

42

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 10.

43

M.8354 – Fox / Sky, para. 69; M.9299 – Discovery / Polsat / JV, para. 54.

44

Form CO, paragraphs 204 – 205.

9

production and supply of AV content, as the Transaction would not raise any

competition concern under any plausible market segmentation.

45

4.1.2.3. The Commission’s assessment

(40) Almost all suppliers of AV content in Spain licence their content on a national basis.

Some respondents pointed out that, in some cases, they also license content on a

regional basis. One respondent replied that it is active in the licencing at all

geographic levels, from national to worldwide.

46

(41) In light of the above, for the purpose of this decision, the Commission concludes that

in Spain the relevant geographic market for the production and supply of AV

content, including all its possible sub-segments, is national in scope.

4.2. Wholesale supply of TV channels

4.2.1. Relevant product market

4.2.1.1. The Commission’s previous practice

(42) In previous decisions, the Commission has identified a wholesale market for the

supply of TV channels. Within that market, in certain decisions, the Commission has

further identified two separate product markets for: (i) FTA TV channels, and (ii)

pay TV channels.

47

The Commission further stated that, within the pay TV channels

market, a further distinction could be made between: (i) basic pay TV channels,

which are included in the basic subscription fee, and (ii) premium pay TV

channels,

48

for which end customers pay a premium in addition to their basic

subscription fee.

(43) In Liberty Global / Corelio / W&W / De Vijver Media, the Commission concluded

that, at the level of the wholesale supply of TV channels, there were two separate

product markets, one consisting of the wholesale supply of premium pay TV

channels and one consisting of the wholesale supply of basic pay TV/FTA channels.

The Commission also considered that there was no need to draw a distinction

between linear TV channels and their non-linear ancillary services.

49

(44) Further, in previous decisions, the Commission examined a number of other

potential additional differentiations, including genre or thematic content (such as

sports, films, general entertainment, news, youth, and others), and ultimately left the

market definition open in these regards.

50

45

Form CO, paragraph 209.

46

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 18.

47

M.7194 - Liberty Global / Corelio / W&W / De Vijver Media, paras. 90-91.

48

M.8785 – The Walt Disney Company / Twenty-First Century Fox, para. 77; Commission decision of 15

June 2018 in Case M.8861 – Comcast / Sky, para. 50; Commission decision of 6 February 2018 in Case

M.8665 – Discovery / Scripps, paras. 19- 20; M.8354 – Fox / Sky, paras. 80- 81.

49

M.7194 - Liberty Global / Corelio / W&W / De Vijver Media, paras. 93-94.

50

M.7194 - Liberty Global / Corelio / W&W / De Vijver Media, para. 98; Commission decision of 18 July

2007 in Case M.4504 – SFR / Télé 2 France, para. 44; Commission decision of 26 August 2008 in Case

M.5121 - News Corp / Premiere, para. 22.

10

(45) Last, in the recent Telia Company / Bonnier Broadcasting Holding decision, the

Commission considered that the market for the wholesale supply of TV channels

should not be further segmented according to the type of infrastructure used for the

delivery to the consumer (such as cable, satellite, DTH, digital terrestrial TV and

IPTV) since the competitive condition in the market for the wholesale supply of TV

channels, and any possible segmentation, would be similar irrespective of the

distribution technology and type of infrastructure used for the distribution of the TV

channels.

51

4.2.1.2. The Notifying Parties’ view

(46) The Notifying Parties do not consider it appropriate to make any further distinctions

within the market for the wholesale supply of TV channels, be it between FTA and

pay TV, between linear TV channels and non-linear ancillary services, by genre, or

by means of transmission.

52

Regardless, the Notifying Parties submit that it is not

necessary for the Commission to reach a conclusion on this, as the Transaction

would not raise any competition concern under any plausible market definition.

53

4.2.1.3. The Commission’s assessment

(47) The Commission focused its investigation in relation to this market on Denmark,

given that only the Danish wholesale supply of TV channels market is affected (see

below Section 5.2). With reference to whether FTA TV and pay TV channels form

separate relevant product markets, respondents to the market investigation provided

a mixed reply.

54

In particular, some respondents noted that there is no real FTA TV

market in Denmark, with only the public service broadcaster still offering FTA TV

channels.

(48) Similarly, within pay TV channels, the results of the market investigation are

inconclusive regarding whether it remains appropriate to segment the wholesale

supply of TV channels between FTA and basic pay TV channels on the one hand,

and premium pay TV channels on the other hand in Denmark.

55

In particular, one

respondent remarks that “premium” pay TV channels only have a minor presence in

Denmark, with a decreasing value in a TV market affected by streaming services

such as Netflix and HBO.

(49) With reference to a segmentation by genre, including the specific genre of kids’ TV

channels,

56

the results were similarly inconclusive. While a number of respondents

considered that thematic pay TV channels of a given genre could be alternatives

(rather than complements) to thematic pay TV channels of a different genre,

respondents also indicated that they did not consider a market segmentation by genre

51

Commission decision of 12 November 2019 in Case M.9064 - Telia Company / Bonnier Broadcasting

Holding, para. 162.

52

Form CO, para. 222.

53

Form CO, para. 228.

54

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to question 7.

55

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to question 8.

56

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to question 10.

11

appropriate. Respondents noted that TV distributors tend to demand a variety of

genres to ensure an attractive global offering.

57

(50) With regard to a possible distinction between linear TV channels and their ancillary

services, the results of the market investigation did not provide reasons to depart

from the Commission's previous approach, as the results of the market investigation

indicated that ancillary services (e.g., TVE, catch-up, PVR, etc.) are associated to

TV channels in Denmark in order to complement the TV offering and enhance the

viewer experience of traditional linear channels.

58

(51) Most of the respondents consider that the market for the wholesale supply of TV

channels should not be further segmented according to the distribution forms (e.g.,

cable, IPTV, satellite, terrestrial, or OTT).

59

(52) In light of the above, the Commission considers that, for the purpose of this decision

and in line with its decisional practice, the relevant product market is the market for

the wholesale supply of TV channels, including their ancillary services and covering

all types of infrastructure. The question whether this product market can be further

distinguished (i) by genre, (ii) by distribution technology, or between (iii) FTA and

pay TV channels, and in turn whether pay TV channels can be further split into basic

pay and premium pay TV channels, or (iv) FTA and basic pay TV channels on the

one hand, and premium pay TV channels on the other hand can be left open since the

Transaction does not raise serious doubts as to its compatibility with the internal

market or the functioning of the EEA Agreement under any such plausible product

market definitions.

4.2.2. Relevant geographic market

4.2.2.1. The Commission’s previous practice

(53) In previous decisions, the Commission found the market for the wholesale supply of

TV channels to be either national in scope,

60

sub-national,

61

or delineated by

linguistically homogeneous areas encompassing more than one EU Member State.

62

4.2.2.2. The Notifying Parties’ view

(54) The Notifying Parties consider that the appropriate geographic market is national in

scope, given that the majority of wholesale supply relationships are concluded at the

national level, with some exceptions in which the retail AV service provider obtains

broadcasting rights to multiple countries/regions with a common language.

63

Regardless, the Notifying Parties submit that it is not necessary for the Commission

57

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to question 9.

58

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to questions 13-14-15.

59

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to question 16.

60

M.6369 – HBO / Ziggo / HBO Nederland, para. 39; Commission decision of 15 April 2013 in Case

M.6880 – Liberty Global / Virgin Media, para. 41; Commission decision of 10 October 2014 in Case

M.7000 – Liberty Global / Ziggo, para. 98; M.9299 – Discovery / Polsat / JV, para. 70.

61

M.7194 Liberty Global / Corelio / W&W / De Vijver Media, para. 106 onwards.

62

M.8354 – Fox / Sky, para. 90 onwards.

63

Form CO, para. 230.

12

to reach a conclusion, as the Transaction will not raise any competition concern

under any plausible geographic market definition.

64

4.2.2.3. The Commission’s assessment

(55) All respondents to the market investigation distribute their wholesale TV channels to

retail RV/AV service providers in Denmark on a national basis. One respondent

clarifies that this reflects the retailers’ scope of operations and the homogenous

linguistic region.

65

(56) In light of the above, for the purpose of this decision, the Commission concludes that

in Denmark the relevant geographic market for the wholesale supply of TV channels,

including all its possible sub-segments, is national in scope.

4.3. Retail supply of AV services to end customers

4.3.1. Relevant product market

4.3.1.1. The Commission’s previous practice

(57) The Commission has in previous cases identified two relevant product markets

within the retail supply of AV services, namely (i) FTA TV services and (ii) pay TV

services,

66

but in other more recent cases has ultimately left open the product market

definition.

67

The Commission has also considered whether the market for retail pay

TV services should be distinguished further according to: (i) premium pay TV vs.

basic pay TV services;

68

(ii) distribution technologies (e.g. cable, satellite, or

terrestrial);

69

and (iii) linear vs non-linear AV services;

70

but ultimately left the

market definition open.

71

(58) With reference to distribution technologies, in Liberty Global / Corelio / W&W / De

Vijver Media the Commission recognised that at least retail AV services offered over

cable and IPTV form part of the same relevant product market.

72

In the recent case of

Telia Company / Bonnier Broadcasting Holding,

73

the Commission concluded that

all the different distribution technologies are part of the same product market.

64

Form CO, para. 233.

65

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to question 16.

66

M.4504 – SFR/Télé 2 France, para. 45.

67

M.8785 - The Walt Disney Company / Twenty-First Century Fox, para. 98; Commission decision of 8

October 2018 in Case M.8842 – Tele2 / ComHem, para. 37; M.7000 – Liberty Global / Ziggo, para. 137;

M.8665 – Discovery / Scripps, para. 33; M.8354 – Fox / Sky, para. 101; Commission decision of 3 August

2016 in Case M.7978 – Vodafone / Liberty Global / Dutch JV, para. 56; M.7194 - Liberty Global / Corelio

/ W&W / De Vijver Media, para. 152.

68

M.7194 - Liberty Global / Corelio / W&W / De Vijver Media, para. 119.

69

M.7194 - Liberty Global / Corelio / W&W / De Vijver Media, para. 127; M.5121 - News Corp / Premiere,

para. 22; Commission decision of 21 December 2010 in Case M.5932 - News Corp / BskyB, para. 105;

M.7000 - Liberty Global / Ziggo, para. 113.

70

M.7194 - Liberty Global / Corelio / W&W / De Vijver Media, para. 124; M.5121 - News Corp / Premiere,

para. 21; M.7000 - Liberty Global / Ziggo, paras. 109–110.

71

M.8785 - The Walt Disney Company / Twenty-First Century Fox, para. 93 and case law cited; M.9299 –

Discovery / Polsat / JV, para. 82.

72

M.7194 – Liberty Global / Corelio / W&W / De Vijver Media, para. 126.

73

M.9064 - Telia Company / Bonnier Broadcasting Holding, para. 195.

13

(59) With reference to linear and non-linear services, in the past the Commission noted

that non-linear services have gradually been integrated to complement TV

broadcasters' and retail AV service providers' offerings and enhance the consumer's

experience of linear TV channels. Most recently, in NENT / Telenor, the

Commission indicated that linear and non-linear AV services are increasingly

regarded as substitutable.

74

(60) Furthermore, the question whether premium and basic pay TV services constitute

separate product markets has ultimately been left open in recent cases.

75

4.3.1.2. The Notifying Parties’ view

(61) The Notifying Parties consider that the Transaction should be assessed on the basis

of a single market for the retail supply of AV services, which encompasses all AV

services (including linear and non-linear, FTA and pay TV, basic and premium),

delivered through all distribution technologies, including OTT.

76

(62) More specifically, as regards linear and non-linear services, the Notifying Parties

submit that customers view these services as substitutable and that data demonstrates

that viewing time is shifting from linear to non-linear services, especially in

countries with the highest levels of penetration of OTT platforms. Furthermore,

linear and non-linear services are being made available to consumers under a single

subscription, and much of the content available on linear TV channels is also

available on VOD services.

77

(63) As regards the distribution technology, the Notifying Parties submit that content

distributed via different retail infrastructures is broadly substitutable from a

consumer perspective. The Notifying Parties point out that distribution technologies

are increasingly converging given the rapid development of internet that enables

consumers to receive video signal of comparable quality to satellite or cable service

via OTT platforms.

78

(64) Furthermore, with reference to premium and basic pay TV services, the Notifying

Parties consider that there is no relevant difference between basic and premium

content, regardless of the type of retail AV service of the commissioning/acquiring

service provider.

79

(65) In any case, the Notifying Parties submit that, for the purpose of this case, it is not

necessary for the Commission to reach a conclusion on the precise product market

definition for the retail supply of AV services, as the Transaction will not raise any

competition concerns under any plausible market segmentation.

80

74

Commission decision of 30 April 2020 in Case M.9604 – NENT / Telenor / JV, para. 184.

75

See e.g. M.9799 – Discovery / Polsat / JV, para. 82.

76

Form CO, paragraph 254.

77

Form CO, paragraphs 257 – 259.

78

Form CO, paragraph 255.

79

Form CO, paragraph 260.

80

Form CO, paragraph 261.

14

4.3.1.3. The Commission’s assessment

(66) The Commission focused its investigation in relation to this market on Denmark and

Spain given that both the Danish and Spanish retail supply of AV services markets

are relevant (see below Section 5.2). Respondents to the market investigation agree

that there is a relevant product market for the retail supply of AV content.

81

(67) With reference to the segmentation between FTA TV channels and pay TV

channels, the majority of respondents to the market investigation consider that the

retail supply of FTA TV channels and the retail supply of pay TV channels do not

form separate product markets. Respondents pointed out that FTA channels, pay TV

channels and internet platforms compete with each other in the eyes of consumers

and one respondent specified that differences in revenue models between FTA

channels, pay TV channels but also internet subscription platforms are blurring. One

respondent submitted that the distinction between FTA and pay TV channels is

relevant in the case of sports content.

82

(68) The majority of respondents consider that the possible market for the retail supply of

pay TV channels should not be separated between basic pay TV and premium pay

TV channels. More specifically, all respondents in Denmark replied that basic and

premium pay TV channels are seen as an alternative, although a number of

respondents answered that they do not know.

83

Replies by market participants in

Spain are less clear-cut, as the majority replied that these channels are actually

complements. However, most of the explanations provided suggest that basic and

premium pay TV channels do not form separate product markets, and that the

difference between the two has been blurring. One respondent argued that whether a

difference exists depends on how retail suppliers package their channels, as premium

channels need to be offered in addition to a basic pay TV channel subscription.

84

All

respondents submit that it would not be accurate to distinguish between the retail

supply of (i) FTA channels and basic TV channels on the one hand and (ii) premium

pay TV channels on the other.

85

(69) With reference to a distinction within pay TV channels between linear and non-

linear pay TV channels, the majority of respondents to the market investigation

consider that this segmentation is not accurate. More specifically, the majority of

respondents in Denmark replied that linear and non-linear pay TV channels do not

form separate product markets.

86

In Spain, however, only a small majority of

respondents believe that linear and non-linear TV channels compete with each other

for consumers’ viewership. In this regard, one respondent pointed out that pay TV

providers increasingly integrate non-linear elements alongside linear services, and

81

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 6; Q2 –

Questionnaire to market participants in the AV sector (Denmark), replies to question 6.

82

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 12; Q2 –

Questionnaire to market participants in the AV sector (Denmark), replies to question 31.

83

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to question 18.

84

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to questions 13.

85

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 13.2; Q2 –

Questionnaire to market participants in the AV sector (Denmark), replies to question 18.2.

86

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to question 19.

15

that pay TV services commonly acquire linear and non-linear content rights together

and incorporate them into the same subscription service.

87

(70) All respondents to the market investigation consider that non-linear pay AV services

offered by local OTT SVOD platforms and by international OTT SVOD

platforms are alternatives and therefore do not form separate product markets.

88

Overall, respondents pointed to the fact that there is intense competition between

local and international VOD platforms, as they both contend for the same local

audiences to which they tailor their content.

(71) Similarly, all respondents to the market investigation submit that, with reference to

advertising founded AV services, FTA linear channels and VOD non-linear

services do not form separate product markets. In general, respondents submit that

consumers do not differentiate on this basis and that the content on FTA channels

and VOD platforms is equivalent.

89

(72) With reference to the different distribution technologies, the majority of

respondents to the market investigation consider different distribution technologies

for AV content as alternative to each other, although many respondents answered

that they do not know.

90

In this regard, the majority of respondents are generally

aligned in considering that, from a demand-side perspective, consumers view

different transmission technologies as substitutable. Furthermore, one respondent

specified that, from a supply-side perspective, certain retailers use multiple

distribution technologies to provide services to consumers.

(73) In light of the above, the Commission considers that, for the purpose of this decision,

there exists a relevant product market for the retail supply of AV services, separate

from the production and supply of AV content and the wholesale supply of TV

channels. However, the Commission considers that the question whether within this

product market a further distinction can be made (i) between FTA TV channels and

pay TV channels; (ii) between basic and premium pay TV channels; (iii) between

linear and non-linear TV channels (and further sub-segmentations thereof); or (iv)

between different distribution technologies, can be left open, since the Transaction

does not raise serious doubts as to its compatibility with the internal market or the

functioning of the EEA Agreement under any such plausible product market

definitions.

4.3.2. Relevant geographic market

4.3.2.1. The Commission’s previous practice

(74) The Commission has in the past considered that the geographic scope of the market

for the retail provision of AV services could be either (i) national, since providers of

87

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to questions 14.

88

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 15; Q2 –

Questionnaire to market participants in the AV sector (Denmark), replies to question 20.

89

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 16; Q2 –

Questionnaire to market participants in the AV sector (Denmark), replies to question 21.

90

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 17; Q2 –

Questionnaire to market participants in the AV sector (Denmark), replies to question 22.

16

retail AV services compete on a nation-wide basis; or (ii) limited to the coverage

area of each respective cable operator.

91

4.3.2.2. The Notifying Parties’ view

(75) The Notifying Parties consider that the geographic scope of the market for the retail

provision of AV services is national. According to the Notifying Parties, the

Commission's previous findings regarding the geographic market for retail AV

services on the basis of the "coverage area of each cable operator" have been based

on the premise that the distributor was acting via its regional infrastructure, e.g., a

cable network. For content delivered directly to consumers over the open internet,

these restrictions of coverage area are not applicable. In this regard, the Notifying

Parties note that there is an increasing number of SVOD players such as Disney+,

Netflix and Amazon Prime Video, which are providing their retail services on a

national basis.

92

(76) In any case, the Notifying Parties consider that, for the purpose of this case, it is not

necessary for the Commission to reach a conclusion as to the precise geographic

scope of the market for the provision of retail AV services, as the Transaction would

not result in a significant impediment of effective competition under any possible

geographic market definition.

93

4.3.2.3. The Commission’s assessment

(77) Almost all respondents to the market investigation consider that the relevant

geographic market for the retail supply of AV services is national in scope.

94

One

respondent submitted that, although some OTT broadcasters are present on a

worldwide basis, content licensed for a specific country can’t be broadcasted outside

of such country.

(78) In light of the above, for the purpose of this decision, the Commission concludes that

in Spain and Denmark the relevant geographic market for the retail supply of AV

services, including all its possible sub-segments, is national in scope.

4.4. Sale of advertising space

4.4.1. Relevant product market

4.4.1.1. The Commission’s previous practice

(79) The Commission has in previous cases established a distinction between (i) online

and (ii) offline advertising, on the basis of specificity (i.e. the ability to reach a more

targeted audience) and pricing model.

95

Within offline advertising, the Commission

91

M.8785 - The Walt Disney Company / Twenty-First Century Fox, para. 100; M.9799 – Discovery / Polsat

/ JV, para. 86.

92

Form CO, paragraphs 263 – 265.

93

Form CO, paragraph 266.

94

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 19; Q2 –

Questionnaire to market participants in the AV sector (Denmark), replies to question 32.

95

Commission decision of 9 September 2014 in Case M.7288 – Viacom / Channel 5Broadcasting, para. 35.

17

has distinguished separate markets for (i) the sale of advertising on TV channels and

(ii) for the sale of advertising in newspapers.

96

(80) However, in the market investigation in Viacom / Channel 5 respondents pointed out

that the line between online advertising and TV advertising is becoming increasingly

blurred.

97

The Commission has never assessed whether advertising placed on OTT

and VOD services belongs to the market for online or offline advertising.

4.4.1.2. The Notifying Parties’ view

(81) The Notifying Parties consider that there is only one market for all TV advertising.

In this regard, the Parties submit that online advertising exercises an increasing

competitive constrain on advertising through OTT VOD platforms and linear TV

channels.

98

(82) Further, the Notifying Parties consider that advertising on OTT VOD platforms

forms part of the same market as advertising via linear TV channels, and that there is

no need to distinguish between advertising on FTA and pay TV channels.

99

(83) In any case, the Notifying Parties submit that, for the purpose of this case, the exact

product market definition for the sale of advertising space can be left open as the

Transaction would not result in a significant impediment to effective competition

under any possible product market definition.

100

4.4.1.3. The Commission’s assessment

(84) The Commission focused its investigation in relation to this market on Denmark

given that only the Danish advertising market is relevant (see below Section 5.2).

The majority of respondents to the market investigation submit that online and

offline advertising do not form separate relevant product markets.

101

In this regard,

some respondents consider that the advertising market is converging and such

distinction is no longer relevant as it no longer reflects the mechanisms of the

market. Another respondent submits that offline and online advertising are very

similar from a customer perspective. Along the same lines, a respondent specified

that the rise of non-linear VOD viewing is making the boundaries between online

and offline advertising more blurred and that constraint from online advertising is

increasing across all forms of advertising media. However, on the other hand, one

respondent considers that TV and digital advertising have different pricing

mechanisms and different levels of reach.

102

(85) As regards the possible market for online advertising, a limited number of

respondents consider that advertising placed on OTT VOD platforms would

96

Commission decision of 7 July 2005 in Case M.3817 – Wegener / PCM / JV, para. 27; Commission

decision of 1 February 1999 in Case M.1401 – Recoletos / Unedisa, paras. 26-28; M.5932 - News Corp /

BSkyB, paras. 265 and 266; M.8665 - Discovery / Scripps, para. 40.

97

M.7288 – Viacom / Channel 5Broadcasting, paras. 38 and 40.

98

Form CO, paragraph 283.

99

Form CO, paragraph 284.

100

Form CO, paragraph 287.

101

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to question 24.

102

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to question 24.1.

18

belong to the market for online advertising, assuming that such a market exists as a

distinct product market, although many respondents answered that they do not

know.

103

(86) With reference to a separation of advertising according to the media channel, all

respondents consider that it is not appropriate to distinguish the market for the

supply of advertising spaces according to the media channel used (e.g., newspapers,

radio, TV, Internet). Respondents consider that historic segmentations on the market

are no longer accurate as today consumers allocate their attention across different

digital media platforms on the basis of the type of content made available to them.

104

(87) With reference to both offline TV advertising and online advertising, all respondents

consider that advertising space sold directly by the publisher (e.g., the OTT

platform or the TV channel) and advertising space sold through an intermediary

do not form separate product markets, although many respondents answered that

they do not know.

105

(88) Finally, the results of the market investigation are inconclusive as to whether, within

online advertising, search and non-search advertising form separate relevant

product markets,

106

although all respondents consider that, should non-search

advertising form a separate relevant product market, it would not be appropriate to

further distinguish between non-search video advertising and other types of non-

search advertising.

107

(89) The Commission considers that, for the purpose of this decision, the question

whether within the relevant product market for the sale of advertising space should

be a further distinction should be made between: (i) online and offline advertising;

(ii) the different media channels; (iii) advertising sold directly by the publisher or

through an intermediary; and (iv) online search and non-search advertising, can be

left open, since the Transaction does not raise serious doubts as to its compatibility

with the internal market or the functioning of the EEA Agreement under any such

plausible product market definitions.

4.4.2. Relevant geographic market

4.4.2.1. The Commission’s previous practice

(90) In previous decisions, the Commission has considered that the market for the supply

of TV advertising, including the possible separate markets outlined above, is

national in scope.

108

4.4.2.2. The Notifying Parties’ view

(91) The Notifying Parties agree with previous Commission’s decisions and consider that

the market for the supply of TV advertising is national in scope.

109

In any case, the

103

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to question 25.

104

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to question 24.

105

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to questions 26 and 27.

106

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to question 28.

107

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to question 29.

108

Among other cases, M.7288 – Viacom / Channel 5Broadcasting, para. 45.

19

Notifying Parties consider that, for the purpose of this case, it is not necessary for the

Commission to reach a conclusion as to the precise geographic scope of the market

for the sale of advertising space, as the Transaction would not result in a significant

impediment of effective competition under any possible geographic market

definitions.

4.4.2.3. The Commission’s assessment

(92) The majority of respondents to the market investigation submit that they buy/sell TV

advertising space on a national basis. In general, respondents submit that they

operate advertising specifically targeted at the audience of the relevant country.

110

(93) In light of the above, for the purpose of this decision, the Commission considers that

the relevant geographic market for the sale of advertising space, including all its

possible sub-segments, is national in scope.

5. COMPETITIVE ASSESSMENT

5.1. Analytical framework

(94) Article 2 of the Merger Regulation requires the Commission to examine whether

notified concentrations are compatible with the internal market, by assessing whether

they would significantly impede effective competition in the internal market or in a

substantial part of it, in particular through the creation or strengthening of a

dominant position.

111

(95) In this respect, a merger may entail horizontal and/or non-horizontal (i.e., vertical or

conglomerate) effects. Horizontal effects are those deriving from a concentration

where the undertakings concerned are actual or potential competitors of each other in

one or more of the relevant markets concerned. Non-horizontal effects are those

deriving from a concentration where the undertakings concerned are active in

different relevant markets. In a case where a merger entails horizontal or non-

horizontal effects, the Commission will appraise these effects in accordance with the

guidance set out in the relevant notices.

112

(96) Horizontal mergers involve companies which are actual or potential competitors of

each other in one or more of the relevant markets concerned. The Horizontal Merger

Guidelines list a number of factors which may influence whether or not significant

horizontal non-coordinated effects are likely to result from a merger, such as the

large market shares of the merging firms, the fact that the merging firms are close

109

Form CO, paragraphs 289 – 290.

110

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to question 33.

111

With regard to the application of the Merger Regulation in the EEA, see Annex XIV to the EEA

Agreement.

112

Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of

concentrations between undertakings ("Non-Horizontal Merger Guidelines"), OJ C 265, 18.10.2008;

Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of

concentrations between undertakings ("Horizontal Merger Guidelines"), OJ C 31, 5.2.2004.

20

competitors, the limited possibilities for customers to switch suppliers, or the fact

that the merger would eliminate an important competitive force.

113

(97) Vertical mergers involve companies operating at different levels of the supply chain.

There are two main ways in which vertical mergers may significantly impede

effective competition: input foreclosure and customer foreclosure.

(98) Input foreclosure may raise competition problems only if it concerns an important

input for the downstream market, and if the combined entity has a significant degree

of market power upstream.

114

In assessing the likelihood of an anticompetitive input

foreclosure strategy, the Commission examines: (i) whether the combined entity

would have the ability to substantially foreclose access to inputs; (ii) whether it

would have the incentive to do so; and (iii) whether a foreclosure strategy would

have a significant detrimental effect on competition downstream.

115

(99) For a transaction to raise customer foreclosure competition concerns, the combined

entity must be an important customer with a significant degree of market power in

the downstream market.

116

In assessing the likelihood of an anticompetitive customer

foreclosure strategy, the Commission examines: (i) whether the combined entity

would have the ability to foreclose access to downstream markets by reducing its

purchases from upstream rivals; (ii) whether it would have the incentive to do so;

and (iii) whether a foreclosure strategy would have a significant detrimental effect

on consumers in the downstream market.

117

(100) In relation to potential cooperative effects, under Article 2(5) of the Merger

Regulation, the Commission takes into account in particular: (i) whether two or more

parent companies retain, to a significant extent, activities in the same market as the

joint venture or in a market which is downstream or upstream from that of the joint

venture or in a neighbouring market closely related to this market; and (ii) whether

the coordination which is the direct consequence of the creation of the joint venture

affords the undertakings concerned the possibility of eliminating competition in

respect of a substantial part of the products or services in question.

5.2. Identification of affected markets

(101) Comcast/Sky and ViacomCBS are active: (i) in the production and supply of

commissioned AV content and in the licensing of pre-produced AV content; (ii) in

the wholesale supply of TV channels; and (iii) in the retail supply of AV services to

end customers. Moreover, Comcast/Sky and ViacomCBS are also active in the sale

of TV advertising space.

118

(102) The JV will be active: (i) in the market for the wholesale supply of TV channels,

where it will wholesale supply Comcast/Sky and ViacomCBS’ TV channels to

MVPD platforms; and (ii) in the market for the retail supply of AV services, where it

113

Horizontal Merger Guidelines, paragraphs 27 and following.

114

Non-Horizontal Merger Guidelines, paragraphs 34-35.

115

Non-Horizontal Merger Guidelines, paragraph 32.

116

Non-Horizontal Merger Guidelines, paragraph 58.

117

Non-Horizontal Merger Guidelines, paragraph 59.

118

Form CO, Table 3.

21

will develop and operate a SVOD streaming service comprising AV services

distributed both directly to consumers and via third-party MVPD platforms.

(103) The Transaction gives rise to the following vertically affected markets.

a) First, the production and supply of pre-produced US film content in Spain

119

,

where Comcast/Sky and ViacomCBS are active, which is upstream from the

retail supply of AV services to end-customers in Spain, where the JV is active.

b) Second, the wholesale supply of pay TV channels in the kids segment in

Denmark, where ViacomCBS is active, which is upstream from the retail supply

of AV services to end-customers in Denmark, where the JV is active.

5.3. Horizontal relationships

(104) The Transaction involves no significant horizontal overlaps between the Parties and

the JV. At the retail level (i.e., the main focus of the JV), there is no horizontal

overlap as Sky has no or minimal activities in the JV EEA Territories, ViacomCBS

has only minor activities in the Nordics through Paramount+, and the JV will have a

modest share of the retail market. At the wholesale level, the JV will be supplying

both Parents' TV channels to third parties in the JV Territories. While the Parties'

activities do overlap in the supply of TV channels, their combined shares are modest,

and in any event below 20%. Therefore, there are no horizontally affected markets.

5.4. Vertical relationships

(105) The Transaction gives rise to two vertically affected relationships, in which the

affected markets are:

c) Sky and ViacomCBS’ supply of pre-produced US film content in Spain

(upstream) (Sky: [20-30]%, ViacomCBS: [5-10]%)

120

for the JV’s retail supply

of AV services in Spain (downstream) (JV: […]% in 2024

121

, Sky: [0-5]%,

ViacomCBS: [0-5]%

122

); and

d) ViacomCBS’s wholesale supply of pay TV channels in the kids segment in

Denmark (upstream) (ViacomCBS: [60-70]%)

123

for the JV’s retail supply of AV

119

The Commission considers that, for the purpose of this decision, the production and supply of US film

content constitutes the narrowest possible segment in which the activities of the Notifying Parties overlap

giving rise to affected markets. First, in relation to the distinction between premium and non-premium US

film content, the Notifying Parties explained that whether specific content is “premium” or not, can’t be

predicted when it is produced. It essentially depends on the success with which a piece will have sold, and

its commercial value will change over time. [Reference to the Parties’ commercial strategy] Second, in

relation to the distinction between US film content based on the exhibition windows, the Notifying Parties

explained that the film content that they license is the same regardless of which specific exhibition

window it is licensed in (Form CO, paragraph 201).

120

Form CO, Annex B.1.2.2., Table 14.5 (Spain, 2020 revenue shares for pre-produced US film content).

121

Notifying Parties’ response to the Commission’s RFI No 5 of 29 October 2021. The JV will be a new

entrant, but is expected to hold […]% in Spain and […]% across all JV territories in the total SVOD

segment (the JV will be a SVOD only service) in 2024. The Notifying Parties have estimated the projected

total market and JV SVOD subscribers for Spain using data regarding the population for Spain.

122

Form CO, Annex B.1.2.5, Table 14.1 (Spain, 2020 revenue shares for total pay TV segment).

123

Form CO, Annex B.1.2.3., Table 4.7 (Denmark, 2020 revenue shares for pay TV kids channels).

22

services to end-customers in Denmark (downstream) (JV: […]% in 2024

124

, Sky:

[0-5]%, ViacomCBS: [0-5]%

125

).

(106) The Notifying Parties’ combined market shares in the upstream market for the

supply of pre-produced US film content in Spain are above 30% ([30-40]%).

Likewise, the Notifying Parties’ combined market shares in the upstream market for

the supply of pay TV channels in the kids segment in Denmark are above 30% ([60-

70]%).

(107) Therefore, the Commission has assessed the risk of (i) foreclosure of competing

suppliers of retail AV services (downstream) from accessing Comcast/Sky and

ViacomCBS’ supply of pre-produced US film content in Spain (input foreclosure);

and (ii) foreclosure of competing suppliers of retail AV services (downstream) from

accessing ViacomCBS’s wholesale pay TV channels in the kids segment in

Denmark (input foreclosure).

5.4.1. Possible foreclosure of competing suppliers of retail AV services in Spain

(downstream) from accessing Comcast/Sky and ViacomCBS’ pre-produced US film

content in Spain (upstream)

5.4.1.1. The Notifying Parties’ views

(108) The Notifying Parties submit that, post-Transaction, the JV will not have the ability

or incentive to foreclose competing retail suppliers of AV services from accessing

Comcast/Sky and ViacomCBS’ pre-produced US film content in Spain.

(A) Ability to engage in input foreclosure

(109) The Notifying Parties submit that the JV will not have the ability to engage in a

successful input foreclosure strategy because Comcast/Sky and ViacomCBS do not

have a significant degree of market power in the market for the supply of pre-

produced US film content in Spain.

(110) First, the Notifying Parties note that Comcast/Sky and ViacomCBS’ combined

market share is only slightly above 30% in 2020, and that there are significant

alternative suppliers of US film content in Spain, including studios of a similar size

such as Warner Bros, Walt Disney Studios/Twentieth Century Fox and Sony.

Moreover, the Notifying Parties point out that their combined market share in 2019

and the first half of 2021 is substantially lower ([10-20]% and [10-20]%

respectively).

126

According to the Notifying Parties, this is due to the endemic

volatility of revenue shares from year to year in the market at hand, which is

inconsistent with a position of market power.

127

Therefore, retailers of AV content

124

Notifying Parties’ response to the Commission’s RFI No 5 of 29 October 2021. See also footnote 38

above. In Denmark, the JV is expected to hold […]% in the total SVOD segment in 2024. The Notifying

Parties have estimated the projected total market and JV SVOD subscribers for Denmark using data

regarding the number of broadband households for Denmark.

125

Form CO, Annex B.1.2.5, Table 4.1 (Denmark, 2020 revenue shares for total pay TV segment).

126

Form CO, paragraph 360.

127

Form CO, paragraph 360 and footnote 275. The Notifying Parties submit that this volatility is due to

different studios having successful film releases at different points in time.

23

would continue to have a wide variety of alternative choice for US film content in

Spain.

(111) Second, the Notifying Parties submit that US film content would be an overly

narrow segment to consider for estimating whether the Parties enjoy a significant

degree of market power. US film content constitutes only one of the many content

types that attract viewers, such that it plays a limited role in shaping end consumers’

choice. In this regard, the Notifying Parties consider that they could not exploit their

market position on US film content, because it is not an important input for retailers

of AV services in Spain and it is not determinant of end-consumers’ choice of

retailer.

128

(112) Therefore, the Notifying Parties consider that the JV would not have the ability to

foreclose Comcast/Sky and ViacomCBS’ pre-produced US film content in Spain.

(B) Incentive to engage in input foreclosure

(113) As regards the incentive to engage in input foreclosure, the Notifying Parties note

that, as part of the Transaction, Comcast/Sky and ViacomCBS [details of licensing

arrangements].

129

(114) Therefore, according to the Notifying Parties, there is no need to assess whether

Comcast/Sky and ViacomCBS would have the incentive to foreclose their pre-

produced US film content by rendering it unavailable to the JV’s competitors.

130

(C) Impact on effective competition

(115) The Notifying Parties further submit that a foreclosure of their pre-produced US film

content in Spain would not cause any anticompetitive effects vis-à-vis retail suppliers

of AV content.

(116) First, the Notifying Parties submit that attractiveness of film content for retail

suppliers of AV services can be measured by box office success, which solely

depends on the particular films released in cinemas in the relevant year and not on

the identity of the producing studio. The Notifying Parties note that there is nothing

unique about their US film content, or about Hollywood studios’ content more

generally, as any given year non-Hollywood studios produce films which are as

popular or more popular than the content produced by Comcast/Sky or

ViacomCBS.

131

(117) Second, the Parties will face strong competition in the downstream market for the

retail supply of AV content from vertically integrated players such as Disney+,

Amazon Prime Video and Netflix, who produce their own content and have

committed significant resources to this end. Therefore, these players do not depend

on the supply of pre-produced US film content by Comcast/Sky and ViacomCBS.

Moreover, even downstream players that acquire US film content from the Notifying

128

Form CO, paragraph 360.

129

Form CO, paragraph 365.

130

Form CO, paragraph 366.

131

Form CO, paragraph 367.

24

Parties do not depend on their input, as Comcast/Sky and ViacomCBS’ US film

content [scale of the Parties' sales to their customers].

132

(118) Third, the Notifying Parties point out that exclusive licensing of US film content is

common practice by producing studios. [Details of licensing arrangements].

(119) Fourth, the Notifying Parties note that the increasing trend of multi-homing by

consumers means that they would not cancel their subscription with a particular

provider and divert their subscription to the JV’s offering simply because a certain

proportion of US films are no longer available on the previous provider’s platform.

On the contrary, consumers may continue their current subscription in addition to the

subscription to the JV’s offering.

133

(120) Therefore, the Notifying Parties consider that, even if they were to engage in input

foreclosure with regard to Comcast/Sky and ViacomCBS’ US film content, such

practices would not have any impact on competition in the downstream market for

the retail supply of AV services.

5.4.1.2. Commission’s assessment

(121) For the reasons set out below, the Commission considers that the Transaction does

not lead to credible input foreclosure concerns in the downstream market for the

retail supply of AV services in Spain, regardless of the precise product and

geographic market definitions retained (see Sections 4.1 and 4.3 above).

(A) Ability to engage in input foreclosure

(122) The Commission considers that, although Sky and ViacomCBS would be able to

license their pre-produced US film content to the JV on an exclusive basis, post-

Transaction the Notifying Parties will not have the ability to engage in a successful

input foreclosure strategy in Spain, because they will not have a significant degree of

market power upstream and their US film content does not represent a sufficiently

important input.

(123) First, the Commission notes that Comcast/Sky and ViacomCBS’ 2020 combined

market shares in the possible relevant market for the production and supply of pre-

produced US film content in Spain are just above 30% ([30-40]%), with a modest

increment of [5-10]%. Moreover, a number of alternative production studios offer

pre-produced US film content in competition with the Notifying Parties, including

major Hollywood studios. In this regard, the majority of respondents to the market

investigation indicate that the level of competition in the market for the production

and licensing of AV content in Spain is very high or high.

134

Therefore, the

Commission considers that, post-Transaction, competing retail suppliers of AV

services in Spain would continue to have access to a variety of alternative choices

for pre-produced US film content.

(124) Second, the Commission considers that pre-produced US film content offered by the

Notifying Parties is not particularly strategic for retail suppliers of AV services as

132

Form CO, paragraph 367.

133

Form CO, paragraph 367

134

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 22.

25

compared to the US film content offered by other studios. Although the majority of

respondents to the market investigation consider that US film content in general is

relevant for the attractiveness of an AV offering to consumers

135

, the market

investigation also indicates that the US films library licensed by Comcast/Sky and

ViacomCBS is not particularly important for the competitiveness of retail AV

services.

136

(125) In this regard, a small majority of respondents submit that, should the Notifying

Parties stop licensing their US film content, they would be able to license other US

film content from alternative suppliers, but such alternative content would not

entirely replicate the present arrangements.

137

However, the Commission notes that,

as explained by the Notifying Parties

138

, a number of retail suppliers of AV services

are independent from Comcast/Sky and ViacomCBS’ offering of US films.

Moreover, retailers that purchase this content from the Notifying Parties are not

reliant on them to an extent greater than their market share in the possible market for

the production and supply of US film content

139

(as indicated in paragraphs (105)-

(106)), and would therefore be able to complement their retail offering with US films

produced by other studios. Furthermore, the Commission notes that the success of

even major studios varies and that market shares fluctuate as they depend on the

consumers’ reception of the particular films released in the reference year.

140

(126) Third, the Commission considers that the supply of pre-produced US film content

amounts to a very narrow market representing only one of the different types of

content that retail suppliers of AV services offer in order to attract viewers to their

platforms. In this regard, a number of respondents to the market investigation

explained that US films usually contribute to build a successful portfolio of content,

but retail providers of AV services seek to secure a variety of different types of AV

content in order to maximize the attractiveness of their platform vis-à-vis consumers

and reach a wider audience.

141

(127) [Confidential information from the Parties' internal documents].

142

(128) Last, the Commission notes that exclusive licensing of US film content is common

across suppliers of AV content in Spain, as indicated by all respondents to the

market investigation.

143

A number of attractive platforms including Netflix, Amazon

Prime Video, HBO and Disney+ compete for consumers’ attention in the

135

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 28.

136

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 27.

137

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 29.

138

Form CO, paragraph 367.

139

Form CO, paragraph 367.

140

Form CO, paragraph 360 and footnote 275. The Notifying Parties explained that there is significant

volatility in production studios’ revenue shares, as these studios release successful films at different points

in time. For example, Warner Bros’ share in the US films sub-segment jumped from approximately [20-

30]% in 2020 to approximately [40-50]% in the first half of 2021 due to successful releases such as

Godzilla vs Kong, The Conjuring: The Devil Made Me Do it, Wonder Woman 1984 and Mortal Kombat.

141

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 28.1.

142

Notifying Parties’ internal documents, [confidential reference to internal document].

143

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 21.

26

downstream market for the retail supply of AV services.

144

Such platforms also rely

on exclusive content to boost their competitiveness

145

, and no respondents to the

market investigation indicated that this practice has led to the exit of competitors

from the downstream market so far. Therefore, [Parties’ business strategy], the

Notifying Parties are unlikely to have the ability to successfully foreclose competing

retail suppliers of AV services.

(129) Therefore, for the reasons set out above, the Commission considers that the Parties

would not have the ability to engage in a successful input foreclosure strategy with

regard to Comcast/Sky and ViacomCBS’ pre-produced US film content in Spain.

(B) Incentive to engage in input foreclosure

(130) The Commission notes that the conditions for a successful input foreclosure strategy

to occur are cumulative. Since the Commission concluded that the Parties would not

have the ability to engage in a successful input foreclosure, the Commission

considers that the Parties’ incentive to foreclose competing suppliers of retail AV

services from accessing Comcast/Sky and ViacomCBS’ pre-produced US film

content in Spain is not decisive. Therefore, the Commission does not have to take a

position on the Parties’ incentive to engage in input foreclosure.

(131) For the sake of completeness, the Commission notes that the JV will acquire

broadcasting rights for pre-produced AV content from each of Comcast/Sky and

ViacomCBS, [details of licensing arrangements].

146

[details of licensing

arrangements].

147

(C) Impact on effective competition

(132) The Commission considers that the Parties will not have the ability to engage in a

successful input foreclosure strategy. In any event, a hypothetical input foreclosure

strategy from the Parties, even if it could impact some retail suppliers of AV

services, would not have an overall detrimental impact on effective competition in

the market for the retail supply of AV services in Spain. Therefore, even if the

Parties were to foreclose some competing retail suppliers of AV content from

accessing Comcast/Sky and ViacomCBS’ pre-produced US film content, this would

not have a detrimental impact on effective competition in the downstream market for

the retail supply of AV services in Spain.

(133) First, the Commission considers that there are sufficient alternatives for the supply

of US film content in Spain. In particular, as indicated in paragraph (123) above, a

number of other US production studios offer US film content comparable to that of

the Notifying Parties, including major Hollywood studios such as Warner Bros, Walt

Disney Studios/Twentieth Century Fox and Sony.

144

Form CO, paragraph 367; see also Q1 – Questionnaire to market participants in the AV sector (Spain),

one competitor’s reply to question 32.

145

Form CO, paragraph 367: for example, Netflix has recently entered into a five-year streaming deal with

Sony whereby it will acquire exclusive rights to Sony’s films once they leave theatres and premium VOD

services.

146

Form CO, paragraph 176.

147

Form CO, paragraphs 358 and 367.

27

(134) Second, the Commission notes that a number of competing retail providers of AV

services such as Netflix, Amazon Prime Video, Disney+ and HBO do not depend on

US film content supplied by the Notifying Parties, as they are vertically integrated

players that produce their own US films.

148

(135) Third, in any case, while acknowledging that US films in general are important for

the purpose of building an attractive AV offering vis-à-vis consumers, the

Commission considers that US films do not constitute per se a sufficiently important

input for the competitiveness of platforms offering AV services at retail level. In this

regard, as noted by the Notifying Parties

149

, non-Hollywood studios regularly

produce film content that is very successful at the box office and that drives success

throughout the entire AV chain, as also specifically pointed out by one respondent to

the market investigation.

150

(136) Therefore, the Commission notes that the Notifying Parties’ [details of licensing

arrangements] licenses of their US film content to the JV is unlikely to have a

significant effect on the ability of rival platforms (both vertically integrated and non-

vertically integrated) to compete.

(137) This conclusion is supported by the results of the market investigation. A majority of

respondents submit that the Transaction would have a neutral impact on their

company.

151

Only one respondent expressed concerns about the general trend of

major producers of AV content creating their own OTT platforms and rendering

access to their AV content, including US films, more difficult and expensive.

152

(138) As regards the impact on the overall market for the retail supply of AV services in

Spain, the results of the market investigation are inconclusive. Most respondents

stated that they do not know what the overall impact will be. A few respondents

consider the impact to be neutral. An equal number of respondents consider that the

Transaction will have a negative impact on the overall market for the retail supply of

AV content.

153

(139) However, it was specified that, although a different alternative would not completely

replicate the current arrangements, there would be alternative suppliers of US film

content in Spain.

154

In any case, as an additional element, some respondents to the

market investigation pointed out that they source content across different genres and

categories to stay attractive

155

and that therefore the success of an AV platform

would not depend solely on US films.

(140) For the reasons set out above, the Commission considers that, even if the Parties had

the ability to engage in a successful input foreclosure strategy by ceasing to supply

their US film content to third-party retail suppliers of AV content, such strategy

148

Form CO, paragraph 367.

149

Form CO, paragraph 367.

150

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 8.2.

151

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 38.

152

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 38.

153

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 39.

154

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 35.1.

155

Q1 – Questionnaire to market participants in the AV sector (Spain), replies to question 27.

28

would not have a detrimental impact on competition in the market for the retail

supply of AV services.

(D) Conclusion

(141) The potential market for the supply of pre-produced US films is the narrowest

possible product market with the largest overlap between the Notifying Parties.

Under any other potential market definition, their combined market shares would be

considerably lower.

(142) In light of the above, the Commission concludes that the Transaction does not raise

serious doubts as to the compatibility with the internal market with respect to

possible input foreclosure practices of retail AV services in Spain (downstream)

from accessing Comcast/Sky and ViacomCBS’ AV content in Spain (upstream)

under any of the alternative product markets for the supply of AV content in Spain.

5.4.2. Possible foreclosure of competing suppliers of retail AV services in Denmark

(downstream) from accessing ViacomCBS’ wholesale pay TV channels in the kids’

segment in Denmark (upstream) (input foreclosure)

(143) Upstream, Comcast/Sky and ViacomCBS will both supply their current pay TV

channels to the JV for wholesale supply in each of the JV EEA Territories.

Downstream, the JV will become responsible for distributing these channels, and

will also be active in the retail supply of AV services.

(144) [Parties' strategic decisions with regard to the JV]. Comcast/Sky does not have any

kids’ channels in Denmark.

5.4.2.1. The Notifying Parties’ views

(145) The Notifying Parties submit that post-Transaction, the Parties will not have the

ability or incentive to foreclose some or all of ViacomCBS’ pay TV kids’ channels

in Denmark. Accordingly, the Notifying Parties also consider there would not be any

plausible negative effect on competition in the downstream retail supply of AV

services in Denmark.

156

(A) Ability to engage in input foreclosure

(146) The Notifying Parties submit that, post-Transaction, the Parties will not have the

ability to engage in a successful input foreclosure strategy.

(147) First, the Notifying Parties submit that ViacomCBS’ market share results from an

unduly narrow market segmentation, which consists only of kids’ pay TV channels

in Denmark and is not a real indicator of market power.

(148) Second, the Notifying Parties consider that kids’ pay TV channels are not an

important input for a retail AV offering in Denmark. Kids’ pay TV channels would

only account for 1% of the overall pay TV audience and would be considered one of

the least important genres from the perspective of end-customers.

156

Form CO, paragraph 317.

29

(149) Third, pay TV retailers possess credible alternatives, including Disney (e.g., Disney

Channel, Disney Junior and Disney XD), WarnerMedia (e.g., Cartoon Network and

Boomerang) as well as FTA channels incorporating similar content.

(150) Therefore, the Notifying Parties argue that the Parties would not have the ability to

foreclose competing retail suppliers of AV services from accessing ViacomCBS’

wholesale kids’ pay TV channels in Denmark.

(B) Incentive to engage in input foreclosure

(151) As regards incentives, the Notifying Parties submit that, post-Transaction, there is no

prospect that an input foreclosure strategy would be successful.

(152) First, even if pay TV retailers were no longer able to carry ViacomCBS’ kids’ pay

TV channels, this is unlikely to result in significant amounts of end-customers

switching away from these retailers because: (i) kids’ pay TV channels do not play a

significant role in shaping the end-customers’ choice at the retail level; (ii) retailers

have credible alternative options (e.g., Disney and Warner Media); and (iii) retailers

can improve other aspects of their offerings (e.g., content/channels carried, home

broadband and telephone services).

(153) Second, other retailers (not the JV) would most likely capture any switching away

from foreclosed pay TV retailers. JV’s SVOD services will not be the closest

competitors to those linear pay TV retailers that ViacomCBS currently supplies with

kids’ channels.

(154) Third, there are a number of alternative significant suppliers in the SVOD segment

in Denmark including Viasat's Viaplay, Netflix, WarnerMedia's HBO Max, TV2's

TV2 Play, Discovery+, and Disney+.

(155) Fourth, the incentive for ViacomCBS to engage in foreclosure will be significantly

dampened by its only partial stake in the JV (i.e., 50%). [ViacomCBS' sales strategy

and financial information].

(156) Finally, this vertical relationship already exists before the Transaction as

ViacomCBS’ has an existing retail business in Denmark, Paramount+, [Parties'

strategic decisions with regard to the JV].

(157) Therefore, the Notifying Parties conclude that they will not have the incentive to

foreclose competing retail suppliers of AV services from accessing ViacomCBS’

wholesale kids’ pay TV channels in Denmark.

(C) Impact on effective competition

(158) The Notifying Parties submit that, even if they had the ability and incentive to

engage in a successful input foreclosure strategy with regard to ViacomCBS’ pay

TV kids’ channels in Denmark, this would not have anticompetitive effects vis-à-vis

retail suppliers of AV content.

(159) In this regard, as set out above, the Notifying Parties consider that downstream

retailers would have recourse to other upstream providers of kids’ pay TV content if

they wished to include this in their service. Further, the inclusion of kids-specific TV

channels would not be essential to the success of a downstream retail AV service.

30

(160) Therefore, the Notifying Parties note that a potential input foreclosure strategy

would not have any plausible negative effect on competition in the market for the

retail supply of AV services in Denmark.

5.4.2.2. Commission’s assessment

(161) For the reasons set out below, the Commission considers that the Transaction does

not lead to credible input foreclosure concerns in the downstream markets for retail

AV services with regard to the wholesale supply of TV channels, regardless of the

precise product and geographic market definitions retained (see Sections 4.2 and 4.3

above).

(A) Ability to engage in input foreclosure

(162) While ViacomCBS would have the technical ability to implement an exclusivity

strategy with regards to kids’ pay TV channels vis-à-vis rival retail AV suppliers, the

Commission considers that the JV will not have the ability to engage in a successful

input foreclosure strategy.

(163) First, all respondents to the market investigation considered that competition in the

upstream wholesale market for the supply of kids’ channels in Denmark, is indeed

high or very high.

157

ViacomCBS’s kids’ channels in Denmark face strong

competition from at least two significant and credible competitors, i.e., Disney and

WarnerMedia. Disney’s kids’ channels (i.e., Disney Channel, Disney Junior and

Disney XD) account for a combined audience share of [50-60]% and Warner

Media’s kids’ channels, (i.e., Cartoon Network and Boomerang) account for a

combined audience share of [10-20]%.

158

Together, Disney and WarnerMedia also

account for a combined revenue share of [40-50]%.

159

The market investigation also

showed further credible alternatives to ViacomCBS’ kids’ channels in Denmark

exists, including FTA TV channels, such as by the Danish public service

broadcaster, Ramasjang.

160

Ramasjang, in a hypothetical kids TV channel segment

(comprising not only pay TV but also FTA channels), would have an audience share

of approx. [70-80]%.

161

Even if the relevant market would be defined as kids’ pay

TV channels, Ramasjang as FTA channel would therefore constitute an important

out-of-market constraint.

(164) Second, a majority of respondents to the market investigation explained that

ViacomCBS’ kids’ channels (and kids’ channels more generally) are unlikely to be a

sufficiently important input for pay TV retailers for there to exist an ability to

successfully foreclose.

162

One respondent clarified that kids’ pay TV channels are

not particularly important for the competitiveness of retail services in Denmark,

since retailers seek to build diverse bundles of attractive channels, regardless of their

specific “genre”.

163

In terms of audience share, kids’ pay TV channels only account

157

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to question 35.

158

Form CO, Table 5 and Annex D.7.

159

Form CO, Table 4.

160

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to question 45.1.

161

Form CO, Annex D.7.

162

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to question 44.

163

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to questions 35.1, 44 and

50.1.

31

for approximately 1% of pay TV audience. Furthermore, viewership of kids’ pay TV

channels in Denmark has been declining significantly in recent years. Between 2015

and 2020, there has been a 74% decline in viewership of kids’ pay TV channels in

Denmark.

164

Ampere data also shows that kids’ channels are of limited importance to

Danish end-customers, with only 1% of Danish consumers identifying “children and

family” as their favourite genre, with this genre ranking last place amongst the 18

genres listed.

165

(165) Third, in the scenario that a separate market for the supply of kids’ pay TV channels

would indeed exist, this market forms a very small part of overall pay TV channels.

This is reflected in the difference in the Notifying Parties’ market shares: while the

Notifying Parties’ combined market for kids’ pay TV channels amounts to [60-70]%

by revenue, and [30-40]% by audience in 2020 in Denmark, the Notifying Parties’

combined market share by revenue for the wholesale supply of all pay TV channels

in Denmark amounts to just [0-5]%, with a combined audience share of [0-5]%.

166

(166) Therefore, for the reasons set out above, the Commission concludes that the JV

would not have the ability to foreclose rival retail AV suppliers by engaging in a

total or partial input foreclosure strategy.

(B) Incentive to engage in input foreclosure

(167) The Parties’ incentive to foreclose rival retail AV suppliers depends on the balance

between: (i) the losses from ceasing to supply (or increasing the carriage fees of)

ViacomCBS’ kids’ channels in Denmark; and (ii) the higher profits obtained by the

JV downstream from any switching by end-customers to the JV’s SVOD service. In

light of this trade-off, the Commission concludes that the Parties would not have the

incentive to engage in an input foreclosure strategy by refusing to supply

ViacomCBS’ kids’ channels on other channels or degrading the terms under which

these channels are made available.

(168) The Commission notes that an input foreclosure strategy would only be

economically viable if ViacomCBS’ kids’ channels were able to attract a sufficiently

high number of new end-customers to the JV’s SVOD service, and if ViacomCBS

could profit enough from their viewership. However, such an outcome is unlikely.

(169) First, it should be taken into account that the vertical link between activities in the

supply of kids’ pay TV channels in Denmark and SVOD services in Denmark exist

already before the Transaction as ViacomCBS currently operates the SVOD

platform Paramount+.

167

Consequently, only one respondent to the market

investigation believes it is credible that ViacomCBS’ incentives to license rights to

its kids’ pay TV channels in Denmark would change as a result of the Transaction.

168

This respondent does not substantiate its concerns.

169

164

Form CO, Annex D.7.

165

Form CO, Annex C.15.1, Ampere analysis.

166

Form CO, Tables 4-5 and Annex D.7.

167

Form CO, Annex D.7.

168

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to question 46.

169

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to question 46.1.

32

(170) In contrast, another respondent notes that it has no reason to expect that the

Transaction would negatively affect ViacomCBS’ incentive to license rights to its

kids’ pay TV channels to broadcasters and streaming services in Denmark due to the

pre-existing vertical relationship. According to this respondent, the introduction of

Paramount+ on the Danish market did not affect its incentive to licence its kids’ pay

TV channels. On the contrary, in this respondent’s experience, ViacomCBS

[customer strategy].

170

(171) Finally, the Commission recalls that the JV is co-owned by Comcast/Sky (50%).

This makes foreclosure less attractive for ViacomCBS compared to the situation

before the Transaction, given that it would need to forego its own upstream profit to

benefit the JV at the downstream retail level, but after the Transaction it will not

recapture the entire potential benefit, but only 50% of it.

171

(172) Therefore, for the reasons set out above, the Commission concludes that the Parties

would not have the incentive to foreclose rival AV suppliers by engaging in a total

or partial input foreclosure strategy.

(C) Impact on effective competition

(173) Even if the Parties were to engage in a (total or partial) input foreclosure strategy,

the Commission considers that such a strategy would not have a material impact on

competition in the EEA. Rival AV retailers would not be deprived of a sufficiently

important input, and could still rely on a large array of valuable kids’ channels

content to attract viewers. Furthermore, as one respondent to the market

investigation pointed out, the attractiveness of a retail offering is not based on kids’

channels alone (see paragraphs (163)-(164) above).

(174) This conclusion is consistent with the results of the market investigation. All

respondents to the market investigation considered that, if ViacomCBS were to cease

licensing its kids’ pay TV channels or degrade the terms on which it licenses these

channels, this would not have a negative impact on their company.

172

One

respondent explained specifically that the kids’ content provided by Paramount+ is

not of particular competitive importance to its SVOD service and it would have

sufficient alternatives to Paramount+’ kids’ content.

173

The majority of respondents

also indicated, more generally, that the Transaction would have a neutral or positive

impact on the retail supply market.

174

(175) In light of the above, the Commission finds that a potential (partial or total) input

foreclosure strategy would not have a material negative impact on effective

competition in Denmark.

(D) Conclusion

(176) The potential market for the supply of kids’ pay TV channels in Denmark is the

narrowest possible product market with the highest market shares of the Parties.

170

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to question 48.1.

171

[ViacomCBS' sales strategy and financial information].

172

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to question 49.

173

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to question 49.1

174

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to question 53.

33

Under any other potential market definition, their combined market shares would be

considerably lower.

(177) In light of the above, the Commission concludes that the Transaction does not raise

serious doubts as to the compatibility with the internal market with respect to

possible input foreclosure practices concerning ViacomCBS’ kids’ channels in

Denmark (upstream) under any of the alternative product markets for wholesale

supply of TV channels.

5.5. Cooperative effects

(178) Sky and ViacomCBS will remain independently active in the same product

markets as the JV, i.e., the retail supply of AV services to end-customers, both

within the JV EEA Territories and outside the JV EEA Territories (“Rest of the

EEA”). ViacomCBS will remain active via the AVOD service Pluto TV.

Comcast/Sky will remain active via the OTT service hayu, the AVOD service Xumo

and very limited direct sales of the CNBC linear channel.

(179) Sky and ViacomCBS will also remain independently active in a number of markets

closely related to the activities of the JV, notably: (a) within the JV EEA

Territories: (i) the production and supply of AV content (upstream); (ii) the

wholesale supply of TV channels (upstream); and (iii) the sale of advertising space

(neighbouring)

175

; and (b) outside the JV EEA Territories (“Rest of EEA”) in the

wholesale supply of TV channels (upstream).

5.5.1. The Notifying Parties’ views

(180) The Notifying Parties submit that the creation of the JV will not lead to any

coordination between them and the JV, or amongst themselves, because market

conditions are not conducive to tacit coordination, confidentiality obligations will be

in place to limit the use by the Notifying Parties of confidential information obtained

from the JV and the JV will form only a small part of the Notifying Parties’ overall

businesses.

176

5.5.2. The Commission’s assessment

(181) The Commission considers that the Transaction does not give rise to serious doubts

as to its compatibility with the internal market as a result of cooperative effects in the

markets for (i) the production and supply of AV content; (ii) the wholesale supply of

TV channels; (iii) the retail supply of AV services to end-customers; and (iv) the sale

of advertising space, both within and outside the JV EEA Territories, for the reasons

set out below.

177

(182) First, the Commission observes that the relevant markets are not conducive to

coordination between the Parties. The market shares of the Parties are low (see

Tables 1-3 below), the Transaction does not eliminate a market player, and several

175

Form CO, paragraphs 449 and 456. While the JV will distribute the Parents' linear channels, [Parties'

strategic decisions with regard to the JV].

176

Form CO, Section 10.

177

Note that the analysis applies in respect of all JV EEA Territories and the Rest of the EEA and does not

vary by individual country.

34

competitors would remain post-Transaction, which would likely disrupt any attempts

of the Notifying Parties to coordinate their activities on the relevant markets.

Moreover, the JV will not become a vertically integrated player with its own active

wholesale and retail services on the market.

(183) In relation to the market for the production and supply of AV content, ViacomCBS's

market shares for the licensing of all AV content is [5-10]% or less in each of the JV

EEA Territories. Similarly, Comcast/Sky's market shares for the licensing of all

AV content is less than [5-10]% in each of the JV EEA Territories (see Table 1

below).

178

The JV will not be active in this market. Post-Transaction, the Notifying

Parties will continue to face competitive constraints from a number of market

participants, including large US movie studies (e.g., Disney/Fox, Warner, and Sony),

smaller players (e.g., Lionsgate and MGM), certain suppliers or retail AV services

(e.g., Netflix and Amazon Prime Video) and independent content producers.

179

Table 1: Production and supply of AV content (revenue, 2020)

Country

ViacomCBS market share for the

licensing of all AV content

Comcast/Sky market share for the

licensing of all AV content

Bulgaria

[0-5]%

Croatia

[0-5]%

Czech Republic

[0-5]%

Denmark

[0-5]%

Finland

[0-5]%

Hungary

[5-10]%

[0-5]%

Netherlands

[0-5]%

Norway

[0-5]%

Poland

[0-5]%

Portugal

[0-5]%

Romania

[0-5]%

Slovakia

[0-5]%

[5-10]%

Slovenia

[0-5]%

Spain

[0-5]%

Sweden

[0-5]%

[5-10]%

Source: […]

178

Form CO, paragraph 483. There are a few narrowly defined sub-segments (see paragraph (36)) in which

ViacomCBS’ share exceeds [5-10]% in certain JV EEA Territories, however, these shares never exceed

[10-20]%. Similarly, there are a narrowly defined few sub-segments in which Comcast/Sky’s share

exceeds [5-10]% in certain JV EEA Territories, however, these shares never exceed [20-30]%. The

highest combined market share in these sub-segments is reached in the production and supply of US film

content in Spain ([30-40]%). See Form CO, paragraph 477 and Annex B.1.2.2.

179

Form CO, paragraph 495 and Figure 4.

35

(184) In relation to the market for the wholesale supply of TV channels, the JV will be

active in the market for the wholesale supply of TV channels in the JV EEA

Territories. The JV will distribute all of the Notifying Parties' channels in the JV

EEA Territories, with the exception of [Parties' strategic decisions with regard to the

JV],

180

there is no overlap in the Parties’ activities in the wholesale supply of TV

channels in the JV EEA Territories and therefore, no risk of cooperation between the

Parties in respect of their retained activities in distinct JV EEA Territories.

(185) Outside the JV EEA Territories, in relation to the Rest of the EEA, the JV will not

be active in the wholesale supply of TV channels.

181

The Notifying Parties’ market

share in the Rest of the EEA where both Notifying Parties will remain active,

remains limited.

182

Overall, the Notifying Parties’ market share in the wholesale

supply of TV channels, irrespective of the product market definition, are below [0-

10]% for both Comcast/Sky and ViacomCBS.

183

(186) In relation to the market for the retail supply of AV services to end customers, the

JV will operate in the JV EEA Territories as an SVOD streaming service

comprising AV content distributed both: (i) DTC on a variety of consumer devices

as well as via app stores, and (ii) via third party MVPD platforms. Each of the

Notifying Parties will retain certain very limited activities in the market for the

provision of retail AV services. The Notifying Parties will continue to provide these

limited retail AV services independently, and in competition with each other. While

both ViacomCBS and Comcast/Sky will continue to be active in this market, based

on their 2020 revenues, their market shares are minimal. ViacomCBS’ market share

in the total pay TV segment is less than [0-5]% of subscription revenues in each of

the JV EEA Territories in which it provides retail AV services. The same applies in

relation to the OTT sub-segment specifically.

184

Similarly, Comcast/Sky’s market

share in the total pay TV segment is less than [0-5]% in each of the JV EEA

Territories in which it provides retail AV services. The same applies in relation to

the OTT sub-segment specifically (see also Table 2 below).

185

The JV is expected to

have […] market share across these Territories. [details of JV's projected market

shares].

186

180

Form CO, paragraphs 499-501.

181

Form CO, paragraphs 533-534.

182

ViacomCBS is active in the wholesale supply of TV channels in every country within the Rest of the

EEA. Comcast/Sky is active in the wholesale supply of TV channels in almost every country within the

Rest of the EEA, except in Latvia.

183

Form CO, paragraph 536 and Notifying Parties’ Response to RFI 6, question 2. Please note that there are

limited exceptions, where the Notifying Parties’ market share remains below 30% (e.g., Ireland (pay TV,

other genres, basic pay TV and premium pay TV) - Comcast/Sky); and each EEA country which is not a

JV EEA Territory (Rest of EEA) (kids’ channels, ViacomCBS)).

184

Form CO, paragraph 508 (a) and Tables 15-16.

185

Form CO, paragraph 508 (b) and Tables 17-18. The same conclusions regarding ViacomCBS and

Comcast/Sky’s market shares apply when considering the various sub -segments as set out in paragraph

(78). See Form CO, Annex B.1.2.5.

186

Notifying Parties’ Response to RFI 6, question 1. This statement does not apply in relation to the

Netherlands and Portugal, where the JV’s estimated projected 2024 and 2026 market shares would be

slightly higher (i.e., [details of the JV's projected market shares]). See also Form CO, footnote 79,

Notifying Parties Response to RFI 2 (question 1), RFI 3 (question 10), and RFI 5. [Methodology to

estimate the JV's projected market shares].

36

Table 2: Retail supply of AV services to end-customers (total pay TV and OTT segment) (revenue, 2020)

Country

ViacomCBS market

shares for the

provision of retail AV

services (total pay TV

segment)

ViacomCBS market

shares for the

provision of retail

AV services (OTT

segment)

Comcast/Sky

market shares

for the provision

of retail AV

services (total

pay TV segment)

Comcast/Sky

market

shares for the

provision of

retail AV

services (OTT

segment)

Bulgaria

[ViacomCBS not

active]

[ViacomCBS not

active]

[0-5]%

[Comcast/Sky

not active]

Croatia

[ViacomCBS not

active]

[ViacomCBS not

active]

[0-5]%

[Comcast/Sky

not active]

Czech Republic

[ViacomCBS not

active]

[ViacomCBS not

active]

[0-5]%

[Comcast/Sky

not active]

Denmark

[0-5]%

Finland

[0-5]%

Hungary

[0-5]%

[Comcast/Sky

not active]

Netherlands

[ViacomCBS not

active]

[ViacomCBS not

active]

[0-5]%

Norway

[0-5]%

Poland

[0-5]%

[Comcast/Sky

not active]

Portugal

[ViacomCBS not

active]

[ViacomCBS not

active]

[0-5]%

[Comcast/Sky

not active]

Romania

[ViacomCBS not

active]

[ViacomCBS not

active]

[0-5]%

[Comcast/Sky

not active]

Slovakia

[ViacomCBS not

active]

[ViacomCBS not

active]

[0-5]%

[Comcast/Sky

not active]

Slovenia

[ViacomCBS not

active]

[ViacomCBS not

active]

[0-5]%

[Comcast/Sky

not active]

Spain

[ViacomCBS not

active]

[ViacomCBS not

active]

[0-5]%

Sweden

[0-5]%

Source: […].

37

(187) Outside the JV EEA Territories, in relation to the Rest of the EEA,

187

the JV will

not be active in the retail supply of AV services. Comcast/Sky’s market share

remains below 30%.

188

ViacomCBS’ market share remains between 0 and 5%, as it

is accounted for only by the provision of its AVOD Pluto TV service which in 2020

was available only in Austria and Germany.

189

In any event, post-Transaction, the

Notifying Parties will continue to face competitive constraints from a number of

market participants, including global competitors (e.g., Netflix) and various recent

entrants (e.g., Disney+, Amazon Prime Video, Apple TV, Facebook, etc.).

(188) In relation to the market for the sale of advertising space, ViacomCBS’ market share

is less than [5-10]% in each of the JV EEA Territories in which it sells advertising

airtime on its TV channels (Table 3 below). ViacomCBS's market share for the

supply of online advertising is less than [0-5]% in each of the JV EEA Territories in

which it sells online advertising space.

190

Comcast/Sky's market share for the supply

of TV advertising is less than [0-5]% in each of the JV EEA Territories in which it

sells advertising airtime on its TV channels. Comcast/Sky's market share for the

supply of online advertising is less than [0-5]% in each of the JV EEA Territories in

which it sells online advertising space (see also Table 3 below).

191

,

192

The JV will

not be active in this market. Post-Transaction, the Notifying Parties will continue to

face competitive constraints from a number of market participants, including large

global players (e.g., Google and Facebook)

193

and multiple other local competitors

(e.g., TV2, NENT, SBS in Norway and Denmark, and SBS, NPO and RTL in the

Netherlands).

Table 3: Sale of TV advertising space (revenue, 2020)

Country

ViacomCBS market shares for the

sale of TV advertising space

Comcast/Sky market shares for the

sale of TV advertising space

Bulgaria

[0-5]%

Croatia

[…]

Czech Republic

[0-5]%

[…]

Denmark

[0-5]%

[…]

187

ViacomCBS and Comcast/Sky will, in relation to the retail supply of AV services in the Rest of the EEA,

only both be active in Austria and Germany. Therefore, this paragraph relates to Austria and Germany

only. Furthermore, these market shares apply irrespective of the exact product market definition.

188

Notifying Parties’ Response to RFI 6, question 3. In relation to an FTA-services only segment,

Comcast/Sky’s market share remains below [0-5]% (both in Germany and Austria). Further, Comcast/Sky

notes that the [20-30]% figure is estimated conservatively, as it corresponds to the retail supply of pay TV

services and not of all AV services (both FTA or pay-TV).

189

Form CO, paragraph 538 and Notifying Parties’ Response to RFI 6, question 3.

190

Form CO, paragraph 461 and Table 11.

191

Form CO, paragraph 461 and Table 12.

192

The same conclusion applies when considering the various sub-segments as set out in paragraph (89). See

Form CO, Annex B.1.2.7.

193

Form CO, paragraph 477. For instance, according to Salesforce Research, Google Search, YouTube,

Facebook and Instagram were responsible for 66% of global digital advertising in 2018. See Source:

Salesforce research,

https://www.salesforce.com/content/dam/web/en us/www/assets/pdf/datasheets/digital-advertising-

2020.pdf.

38

Country

ViacomCBS market shares for the

sale of TV advertising space

Comcast/Sky market shares for the

sale of TV advertising space

Finland

[0-5]%

[…]

Hungary

[5-10]%

[…]

Netherlands

[5-10]%

[0-5]%

Norway

[0-5]%

Poland

[0-5]%

Portugal

[0-5]%

Romania

[0-5]%

Slovakia

[…]

Slovenia

[…]

Spain

[0-5]%

Sweden

[0-5]%

Source: […].

(189) Second, the small size of the JV relative to ViacomCBS’ and Sky/Comcast’s

activities makes it unlikely that the Notifying Parties would have any incentive to

coordinate their competitive behaviour. [Comparison between the Parties' and the

JV's revenues] (see also Table 4 below).

194

Based on the Commission’s decisional

practice

195

, this suggests that the conduct of the Notifying Parties on the markets is

unlikely to be influenced by their cooperation in the JV.

Table 4: Ratio of expected turnover over Notifying Parties' estimated turnover (2022-2024)

JV turnover (EUR

million)

196

% of ViacomCBS total

estimated turnover

197

% of Comcast/Sky total

estimated turnover

198

2022

[Turnover]

[Proportion]

2023

[Turnover]

[Proportion]

2024

[Turnover]

[Proportion]

(190) Third, the Commission notes that antitrust compliance protocols will be in place.

These include, inter alia, information barriers governing the relationship between the

JV and its parents to prevent any illegitimate coordination between them in respect

of activities outside the JV.

199

194

Form CO, paragraphs 468, 489, 546 (in relation to the Rest of the EEA).

195

M.9604 – NENT / Telenor / JV, para. 642 and Commission decision of 6 March 2020 in case M.9674 -

Vodafone Italia / TIM / INWIT JV, para. 434.

196

Form CO, Table 13 [reference to the transaction documents].

197

Based on median broker consensus estimates dated September 2021.

198

Based on Comcast/Sky's best estimates of its consolidated worldwide revenues in each of 2022, 2023 and

2024.

199

Form CO, paragraphs 470-471, 491, 515, 549 (in relation to the Rest of the EEA), footnote 314 and

Annex 19. [Reference to the transaction documents].

39

(191) Fourth, the markets for the wholesale supply of TV channels, and the retail supply of

AV services to end customers, are national (see paragraphs (56) and (78) above).

AV content and TV channels are primarily licensed on a national basis. Therefore,

the respective agreements often contain different terms. The JV Territories in which

the JV is active are therefore different markets than the territories where the

activities of the Notifying Parties overlap. Therefore, the JV is unlikely to increase

each Notifying Party’s visibility of the other Notifying Party’s activities in the Rest

of the EEA.

(192) Fifth, certain features of the relevant markets listed above (paragraphs (178) and

(179)) make it difficult to reach or sustain a tacit, or overt, coordinated outcome. The

creation of the JV does not change any of these features of the markets and cannot

therefore increase the likelihood of a coordinated outcome on these markets. These

markets are complex and constantly evolving. E.g., in the retail supply of AV

services, retailers adjust permanently to evolving demand patterns.

200

Further, these

markets lack transparency as, e.g., negotiations are bilateral, and highly

confidential.

201

Last, these are highly competitive markets. Any potential

coordination strategy could be immediately undermined by competing firms.

(193) Finally, none of the respondents to the market investigation considered that the

Transaction could give rise to cooperative effects.

202

5.5.3. Conclusion

(194) In light of the above, the Commission concludes that the Transaction does not give

rise to serious doubts as to its compatibility with the internal market in relation to

cooperative effects in the EEA in the markets for: (i) the production and supply of

AV content; (ii) the wholesale supply of TV channels; (iii) the retail supply of AV

services to end-customers; and (iv) the sale of advertising space.

6. CONCLUSION

(195) For the above reasons, the European Commission has decided not to oppose the

notified operation and to declare it compatible with the internal market and with the

EEA Agreement. This decision is adopted in application of Article 6(1)(b) of the

Merger Regulation and Article 57 of the EEA Agreement.

For the Commission

(Signed)

Margrethe VESTAGER

Executive Vice-President

200

For the Notifying Parties’ description of such evolving demand patterns, see Form CO, paragraph 552 (in

relation to wholesale and retail supply of TV channels/AV services).

201

Form CO, paragraphs 474 (between ad sales houses and their main customers) and 553 (between

wholesale suppliers and their customers).

202

Q2 – Questionnaire to market participants in the AV sector (Denmark), replies to questions 51.1-51.5.