German industry associations BREKO, BUGLAS, VAUNET and DNMG are concerned about the consequences of Vodafone’s proposed acquisition of Liberty Global’s German cable subsidiary Unitymedia.
With the move, Vodafone aims to re-monopolise the German cable market, the associations write in a joint statement. 20 years after the liberalisation of the market, Vodafone has submitted a merger proposal to the EU Commission which would create a giant player with over 14 million connected households and 80% market share in the cable market.
The associations fear that this would force smaller competitors out of the market to the disadvantage of end customers. In addition, the merger would seriously jeopardise competition for access to apartments in the housing sector which has so far enabled housing companies to provide inexpensive infrastructure and media for its tenants’ benefit.
In the absence of such competition, the merged entity would not be prepared to invest in the provision of apartment blocks with fibre-optic infrastructure (FTTB/FTTH), expect the associations. The merger would therefore call into question the important provision of fibre-optic connections and media supply for tenants and would also trigger additional expenses for tenants in the medium term. Past experience has shown that monopolies always lead to price increases for consumers in the respective market in the medium term, according to the statement.
The associations also warn that the merger poses considerable risks for media diversity in Germany. It would create a gatekeeper controlling access to media content for almost half of German TV households. In this situation, broadcasters and content providers would have to accept the dictated conditions in order to ensure their distribution and use of their content and services.
In addition to an increase in carriage fees, the providers expect in particular a deterioration in the conditions of use, for example in the provision of HbbTV or access to collected data. In addition, the merged company could assume a dominant position on the rights market due to its quasi-monopoly position and successively secure exclusive content, such as attractive sports rights. Due to these “massive negative effects”, the associations consider the merger not to be approvable.
The EU Commission also takes a critical view of the proposed merger and, according to industry speculation, is preparing a warning letter to Vodafone and Liberty Global in which it expresses its concerns.