Liberty Global is to remove clauses in channel carriage agreements that limit broadcasters’ ability to offer their channels and content OTT.
Following the acquisition of Ziggo, Liberty Global will merge its two operations in the country, UPC Nederland and Ziggo, into a single unit using the Ziggo brand name.
The company will also sell its premium movie channel Film1.”The commitments offered by Liberty Global ensure that the acquisition of Ziggo will not be detrimental to Dutch consumers, who will continue to enjoy the benefits of innovative services and choice for watching audio visual content,” according to Joaquín Almunia, the departing Commission VP in charge of competition policy.
If Liberty Global would keep Film1, the merger would have combined the only two linear premium pay TV film channels in The Netherlands, namely Film1 and HBO Nederland. This would have allowed Liberty Global to increase the wholesale price of these channels for competing retail pay TV operators such as KPN.
Furthermore, Liberty Global would have been in a position to refuse to supply, in particular, Film1 to its retail rivals, thus limiting the breadth of the content that those rivals could offer to consumers.
The Commission also considered that combining the two cable footprints of Ziggo and Liberty Global, which together cover around 90% of The Netherlands and currently command between 60% and 70% of Dutch pay TV subscriptions, would have given Liberty Global increased buyer power vis-à-vis TV broadcasters, in particular Dutch TV broadcasters. The Commission was concerned that this would have allowed Liberty Global to hinder the development of innovative audio-visual OTT services that TV broadcasters wish to launch or to provide content to. OTT services are a significant threat to the traditional pay TV model.
The Dutch market is already characterised by the existence of agreements with TV broadcasters, in particular agreements that Liberty Global concludes, that reduce TV broadcasters’ ability to offer such OTT services. The merger would have strengthened Liberty Global’s ability to impose such restrictions on TV broadcasters, in particular by conditioning the terms of carriage of TV channels on its cable pay TV network upon a TV broadcaster’s commitment to limit its OTT activities.
For all these reasons, the Commission was concerned that the merger, in its original form, would have led to higher prices for premium Pay TV film channels and reduced OTT innovation to the detriment of Dutch consumers.
In a reaction to the Commission’s decision, Dutch incumbent KPN said it no longer wants to be regulated by the Dutch competition authority ACM. KPN said that the combined Ziggo/UPC network will serve 44% of the Dutch broadband market without any conditions for third party access, while KPN is obliged to allow others on their network. The operator expect the Dutch broadband market to be deregulated following the decision.
With regards to content, KPN noted that the Commission only requires the company to sell off Film1, “a light measure.” Liberty Global performs internationally a clear and overt strategy to acquire and exploit content a so-called vertically integrated provision of access services and content. The dominant position of Ziggo on the market for the distribution of television, combined with the global content strategy of Liberty Global, gives Ziggo the ability to offer pricing and content to further strengthen itst already strong position in the market.”
KPN finds this development undesirable.
