German cable operator association FRK has submitted a formal complaint against Unitymedia, Kabel BW, Deutsche Telekom und NetCologne at federal antitrust authority Bundeskartellamt.
The complaint refers to the settlement between the companies announced in 2015 which cleared the way for the merger between Unitymedia and Kabel BW while providing Deutsche Telekom and NetCologne with a multimillion euro cash injection. In FRK’s view, the settlement constitutes an illicit cartel agreement the antitrust authority has to prohibit.
The cartel office had approved the acquisition of Kabel BW by Liberty Global’s German cable subsidiary Unitymedia with conditions in 2011. Competitors Deutsche Telekom and NetCologne submitted a complaint against the permission at appellate court Oberlandesgericht Düsseldorf – with success: The judges lifted the approval in 2013, arguing that the imposed conditions would not sufficiently balance the competitive disadvantages of the merger.
Unitymedia submitted a complaint against the ruling at the Federal Court of Justice. Before the judges were able to reach a decision, the parties involved reached a settlement in which Deutsche Telekom and NetCologne take back their complaint against the cartel office’s approval and, in return, receive a payment from Liberty Global amounting to up to €300 million, according to market estimates.
In the view of FRK which mainly represents small and medium-sized independent cable operators, the merger between Unitymedia and Kabel BW has a negative impact on competition in the cable and broadband market. The antitrust suit instigated by the association focuses on the settlement that allowed Liberty Global to buy itself out of the risk of losing clearance of the merger.
The complaint submitted by Frankfurt-based lawyer’s office Schalast & Partner on behalf of FRK is mainly based on the argumentation that the settlement constitutes an illicit cartel agreement. The deal would, on the one hand, clear the illegitimate merger between Unitymedia and Kabel BW and, on the other hand, constitute a case of suppressing competition by financial means considered to be illegal in the cartel office’s ruling practice.
With its offensive, FRK wants to achieve the cartel office interdicting the settlement and, ultimately, the merger between Unitymedia and Kabel BW being undone.