The AMO SR approved concentration consisting in acquisition of exclusive direct control of Slovak Telekom over DIGI SLOVAKIA

14.08.2013
The Division of Concentrations of the Antimonopoly Office of the Slovak Republic approved the concentration consisting in acquisition of exclusive direct control of undertaking Slovak Telekom based in Bratislava, Slovakia (hereinafter “ST”) over the undertaking DIGI SLOVAKIA based in Bratislava, Slovakia (hereinafter “DIGI”).

ST offers complete portfolio of data and voice services. It owns and operates extensive fixed and mobile telecommunication networks covering almost the whole territory of Slovakia (hereinafter “SR”). ST provides the services of broadband access to internet via fixed networks – metallic xDSL and optical FTTx and via mobile broadband networks. ST entered the market of paid TV via IPTV technology through fixed nets under the brand “Magio”, later it provided similar service based on satellite technology covering the whole territory of SR. ST provides video on demand as well.

DIGI provides services of paid TV on the whole territory of SR through satellite technology or fixed nets and the broadband access to internet through fixed nets.

The Office assessed impact of concentration on competition focusing on markets that could be affected by concentration. It concerns following markets:

-retail market of providing broadband access to internet for end users

-the market of retail providing of paid TV including related markets – wholesale market of providing the rights for sport matches broadcasting (or more precisely in wider scale providing of licenses on audiovisual content).

In its analyses the Office took into account the information from the participants to concentration and the data provided by competitors as well.

In the case of retail market of providing broadband access to internet, the Office examined the possibility of substitution of particular technologies enabling to provide the access to internet and also defined the market from geographic point of view.

From the viewpoint of product market the Office considers as substitutes particularly the accesses to internet via fixed nets – technologies xDSL, CATV, FTTx. Mobile and FWA/WiFi technologies show differences indicating that they don´t fall into given relevant market.

From the viewpoint of geographical market the Office tends to definition of this market as national market. In this case it was not necessary to define precisely both aspects of relevant market, as assessing either from the national viewpoint or from local operation of participants, even when the Office took into account the narrowest alternative of providing the access to internet via fixed nets, the Office din not identified competition problem in connection with given concentration.

Analyzing market shares, assessing entry barriers and other facts the Office came to conclusion that ST has already had considerable market power before the concentration. Action of DIGI from the national viewpoint is inconsiderable and it is not presumable that it could exert effective competitive pressure on ST. So, there don´t happen significant changes in market structure in consequence of given transaction. Similar market structure was on local markets. The Office also took into consideration that the clients have besides ST the choice from the offer of another providers of broadband access, to say nothing of potential competitors on the local markets. It means, that concentration doesn´t infringe effective competition on the market of retail providing of broadband internet.

In the field of providing paid TV the Office assessed providing the licenses on audiovisual TV content, i. e. licenses on movies, sport broadcastings etc. Neither ST nor DIGI are providers of licenses on audiovisual TV content, their activities however coincide in the field of acquiring of licenses. That is why the Office assessed consequences of given concentration from the viewpoint of purchasing power after concentration. ST acquires licenses to provide video on demand while DIGI for producing of the channel DIGI SPORT. As it concerns acquiring of TV content rights for different purpose (home video distributors versus insertion of content into program menu of the own channel DIGI SPORT) and with different content (sport broadcasting versus movies) the concentration doesn´t come to horizontal coincidence of activities of participants to the concentration. Even if the Office would have taken into consideration acquiring of licenses generally, without reference to purpose, respectively content, there would come to horizontal coincidence of participants to concentration only minimally.

Next the Office inquired into providing the rights of TV channels. ST is not producer of any channel. DIGI is producer of the channel DIGI SPORT which is transmitted exclusively only in the frame of DIGI. The Office assessed whether it is must have channel that significantly affects end consumers when choosing providers of paid TV. Evaluating ratings, the interest in particular sport channel, the interest in sports channels in general, the Office found out, that acquiring the rights of TV channel DIGI SPORT ST would not hamper its competitors to provide paid TV.

As ST and DIGI purchase the rights of TV channels from their producers, their activities horizontally coincide in demand for the rights of TV channels. The Office therefore assessed whether concentration can create or strengthen the purchasing power of ST towards providers of rights of TV channels in such extent that ST could behave towards this providers independently (for example acquiring unfoundedly privileged purchase conditions, eventually exclusiveness) and impacts of eventual acquiring of exclusiveness on the market of retail providing of paid TV. The Office found out, that providers of rights are on the one hand big multinationals placing their products globally and disposing of sufficient negotiating power, towards which ST has not significant purchasing power. On the other hand there are the producers of so called must have channels (Markíza, JOJ, STV1, STV2 etc.). These channels represent the focus of viewers´ interest and are necessary for providing services of paid TV to end consumers, what presupposes strong negotiating position of their producers. At the same time, if ST would be able to negotiate exclusive rights for some TV channels, there would not be those, which are necessary for providing services of paid TV. Even in this case is not likely that other providers have no access to necessary entry for providing services of paid TV to end consumers. The Office concluded that concentration does not infringe effective competition.

The Office assessed the impact of concentration on retail market of providing services of paid TV for end consumers. Both ST and DIGI provide services of paid TV to end consumers in Slovakia. Concentration changes structure of relevant market. The Office assessed the position of undertakings on relevant market from the point of view of number of clients and from the point of view of sales for services of paid TV taking into account entry barriers. The assessment was done alternatively, because it was not clear whether the whole offer of undertaking M7Group (Skylink and CS link) can be considered substitutable with the services of other providers of paid TV. However it was not necessary to conclude this question, because in any alternative the Office did not find significant infringement of competition.

The analyses showed, that despite the growth of market share of ST, this competitor will be under the sufficient pressure of competitors after the concentration, namely by undertakings LIBERTY GLOBAL and M7Group (or even when the whole portfolio of M7Group is not placed in given market, this undertaking is minimally the potential competitor) and it is not very similar that ST could behave towards its clients independently (e.g. to advance prices for long term, to lower the quality of services).

As ST operates in several relevant markets in the field of providing telecommunication services, the Office investigated, whether ST in the consequence of concentration can obtain any unfounded advantage in relation to triple play and quadruple play service packages. Essential was, that ST had all necessary components for creating quadruple play package, i.e. mobile voice, fixed telephony, internet and paid TV before the concentration. At the same time, DIGI does not provide any mobile voice services. In the consequence of concentration ST significantly strengthens only in segment of paid TV. ST was able to create quadruple play package regardless of concentration with DIGI.

Evaluating all received information the Office concluded, that assessed concentration does not arouse competition concerns.

The decision came into force on August 2, 2013.
Last update:02.12.2013