Bundeskartellamt institutes cartel proceedings to examine video-on-demand platform of public service broadcasters

The Bundeskartellamt has instituted cartel proceedings to examine in more detail plans by the public service broadcasters ARD and ZDF to set up a joint video-on-demand platform. The assessment of the project under merger control provisions has already been completed.

The President of the Bundeskartellamt, Andreas Mundt, stated: "The project is subject to the same competition law standards as was the platform planned by RTL and ProSiebenSat.1. Among other things we will examine whether the plans by the public service broadcasters will result in competition restraints at the production and licensing level. We will also have a look at the viewer markets."

At the end of October, subsidiaries of ZDF and several (regional) ARD channels, as well as several TV production companies, had notified the Bundeskartellamt of plans to create a joint venture to offer video-on-demand services. The term video-on-demand denotes the downloading of individual videos (films, episodes, television shows, etc.) by users. To be able to offer this service, the companies intend to set up and operate a joint platform via a joint venture. According to the companies' plan, the videos offered via the platform will be provided from the companies' pool of broadcasting material, but also from third parties. The platform will offer the contents via all accessible distribution channels. The downloading of content (on demand or via a subscription) will be possible for a certain fee or free of charge (financed by advertising). The content available for download will be offered and promoted by the joint venture operating the platform.

The assessment of the project under merger control provisions has been completed. Other than in the case of RTL and ProSiebenSat.1, which are collectively dominant in the TV advertising market, the project does not raise any concerns with regard to merger control issues because the parties are not dominant in the market, nor will they be after the creation of the joint venture.

However, similarly to the RTL ProSiebenSat.1 case - where the companies' plans to set up a joint platform were prohibited by the Bundeskartellamt - the project gives cause for concerns that it might violate the general ban on cartels. The Bundeskartellamt has instituted examination proceedings to that effect which will be continued irrespective of the termination of the merger control proceedings. Several applications for admission to the proceedings have been lodged with the Bundeskartellamt. The parties to the project have been informed that any investment in the joint venture while the examination proceedings are still ongoing will be at their own risk and not subject to the principle of legitimate expectation.

On the decision of the Bundeskartellamt regarding the plans of RTL and ProSiebenSat.1, see press release of the Bundeskartellamt of 18 March 2011 and press release of the Bundeskartellamt of 24 February 2011.