Bundeskartellamt plans the clearance under merger control of a joint mobile TV venture

The Bundeskartellamt is currently examining plans by the three mobile phone network operators T-Mobile Deutschland GmbH (T-Mobile), Vodafone D2 GmbH (Vodafone) and O2 (Germany) GmbH & Co. OHG (O2), to set up a joint venture to create and operate a platform for the broadcasting of mobile television based on the DVB-H standard. The project is being examined under merger control and competition law aspects in two separate proceedings.

According to the Bundeskartellamt’s current estimation, from a merger control perspective, the project would not result in the creation or strengthening of a dominant position of the participating companies in the affected markets. On 17 July 2007 the Bundeskartellamt therefore informed the parties that it intends to clear the venture. The parties have the opportunity to comment on this up to 31 July 2007. The time limit for the decision under merger control ends on 13 August 2007.
The Bundeskartellamt also intends to conclude the examination under competition law immediately after its decision in the merger control proceedings. In these proceedings, according to the Bundeskartellamt’s current estimation, commitments are required from the companies concerned to dispel competition concerns raised after preliminary examination.

The joint venture of T-Mobile, Vodafone and O2 is connected with the invitation to tender for DVB-H frequencies and the TV content for these frequencies put out by the Federal Network Agency and the media regulation authorities of the Länder. As part of the joint venture the three mobile telephone network operators wish to jointly perform technical services which are necessary to produce and transmit digitalized TV signals, to purchase programme content and to bundle the content into programme packages for mobile TV which is based on the DVB-H standard. The mobile TV offer is, however, to be marketed separately to final customers by the three individual parent companies as well as possible further customers of the joint venture.

In its examination under merger control the Bundeskartellamt has examined markets which are directly linked with the broadcasting of radio/TV programmes (final consumer market for mobile television, market for the wholesale of programme packages for mobile radio and TV, market for the acquisition of marketing rights for programmes). It is expected that the planned joint venture or the parent companies T-Mobile, Vodafone and O2 will achieve considerable shares in all the markets concerned. However, these are newly emerging technology markets which are still in the experimental phase. The market shares to be expected are therefore not yet so stable that they could substantiate a dominant position. Moreover, the three mobile telephone network operators have hardly been active, if at all, in these markets.

The Bundeskartellamt has also examined whether the creation of the joint venture could have an effect on the market positions of its parent companies in the mobile telephone end consumer markets for data services and voice telephony (including SMS). It examined whether, in view of the combined high market share of T-Mobile, Vodafone and O2, the merger would lead to the creation or strengthening of collective dominance (so-called oligopoly). The market for mobile telephone data services is, however, still a young, dynamic market, which offers little incentive for oligopolistic parallel conduct. In the case of the mobile cellular telephony market the strategic importance of mobile TV in terms of narrow-band telephone services is minor, so that again here the creation or strengthening of an oligopoly is not to be expected.