Following an in-depth examination, the Bundeskartellamt has cleared the planned participation of Funke Mediengruppe GmbH & Co. KGaA, Essen, in the marketing company BCN Brand Community Network GmbH, Munich, a subsidiary of BurdaVerlag GmbH, Munich.

BCN has so far particularly marketed the advertising inventory of Burda and Medienholding Klambt GmbH & Co. KG, Speyer. After the merger, BCN will also market Funke’s advertising inventory, especially magazines and online platforms. In the future Burda and Funke will jointly control BCN; Klambt is only to retain a minority interest in BCN, which was not covered by the examination under merger control.

Andreas Mundt, President of the Bundeskartellamt: “The merger between Burda and Funke will bring two large players on the relevant advertising market together. The two companies will thus reach a joint market share of almost 40 per cent in certain advertising markets. When assessing the joint
venture, we examined in depth which alternative options advertising customers would still have after the merger. Despite the ever-growing importance of advertising on the internet and in social media and the competitive pressure on print media associated with this, adverts in certain categories of
magazines still play an important role for many advertising customers. It is important here that certain target groups are hardly reached through other forms of advertising or that the respective costs are too high in comparison. Nevertheless, we have ultimately not prohibited the project. Despite the strong market position of Burda and Funke, there are still sufficient alternative options even for these advertising customers to place their adverts or newspaper supplements.” 

In order to assess the project the Bundeskartellamt carried out extensive investigations and in particular surveyed numerous magazine publishers, media agencies and advertising customers. In this context, the authority focused on the publishers’ current competitive situation, competition with other forms
of media, actual alternative options available to advertising customers and the special role of media agencies. The magazine titles of Burda and Funke overlap especially in the categories TV programme guides and tabloids. Adverts for OTC pharmaceutical products and nutrition supplements as well as mail order retailing – with the option of placing orders in writing or by phone – account for by far the largest part of advertising revenue generated by these magazine categories. This also applies, with a different focus, to pharmacy magazines and TV supplements, which were therefore, and due to them charging similar advertising prices, also included in the relevant market.

The merger will result in Burda and Funke becoming the strongest provider on the advertising markets examined with a joint market share of up to almost 40 per cent, depending on which individual titles are considered. Despite the strong market position of Burda and Funke, the results have shown that the merger does not fulfil the requirements for prohibition under merger control. An important reason for this assessment is that the customers affected stated that they would shift some of their advertising budget to competitors in response to any attempts by the parties to increase prices. Consequently, this
would make price increases unprofitable for the publishers.

“Double control” of joint ventures

When a joint venture is established, like in the present case, the assessment goes beyond merger control, and the underlying agreements and contracts of the companies involved must always also be examined in accordance with the principles of the general prohibition of anti-competitive agreements
(referred to as double control).

Based on the draft agreements in question and taking into account the already existing cooperation between Burda and Funke in various areas, the present project could result in an appreciable restraint of competition on the advertising market and the reader market. The requirements for an exemption
under merger control could not be considered to have been met in full due to, among other things, excessive information obligations in the draft agreements and because it is not evident that readers will be allowed a fair share of the benefits resulting from the cooperation. However, within the scope of its
discretion the Bundeskartellamt decided not to prohibit the project at this point in time. This does not prevent the authority from once again examining the marketing cooperation in the future if it receives substantial complaints, the parties expand their cooperation or enter into further forms of cooperation
which are relevant in terms of competition.

The decision is not yet legally binding. Both the parties and the interested publishers Bauer, Axel Springer and Wort & Bild can appeal the decision within one month.

Further information is available in the case summary relating to this proceeding (in German only).