The European Commission has decided to begin an ‘in-depth investigation’ into the proposed merger between Dutch cable companies UPC and Ziggo.

Liberty Global, the US company which owns the UPC cable group in the Netherlands, made a formal offer of €34.53 a share for Dutch cable market leader Ziggo in January.

Ziggo was founded over five years ago following the merger of three separate cable operators and has 55% of the Dutch market. UPC has around 35%. Neither company has nationwide coverage and their areas do not overlap.

Competition

In a statement, the commission said its preliminary research had shown the deal raised concerns about the competition for Dutch language content, the acquisition of television channels, the supply of premium film channels and the provision of internet, television and fixed telephony services to private households.

‘The merger is bringing together two of the main players in these markets in the Netherlands and the only two suppliers as regards premium pay television film channels’, the Commission points out.

In particular, the merger could hit the new company’s competitors when it came to bidding for content because the new company would be in a powerful position in negotiations, the Commission said.

The rest of the Dutch cable market is made up of four small regional players and 15 or so town-based providers.

Concerns

The Dutch consumer authority ACM told the Financieele Dagblad it was surprised at Brussels’ intervention. The ACM had wanted to deal with the proposed merger itself but has now been sidelined.

A spokesman pointed out that Brussels is not investigating a cross-border issue and that the focus is on the Dutch market.