|Date of ruling
|23 May 2019
|Case name (short version)
|KPN BV v European Commission
|Competition — Concentrations — Netherlands market for television services and telecommunications services — Full-function joint venture — Decision declaring the concentration compatible with the internal market and the EEA Agreement — Commitments — Relevant market — Vertical effects — Manifest error of assessment — Duty to state reasons
|In the judgment KPN v Commission (T-370/17), delivered on 23 May 2019, the Tribunal ruled on the European Commission’s decision C(2016) 5165 final of 3 August 2016 declaring compatible with the internal market and the Agreement on the European Economic Area the concentration relating to the acquisition by Vodafone Group and Liberty Global Europe Holding (the ‘notifying parties’) of joint control of a full-function joint venture in the telecommunications sector in the Netherlands. The applicant, a Dutch undertaking competing with the notifying parties, active inter alia in the sector of cable networks for television services in the Netherlands, has contested that decision. In particular, the action concerned the existence of vertical competition concerns along the distribution chain for television content.
|Points arising – admissibility
|Action for annulment – Pleas in law – Lack or inadequacy of statement of reasons – Plea distinct from that concerning legality as to the substance of the case
|Points arising – substance
|Concentrations between undertakings – Examination by the Commission – Economic assessments – Discretionary power of assessment – Judicial review – Scope – Limits
Concentrations between undertakings – Assessment of compatibility with the internal market – Examination by the Commission – Assessment of anti-competitive effects – Vertical effects – Assessment of the likelihood of an anti-competitive input foreclosure scenario – Criteria – Ability to foreclose inputs significantly – Substantial power on the upstream market
Concentrations between undertakings – Examination by the Commission – Definition of the relevant market – Criteria – Product substitutability – Concept
Concentrations between undertakings – Examination by the Commission – Definition of the relevant market – Impact of the Commission’s previous decision-making practice – Absence
Acts of the institutions – Statement of reasons – Obligation – Scope – Decision to apply the rules on concentrations between undertakings – Decision authorizing a concentration
The Tribunal first ruled on a plea alleging a manifest error of assessment concerning the definition of the relevant market. In that regard, the Court recalled that the question whether two goods or services form part of the same market involves determining whether they are regarded as interchangeable or substitutable by reason of their characteristics, price and intended use, primarily from the customer’s point of view. In the present case, the Tribunal considered that the Commission did not commit a manifest error of assessment by not further segmenting the market for the supply and wholesale acquisition of premium pay-TV sports channels, in view of the substitutability of those channels from the point of view of the retail suppliers of television services, due to the similar customer base and content of those channels.
Next, the Tribunal examined whether there was a manifest error of assessment concerning the vertical effects of the concentration, in particular the input foreclosure effect concerning the Ziggo Sport Totaal channel on the market for the supply and wholesale acquisition of premium pay-TV sports channels. The Tribunal first recalled that, according to the non-horizontal Merger Guidelines, input foreclosure occurs when, following the merger, the new entity is likely to restrict access to the products or services which it would have provided in the absence of the merger. In assessing the likelihood of an anticompetitive foreclosure scenario, the Commission has to examine, first, whether the merged entity would, post-merger, have the ability to significantly foreclose access to inputs, second, whether it would have an incentive to do so and, third, whether a foreclosure strategy would have a negative impact on downstream competition. These three conditions are cumulative so that the absence of any one of them is sufficient to exclude the risk of anticompetitive input foreclosure. The first of these conditions can only be fulfilled where the vertically integrated company resulting from the merger has substantial market power on the upstream market, namely the market for the wholesale supply of premium pay-TV sports channels in the present case. However, the Court held that the Commission did not commit a manifest error of assessment in concluding in the contested decision that the merged entity would not have the ability to engage in an input foreclosure strategy because of its relevant market share of less than 10 %.
|Notes on academic writings