On 26 October 2017, the General Court annulled the European Commission's conditional merger clearance decision in Liberty Global/Ziggo.
The Commission had approved the acquisition of Ziggo by Dutch rival cable TV operator Liberty Global in 2014, subject to extensive conditions including the divestiture of a pay TV film channel and commitments not to impede the provision of audio visual content online (see VBB on Competition Law, Volume 2014, No.10, available at www.vbb.com). KPN, a competitor, appealed the clearance decision on 17 July 2015, alleging, in part, that the Commission had breached its duty to explain why the transaction would not create anti-competitive vertical effects on the market for premium pay TV sports channels.
The General Court found that the Commission failed to include express reasoning in its clearance decision to explain why vertical concerns on the market for premium pay TV sports channels would not arise even though KPN had raised these vertical concerns during the Commission's in-depth merger review and the Commission admitted during the hearing before the General Court that such a market was conceivable. As a result, the General Court annulled the Commission's clearance decision.
This judgment is a rare example of a case where the General Court has overturned a Commission merger approval decision upon appeal by a third party. While a number of prohibition decisions have been annulled on appeal, annulments of approval decisions have been few and far between. The last time the General Court set aside a Commission clearance was when IMPALA challenged the Sony/BMG transaction in 2006 (although that judgment was later overturned by the ECJ).
The Commission will now need to re-assess Liberty Global's acquisition of Ziggo in light of current market conditions. It is possible that the Commission may yet find that vertical concerns are not likely to arise. Indeed, the Commission conditionally approved the creation of a joint venture between Liberty Global and Vodafone in the Netherlands as recently as August 2016 (see VBB on Competition Law, Volume 2016, No. 8, available at www.vbb.com). In that case, the Commission discussed the (possible) market for pay TV premium sports channels and noted that "even if the joint venture would foreclose KPN (or other competitors) with respect to Ziggo Sport Totaal and/or HBO, these channels cannot be considered 'must have' and there are sufficient alternatives".
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