On 25 June 2008, the European Commission cleared News Corp’s acquisition of German pay-TV operator Premiere AG after a detailed investigation. 

The decision is interesting in that the Commission cleared the acquisition on the condition that Premiere’s competitors would continue to have access to Premiere’s satellite distribution platform. The case extends the Commission’s access requirement in the field of satellite platform consolidation[1] to vertical consolidation between content providers and satellite platforms.

The transaction raised two principal competition concerns:

(I) Conditional access (CA):  Prior to its acquisition by News Corp, Premiere's pay-TV competitors had access to Premiere's DTH set-top-boxes (STBs) and were free to sell pay-TV channels to consumers with Premiere boxes.  Competing channels were encrypted with Premiere's CA technology by an independent third party.  Premiere recently announced that it would change its CA technology to that of News Corp's subsidiary NDS, potentially denying competitors access to Premiere's STBs and ultimately consumers.  The Commission was concerned that this would strengthen Premiere's dominant position in the German pay-TV market.

Remedy:  To address the Commission’s concerns, News Corp undertook to allow competing channels access to Premiere’s satellite platform on the same conditions as before the acquisition.  In particular, Premiere’s technical service provider was licensed to encrypt competing channels with NDS’s CA technology.  The remedy also provided for direct delivery of smartcards by NDS to the technical service provider to avoid any discrimination against competitors.

(II) Content:  The Commission also scrutinised the competitive effect of combining News Corp's activities as provider of audiovisual content with Premiere's role as a purchaser of such content.  It reached the conculsion that the acquisition would not foreclose competitors from access to audiovisual content, primarily because several alternative suppliers would remain in the market post-acquisition.  No remedy was required.[2]

Finally, it is interesting to note that the Commission, in line with its previous case law, defined a relevant market for “pay-TV”.  This is different from the UK’s Competition Commission which recently in its prohibition of BSkyB’s acquisition of a minority interest in ITV – the largest commercial Free-to-Air channel in the UK - defined the relevant product market as "all-TV", including both pay-TV and Free-to-Air services.[3]

For further information, please contact: Douglas Lahnborg at +44 (0)20 76655150 or douglas.lahnborg@hellerehrman.com or Ted Henneberry at +44 (0)20 76655222 or ted.henneberry@hellerehrman.com in our London office.