Bundeskartellamt clears takeover of Premiere’s Digital Playout Center by SES Astra (satellite TV /pay TV)

The Bundeskartellamt in Bonn has cleared the acquisition of all the shares in the DPC Digital Playout Center GmbH, Unterföhring, of the Premiere Fernsehen GmbH & Co. KG, Unterföhring, by SES Global Europe S.A., Betzdorf/Luxemburg. The takeover affects the market for broadcasting satellite programmes and the pay TV end consumer market in Germany.

SES Global operates the ASTRA satellite fleet in Europe and in particular provides transponder capacity to broadcasting service providers for the transmission of programmes via satellite to end consumers (DTH “direct to home”). DPC currently provides Premiere with intracompany technical services for pay TV (so-called digital platform: encoding, SmartCard management, set-top boxes). On conclusion of the takeover, SES Astra will open up this digital platform, which until now has been owned by Premiere, to all interested pay TV providers.

The merger will lead to a strengthening of SES Astra’s dominant position in the national market for DTH transponders. However, the unbundling of the digital platform for pay TV from Premiere will result in improved conditions of competition in the national pay TV market and therefore the planned merger was to be cleared (balancing clause).

The strengthening of SES Astra’s dominant position results from the vertical integration of the dominant satellite provider with the only service provider which is able to grant access to the Premiere set top boxes for satellite reception. Thus, two essential technical components of pay TV advance services with net characteristics are bundled under one provider.

However, the parties concerned have established proof that competition conditions on the pay TV market currently dominated by Premiere will improve as a result of the merger in such a way that the improvements outweigh the strengthening of the position (balancing clause). So far, Premiere has sealed off the pay TV market by using proprietary encoding technology and a matching set top box infrastructure. With the merger, access to the established set top box infrastructure will be provided by a company which is independent from Premiere. Thus, a significant entry barrier to the pay TV market will be eliminated. The creation of a neutral platform in the digitalisation stage of satellite transmission is also likely to lead to a significant increase in pay TV market volumes. The opportunities offered by digitalisation can only be utilised with an open pay TV platform.

The Bundeskartellamt considers the positive effects more important than the strengthening of the dominant position on the market for satellite transponders because by unbundling DPC from Premiere an essential infrastructure component is disconnected from the end consumer market for pay TV, a market in which Premiere is dominant. Based on experience with the network-based markets for telecommunications, energy and transport, the unbundling of (bottle neck) advance services and downstream (end consumer) services weighs more in competition terms than the bundling of two advance service components under one provider.