COMMISSION DECISION of 30/07/1998 declaring a concentration to be compatible with the common market (Case No IV/M.1251 - PARTICITEL INTERNATIONAL / CABLEUROPA) according to Council Regulation (EEC) No 4064/89

(Only the English text is authentic).

The paper version of the decision is available through the sales offices of the Office of Official Publications of the European Communities.

PUBLIC VERSION

MERGER PROCEDURE

ARTICLE 6(1)(b) DECISION

To the notifying party

Dear Sirs,

Subject: Case No IV/M. 1251-Particitel International/Cableuropa

Notification of 30/06/1998 pursuant to Article 4 of Council Regulation N/ 4064/89

1. On 30.06.1998 the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EEC) n 4064/89[OJ L 395 p.1 ; corrected version OJ L 257 of 21.9.1990, p.13 ; as last amended by Regulation (EC) No 1310/97, OJ L 180, 9.7.1997, P.1, corrigendum in OJ L 40, 13.2.1998, P.17.] by which the undertaking Capital Communications CDPQ Inc. («CDPQ »), belonging to the group Caisse de dépôt et placement du Quebec (« Caisse de dépôt »), via its subsidiary Particitel International, Limited Partnership (« Particitel »), will acquire a controlling interest in Cableuropa. As a result of the operation, CDPQ, General Electric and Bank of America will jointly control Cableuropa.

2. After examination of the notification, the Commission has concluded that the notified operation falls within the scope of Council Regulation N 4064/89 and does not raise serious doubts as to its compatibility with the common market and with the functioning of the EEA Agreement.

THE PARTIES

3. CDPQ is a wholly owned subsidiary and a member of the private investment group of the Caisse de dépôt. CDPQ is a portfolio management company which invests as a partner the funds entrusted to it by Caisse de dépôt in companies operating in the communications sector. Activities cover all areas related to communications, including audio-visual production, wireless technology, multimedia, publishing and media. Particitel is an investment vehicle of CDPQ.

4. BankAmerica International Investment Corporation ("BankAmerica") forms part of the corporate group of BankAmerica Corporation which provides diverse financial products and services to individuals, businesses, government agencies and financial institutions throughout the world.

5. General Electric Capital Services Structured Finance Group, Inc. ("General Electric") forms part of the corporate group of General Electric Company, a grouping of large businesses in the field of electronic systems and defence, telecommunications and information technology, consumer goods, electronic metrology, inkjet printing, medical equipment and industrial apparatus. GEC is publicly quoted on the London Stock Exchange.

6. Cableuropa is a Spanish company active in the provision of services using or related to cable television networks ("CATV"). Cableuropa bids for the necessary authorisations for the deployment and operation of CATV networks and telecommunications services in Spain.

THE OPERATION

7. On Friday 19 June 1998, CDPQ via Particitel, BA and GE Capital entered into an amended and restated subscription and shareholders agreement, permitting CDPQ to acquire a shareholding interest in Spanish Telecommunications Limited s.a.r.l. ("SpainCom") and consequently control over Cableuropa.

8. SpainCom is a joint venture under the joint control of General Electric and BankAmerica (see Commission decision on 19.06.1997, case IV/M.939-BankAmerica/General Electric/Cableuropa, hereinafter, «the Cableuropa decision»).

9. SpainCom has been established solely for the purpose of enabling the parents to reach a unified position over issues concerning Cableuropa. SpainCom does not have a business activity of its own. SpainCom controls Cableuropa as the Commission indicated in the Cableuropa decision.

CONCENTRATION

10. Upon completion of the notified transaction, General Electric, CDPQ and BankAmerica will control, via their investing subsidiaries, [Deleted: business secret ] of the voting shares of SpainCom. Following the notified agreements General Electric, BankAmerica and CDPQ will need to reach a unified position in SpainCom with regard to any strategic decision to be taken in Cableuropa.

11. In the Cableuropa Decision, the Commission considered that General Electric and BankAmerica enjoyed joint control over Cableuropa because SpainCom, and therefore both General Electric and BankAmerica, has a veto right over Cableuropa's commercial decisions and business policy.

12. Similar to General Electric and BankAmerica, CDPQ (via SpainCom) will also have the right to veto any strategic decisions of Cableuropa. Therefore, it too will have joint control over Cableuropa.

13. The operation amounts to a change of joint control on Cableuropa by General Electric and BankAmerica to a situation of joint control by General Electric, BankAmerica and CDPQ on Cableuropa. As the Commission has explained in its Notice on the concept of undertaking concerned [OJ C 66 of 02.03.1998.] a change in the shareholding through the entry of new shareholders acquiring control is considered as leading to a change in the quality of control.

14. The Commission defined Cableuropa as a full-function joint venture in the Cableuropa decision.

15. The operation constitutes a concentration under Article 3 1 b) of the Merger Regulation.

COMMUNITY DIMENSION

16. The operation has a community dimension. The joint world-wide turnover of the undertakings concerned exceeds ECU 5,000 million (General Electric: [Deleted: business secret ] MECU, BankAmerica: [Deleted: business secret ] MECU, Caisse de dépôt: [Deleted: business secret ] MECU).

17. The aggregate EC-wide turnover of at least two of the undertakings concerned exceeds ECU 250 million ( General Electric:[ Deleted: business secret ] MECU, BankAmerica: [Deleted: business secret ] MECU, Caisse de dépôt: [Deleted: business secret ] MECU), but they do not achieve more than two-thirds of their aggregate Community-wide turnover within one and the same Member State. The notified operation therefore has a community dimension, but does not constitute a co-operation case under the EEA Agreement, pursuant to Article 57 of that Agreement.

COMPATIBILITY WITH THE COMMON MARKET AND THE EEA

Relevant product and geographic markets

18. Cableuropa is primarily active in the provision of CATV broadcasting services, namely pay television, and in the voice telephony market in Spain (see the Cableuropa decision).

19. It is however, for the assessment of the present operation, not necessary to define the relevant product and geographic markets since even the narrowest definitions will not give rise to the creation or strengthening of a dominant position.

ASSESSMENT

20. The participation of CDPQ in Cableuropa increases the financial ability of the joint venture and does not change the evaluation made by the Commission in case IV/M.939-BankAmerica/General Electric/Cableuropa that a competitor is introduced in the Spanish market place with both the technical ability to provide a full range of telecommunication and media services and the financial strength to sustain its competitiveness beyond the short term. The new player faces active competition from other companies with a very strong presence in the markets affected and in particular Telefónica in the telecommunications field and Sogecable in the pay tv market.

CONCLUSION

21. For the above reasons the Commission has decided not to oppose the notified operation and to declare it compatible with the common market and with the functioning of the EEA Agreement. This decision is adopted in application of Article 6 (1)(b) of Council Regulation (EEC) N 4064/89.

For the Commission,