COMMISSION DECISION of 19/06/1997 declaring a concentration to be compatible with the common market (Case No IV/M.939 - BANKAMERICA / GENERAL ELECTRIC / 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 parties:

Subject: Case N IV/M.939 - BankAmerica/General Electric/Cableuropa.

1. On 16.05.1997 the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EEC) N 4064/89 by which the undertakings BankAmerica International Investment Corporation and General Electric Capital Services Structured Finance Group, Inc. acquire joint control of Cableuropa S.A. ("Cableuropa") within the meaning of Article 3 (1)(b).

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. 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.

4. 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 aircraft engines, appliances, capital services, lighting, medical services, broadcasting, plastics, power systems, electrical distribution and control, information services, motors and industrial systems and transportation systems.

5. Cableuropa is a Spanish company active in the provision of services using or related to cable television networks ("CATV"). Cableuropa will bid for the necessary authorisations for the deployment and operation of CATV networks and telecommunications services in Spain.THE OPERATION6. The basic structure of the proposed transaction can be described as follows:7. General Electric and BankAmerica will participate as shareholders in the joint venture, Spainco. Spainco, under the joint control of General Electric and BankAmerica, has been established solely for the purpose of this transaction and will enable the parents to reach a unified position over issues concerning Cableuropa.

8. Spainco will purchase [Deleted business secrets] of Cableuropa. The capital structure of Cableuropa after this transaction has been completed will be:

Spainco...........................[Deleted business secrets.]

Banco de Santander.1..............[Deleted business secrets.]

Banco Central Hispanoamericano....[Deleted business secrets.]

Grupo Ferrovial, S.A..............[Deleted business secrets.]

Multitel Cable S.L................[ Deleted business secrets.]

CONCENTRATION

9. Following the Agreements between Cableuropa's shareholders all strategic business decisions in Cableuropa will be taken by a [Deleted business secrets] majority of the voting rights including the approval of the Annual Business Plan and the capital and operating budgets. This majority will confer on Spainco and therefore on General Electric and BankAmerica a veto right over Cableuropa's commercial decisions and business policy. In addition Spainco will name the Managing Director of Cableuropa. The Managing Director will have also the right to nominate all executives of Cableuropa and to designate their responsibilities and their functions. Therefore, General Electric and BankAmerica (through Spainco) will jointly control Cableuropa.

10. The operation amounts to a change of joint control on Cableuropa by all the former shareholders of Cableuropa ( Banco de Santander, Banco Central Hispano, Endesa, Multitel, Ferrovial, Hidroeléctrica and Unión Fenosa), as all strategic decisions had to be taken unanimously by the board, to a situation of joint control by General Electric and BankAmerica through Spainco. As the Commission has explained in its Notice on the notion of undertaking concerned (94/C 385/03) 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 and the operation constitutes a concentration under Article 3 1 b) of the Merger Regulation.

FULL FUNCTION/ABSENCE OF CO-ORDINATION OF ECONOMIC BEHAVIOUR

11. Cableuropa is a full-function joint venture. Cableuropa is a Spanish company which has an interest in 32 subsidiaries. The subsidiaries are bidding for the necessary authorisations (the "concessions") for the deployment of cable television ("CATV") networks and the actual operation of such networks to provide both CATV and telecommunications services in Spain. Cableuropa and the Subsidiaries will have sufficient financial (equity funding in the region of Pts [Deleted business secrets] and other resources in order to operate business activities on a lasting basis (the initial duration of each concession is twenty-five years) and will accordingly operate as an autonomous full function join venture. In addition, none of the parent companies operate on the same product market as that of the joint venture. Therefore, the joint venture is of a concentrative character.

COMMUNITY DIMENSION

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

13. The aggregate EC-wide turnover of at least two of the undertakings concerned exceeds ECU 250 million ( General Electric: [Deleted business secrets] MECU, BankAmerica: [Deleted business secrets] 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

14. The joint venture will be primarily active in the provision of CATV broadcasting services, namely pay television, and in the voice telephony market.

15. The Commission has in previous decisions defined pay television as a separate market, if compared with television financed by advertising or by State contributions.[ See decisions in cases:

- IV/M.110 of 10 September 1991, ABC/Générale des Eaux/Canal +/W.H. Smith TV;

- IV/M.410 of 5 August 1994, Kirch/Richmond/Telepiù;

- IV/M.469 of 9 November 1994, MSG Media Service.] The geographic market would be national in particular for cultural reasons.

16. The voice telephony market can be an affected market by the operation as the cable TV networks and namely the broadband networks, which are being used especially in the field of cable pay-Tv are able to carry the voice telephony service.

17. With regard to the geographic market delimitation it could be argued that at present voice telephony is a national market in Spain as a result of the legal framework.

18. 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

19. Cableuropa has at present neither any relevant market share in the markets described above nor any degree of market power as of the commencement of its operations. A competitor will be 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 will face 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. In addition to that, the parties acquiring control of Cableuropa have no activity at present in Spain in the markets referred to above or other upstream or downstream markets. Therefore there is neither addition of market shares nor vertical relations as a result of this operation and no competition concerns arise.

CONCLUSION

20. 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.