Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE  
Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel,   BELGIË  
 
Tel: +32 229- 91111. Fax: +32 229- 64301. E -mail: COMP -MERGER -REGISTRY@ec.europa.eu.   EUROPEAN COMMISSION  
Brussels,  12.04.2021  
C(2021) 2629 final  
PUBLIC VERSION 
 
UNITED INTERNET AG  
Elgendorfer Straße 57 
56410 Montabaur  
Germany 
 
MORGAN STANLEY  
Große Gallusstraße 18 
60312 Frankfurt am Main  
Germany  
Subject : Case M. 10163 – United Internet / Morga n Stanley / Tele Columbus  
Commission decision pursuant to Article 6(1)(b) of Council Regulation 
No 139/20041 and Article 57 of the Agreement on the European Economic 
Area2 
Dear Sir or Madam,  
(1) On 3 March 2021, the European Commission receive d notification of a proposed 
concentration pursuant to Article 4 of Council Regulation (EC) No 139/20043, by 
                                                 
1  OJ L 24, 29.1.2004, p. 1 (the ' Merger Regulation '). With effect from 1 December 2009, the Treaty on the 
Functioning of the European Union ( 'TFEU ') has introduced certain changes, such as the replacement of  
'Community ' by 'Union'  and 'common market ' by 'internal market '. The terminology of the TFEU will be 
used throughout this decision.  
2  OJ L 1, 3.1.1994, p. 3 (the 'EEA Agreement'). 
3 OJ L 24, 29.1.2004, p. 1 (the ‘ Merger Regulation ’). 

 
 
2 which United Internet AG (“United Internet” , Germany) and Morgan Stanley (USA) 
will indirectly acquire  within the meaning of Article 3(1)(b) joint control of Tele 
Columbus AG (“Tele Columbus” , Germany). This operation is hereafter referred to as 
the “Transaction” . United Internet  and Morgan Stanley are referred to as the 
“Notifying Parties”.  United Internet, Morgan Stanley and Tele Columbus are 
colle ctively referred to as the “Parties”  
1. THE PARTIES  
(2) United Internet  is a provider of telecommunications and Internet services for 
consumers, small and home offices as well as small -to-medium-sized companies , 
active  mostly in Germany.  
(3) Morgan Stanley is a global financial services firm providing a wide range of 
investment banking, securities, wealth management and investment management 
services. […]. 
(4) Tele Columbus is an independent broadband cable network operator active in the 
fields of multimedia an d telecommunications with broadband cable network 
infrastructures mainly located in Germany.  
2. THE OPERATION  AND CONCENTRATION  
(5) On 21 December 2020, United Internet , through its subsidiary United Internet 
Investments Holding AG & Co. KG,  and Morgan Stanley, through its subsidiary 
Canterbury Holding B.V. (“Canterbury Holding”)4, entered into a Shareholders’ 
Agreement and a Transaction Agreement pertaining to the acquisition of joint control of Tele Columbus via a public takeover offer (“the Offer”) . The O ffer w as made by 
Kublai GmbH (“Kublai”), an indirect subsidiary of Morgan Stanley, commenced on 
1 February 2021 and is subject to a minimum acceptance rate of 50% plus one share 
of all outstanding Tele Columbus shares. 
(6) Pre-Transaction, United Internet holds a non-controlling share of approximately 
29.9% of Tele Columbus’ share capital. Following the Transaction, United Internet 
will sell its shares in Tele Columbus to Hilbert Management GmbH (“Hilbert 
Management”), an indirect subsidiary of Morgan Stanley, and, simultaneously, will 
acquire shares in Kublai from Hilbert Management, with an economic value 
corresponding to its previous shareholding in Tele Columbus. The shareholding of 
United Internet in Kublai is dependent on the precise outcome of the Offer. However, based on the Shareholders Agreement, it will not exceed 50% minus one share in 
Kublai.  
(7) On 1 March 2021, United Internet exercised its right under the Transaction 
Agreement to declare its intended level of (indirect) shareholding in Kublai within the  
range of […]% and […]%, regardless of the result of the Offer and thereby confirmed 
it shall be […]%.  
                                                 
4  On 15 January 2021, Hilbert M anagem ent GmbH, a wholly -owned subsidiary of Canterbury Holding, 
replaced the latter for the purposes of the Transaction Agreement.  
 
 
3 (8) Accordingly, United Internet will (indirectly) hold no less than […]%, but in any 
event less than 50%, of the shares in Tele Columbus.  
(9) Despite the unequal shareholding, Morgan Stanley and United Internet  will acquire 
indirect joint control  of Tele Columbus, for the following reasons . 
(10) According to paragraph 65 of the Commission Consolidated Jurisdictional Notice  
under Council Regulation (EC) No 139/2004 on the control of concentrations between 
undertakings , joint control may exist even where there is no equality between the two 
parent companies in votes or in representation in decision- making bodies or where 
there are more than two parent companies. This is the case where minority shareholders have additional rights which allow them to veto decisions which are essential for the strategic commercial behaviour of the joint venture . 
(11) The evidence as regard s the decisi on-making bodies is inconclusive and does not 
allow to find joint control. At the level of Kublai, an Advisory Board will be set up as 
a forum for shareholders to discuss all matters regarding Kublai and Tele Columbus 
and to coordinate the exercise of voti ng and shareholders’ rights of Kublai in the 
General Meeting of Tele Columbus.
5 In particular, the Advisory Board shall be 
responsible for material decisions regarding […], except for certain reserved matters 
and decisions regarding the business plan of Te le Columbus. Morgan Stanley and 
United Internet will be entitled to appoint  […]. Moreover, Morgan Stanley will be 
entitled  […], while  United Internet  […]. However, […].  
(12) In addition, Kublai shall be managed by -[…].6 The managing directors  […]. 
However  […].7 
(13) At the level of Tele Columbus, Kublai shall cast its votes in the General Meeting in 
accordance with the instructions set forth in the duly resolved resolution by Kublai’s 
Advisory Board.8 In addition, both Morgan Stanley and United Internet will be 
entitled  […].9 Moreover, Morgan Stanley will be entitled[…], while United Internet 
will have the right  […].10 However, the parties agreed that in the event that the  […].11 
Finally, as regards  […], Morgan Stanley and United Internet intend to follow a joint 
approach, with United Internet having the right to ultimately […].12 
(14) However, both Morgan Stanley and United Internet will enjoy veto rights regarding 
Tele Columbus’ business plan and other strategic decisions pertaining to Tele 
Columbus, including investments over EUR […] million and company transactions 
(such as indebtedness) over EUR […] million.  
                                                 
5  Section 6.7 of the Shareholders ’ Agreement.  
6  Section 6.2 of the Shareholders ’ Agreement.  
7  Section 6.6 of the Shareholders ’ Agreement.  
8  Section 7.3 of the Shareholders ’ Agreement.  
9  Section 7.3 of the Shareholders ’ Agreement.  
10  Section 7.6 of the Shareholders ’ Agreement.  
11  Section 7.7 of the Shareholders ’ Agreement.  
12  Sections 7.11 and 6.1 of the Shareholders ’ Agreem ent.  
 
 
4 (15) With regard to the business plan, the Notifying Parties have agreed that they will 
update the business plan (including the budget) […].13 The Notifying Parties have 
agreed that,  […].14 Finally, the Notifying Parties have agreed that  […].15 
(16) The Notifying Parties have agreed  […]. The agreed upon business plan includes  […].  
(17) In addition to their veto rights with respect to the business plan, irrespective of their 
exact shareholdings in Tele  Columbus, the Notifying Parties will have veto rights 
regarding any major investments that are not extraordinarily high and constitute an 
essential feature of the industry.16  
(18) On balance, the Commission considers that, due  to the veto rights both United 
Internet and Morgan Stanley will enjoy with respect to the detailed business plan of 
Tele Columbus as well as  the veto rights regarding  major investments  including those 
not extraordinarly high, the Notifying Parties will acquire joint control of Tele 
Columbus.  
(19) Therefore, as a result of the Transaction, United Internet and Morgan Stanley will jointly control Tele Columbus within the meaning of Article 3(1)(b) of the Merger Regulation  
3. EU
 DIMENSION  
(20) The undertakings concerned have a combined aggregate worl dwide turnover of more 
than EUR 5 000 million (EUR […]  million). Each of United Internet, Morgan Stanley 
and Tele Columbus have an EU -wide turnover of more than EUR 250 million (United 
Internet: EUR […] million, Morgan Stanley: EUR […] million and Tele Col umbus: 
EUR […] million).  
(21) While United Internet and Tele Columbus achieve more than two thirds of their respective EU -wide turnover in Germany, Morgan Stanley does not. 
(22) Therefore, the Transaction has a Union dimension pursuant to Article 1(2) of the 
Merger  Regulation.  
                                                 
13  Section 3.2 of the Shareholders ’ Agreement.  
14  Section 3.5 of the Shareholders’ Agreement . 
15  Sections 6.25(k) and 6.30(f)(xi) of the Shareholders’ Agreement . 
16  Sections 6.25 (g) and (i) and 6.30(f)(vii) and (ix) of the Shareholders’ Agreement . 
 For instance, given the total amount of investment with regard to the Fiber Champion Strategy, which 
involves investments of  up to EUR 2.0 billion within the next 10 years, any material indebtedness with a 
maximum threshold of EUR […] million  is considered as extraordinarily high. In view of future 
investments under the Fibre Champion Strategy, the Parties expect this threshold to be exceeded regularly.  
 Furthermore, telecommunication networks are key infrastructure where the investment policy of a company plays a significant role. Especially in view of the necessity to upgrade existing networks and roll-out new fibre networks, s ignificant investments are an essential industry feature and of utmost 
importance for each market participant to be an effective competitor,  […]. The investment decisions, 
which require the consent of all shareholders and shall not be carried out without such consent, go beyond the mere protection of the financial interests of the minority shareholder and equally contribute to both Morgan Stanley and United Internet having the ability to influence the overall strategic business policy of Tele Columbus.  
 
 
5 4. RELEVANT MARKETS  
4.1. Introduction  
(23) United Internet and Tele Columbus are active in a number of telecommunications and 
TV markets in Germany, while Morgan Stanley is not active in any relevant market in Germany. While t he activities of United Internet and Tele Columbus  overlap in a 
number of markets
17, they do not lead to any horizontally affected market. The only 
vertical relationships between the  activities of United Internet and Tele Columbus that 
lead to affected markets are those between the ups tream market for wholesale call 
termination on fixed networks and the downstream markets for retail fixed and mobile telecommunications services, respectively.  
(24) Additionally, Tele Columbus is currently upgrading its hybrid fibre coaxial (“HFC”)  
network by replacing the coaxial parts with fibre (both fibre -to-the-building (“FTTB”) 
and fibre -to-the-home (“FTTH”)). The network enables fast internet connections of 
up to several hundred megabi ts per second under DOCSIS 3.0 or DOCSIS 3.1 internet 
transmission sta ndard. In this context, it will start offering wholesale broadband 
access post -Transaction. This will result in a potential vertical relationship with the 
downstream market for the retail supply of internet access services, in which United 
Internet is acti ve. However, given Tele Columbus’ limited footprint in Germany
18 and 
United Internet’s and Tele Columbus’ modest combined market share on the 
downstream market19, this potential vertical relationship would not lead to any 
affected markets in the foreseeable future. 20  
                                                 
17  The markets for retail supply of fixed telephony services , retail supply of fixed i nternet access services , 
retail business connectivity services;  retail supply of TV service s, retail supply of TV signal transmission 
to single -dwelling units , the potential  market for r etail s upply of multiple play services, w holesale 
termination and hosting of calls to non- geographic numbers;  wholesale leased lines , wholesale acquisition 
of TV channels  and c olocation services.  
18  In particular, Tele Columbus United expects to achieve a market share of below [0 -5]% on the upstream 
market for wholesale broadband access, and a market share of well below 30% on the potential segment 
for wholesale broadband access based on layer 3 -bitstream.  
19  On the downstream market for the re tail supply of fixed internet access services, United Internet’s market 
share in 2019 was of [10- 20]% by revenues and [10- 20]% by volume, while Tele Columbus had a market 
share of [0 -5]% by revenues and [0 -5]% by volume. Therefore, under all plausible segm entations, United 
Internet’s and Tele Columbus‘ individual and combined market share on the downstream market remains well below 30%.  
20  The Commission considers that in any event, the Transaction does not give rise to serious doubts as to its 
compatibilit y with the internal market in relation to the vertical link between the upstream market for 
wholesale broadband access and the downstream market(s) for the supply of internet access services, for 
the following reasons. With regard to input foreclosure , the Commission considers that Tele Columbus 
would not have the ability to foreclose United Internet’s downstream competitors, due to its limited footprint and the resulting low market share of below [0 -5]%. In addition, the Parties would have no 
incentive to engage in input foreclosure, in particular due to the diverging interests of the two parents United Internet and Morgan Stanley. Moreover, the Notifying Parties have publicly confirmed that the business rationale of their investment in Tele Columbus is to benefit from the roll- out of Tele Columbus 
fiber network in Germany and, in particular, the fact that it will be based on an “open access” strategy with the view to maximise the number of users connected to that network (see the Public Takeover Announcement by Kublai GmbH, p. 34)). Finally, any input foreclosure strategy would have no likely impact on competition in the downstream market, due to Tele Columbus’ limited footprint and the fact that downstream competitors can rely on their respective nation -wide networks.  
 
 
 
6 4.2. Wholesale call termination on  fixed  networks  
(25) Call termination is the service provided by a network operator on the supply side to 
other network operators on the demand side, whereby a call originating in a demand 
side operator’s network is delivered to a user in the supply side operator’s network. This service is required by every originating operator, as it is necessary for its 
customers to be able to communicate with the customers of other networks. Call 
termination is therefore a wholesal e service that is resold or used as an input for the 
provision of downstream retail fixed and mobile telephony services.  
4.2.1. Product market definition  
(26) In previous decisions, the Commission has identified relevant markets for the 
provision of wholesale call termination on fixed and mobile networks. The 
Commission further considered that there is no substitute for call termination on 
individual networks as the operator transmitting the call can reach the intended 
recipient only through the operator of the network to which that recipient is 
connected. Therefore, each individual network, either fixed or mobile, constitutes a 
separate market.
21  
(27) The Notifying Parties do not object to the Commission’s decisional practice according 
to which the relevant product market i s the market for wholesale call termination 
services on fixed networks.  
(28) For the purpose of the present decision, the Commission considers that, as regards wholesale call termination services on fixed networks, termination on each individual 
fixed network c onstitutes a separate product market.  
4.2.2. Geographic market definition  
(29) In previous decisions, the Commission has found that the market for wholesale call 
termination services  on fixed networks  is national in scope, considering that the 
geographic scope of each  wholesale market for call termination should correspond to 
the dimensions of the operator’s network, which is limited to national borders due to 
regulatory barriers.
22  
                                                                                                                                  
With regard to customer foreclosure, the Commission considers that the Parties will not have the ability to 
foreclose upstream providers of wholesale broadband access, given United Internet’s low market share of 
below 20% in the market for internet access services. Additionally, United Internet has no incentive to solely rely on wholesale broadband access from Tele Columbus, given Tele Columbus’ limited footprint and United Internet’s necessity to supply customers nation- wide. Therefore, the  Commission considers 
that any customer foreclosure strategy would have no impact on competition in the market for wholesale broadband access.  
21  Commission decision of 27 November 2018 in case M.8792  – T-Mobile NL/Tele2 NL, para graph 259; 
Commission decis ion of 15 July 2019 in case M.9370 – Telenor/DNA; Commission decision of 
27 July 2018 in case M.8883 – PPF/Telenor Target Companies; Commission decision of 12 December 
2012 in case M.6497 – H utchison 3G Austria/Orange Austria, pa ragraph 68 . 
22  Commission d ecision of 27 November 2018 in case M.8792  – T-Mobile NL/Tele2 NL, paragraph  263; 
Commission decision of 15 July 2019 in case M.9370 – Telenor/DNA, paragraph 81; Commission 
decision of 27 July 2018 in case M.8883  – PPF/Telenor Target Com panies, paragraph 35; Commission 
decision of 3 August 2016 in case M.7978 – Vodafone/Liberty Global/Dutch JV,  paragraph 210.  
 
 
7 (30) The Notifying Part ies do not object to the Commission’s decisions  according to which 
the market for wholesale call termination services on fixed networks is national.  
(31) The Commission observes that nothing in the present case indicates that the market 
should be defined differently in the present case  – in particular, considering that the 
geographic scope of each wholesale market for fixed call termination corresponds to 
the dimension of each operator’s network which, due to regulatory barriers, is limited 
to the national territory within which it operates. Consequently, for the purpose of the 
present decision, and in line with its previous decisional practice the Commission 
considers that the market for wholesale fixed call termination services is national in 
scope. 
4.3. Retail supply of fixed telecommunications services  
(32) Fixed telephony services comprise the provision of connection services at a fixed 
location or access to the public telephone network, for the purpose of making and/or 
receiving calls and related services.  
4.3.1. Product market definition  
(33) In previous decisions, t he Commission considered whether a distinction should be 
made between (i) regional/national and internationa l calls as well as between 
(ii) residential and non-residential customers, but ultimately left the exact product 
market definition open.23 The Commis sion however considered that managed Voice 
over Internet Protocol (“VoIP”) services and fixed voice services provided through 
fixed lines are interchangeable and therefore belong to the same market.24 The 
Notifying Parties consider this product market definition as plausible.  
(34) For the purpose of the present decision, the Commission considers that the exact 
product market definition in relation to the provision of retail supply of fixed 
telecommunications services (whether an overall market for fixed telecommunication 
services  would be considered or whether the market would be segmented between 
regional/national and international calls or between residential and non-residential 
customers ) can be left open as the Transaction does not give rise to seriou s doubts as 
to its compatibility with the internal market  or the functioning of the EEA Agreement  
under any such product market definition.  
4.3.2. Geographic market definition  
(35) As regards the geographic scope  of the retail supply of fixed telecommunications 
servic es, in previous decisions, the Commission has considered that the geographic 
scope is national.25 This reflects the continuing importance of the role of national 
                                                 
23  Commission decision of 07 September 2005 in case M.3914 – Tele2/Versatel, paragraph 10; Commission 
decision of 29 June 2010 in case M.5532 – Carpho ne Warehouse/Tiscali UK, paragraphs. 35 and 39; 
Commission decision of 9 January 2010 in case M.5730 – Telefónica/Hansenet Telekommunikation, 
paragraphs. 16 and 17.  
24  Commission decision of 03 August 2016 in case M.7978 – Vodafone/Liberty Global/Dutch JV,  
paragraph 40; Commission decision of 04 February 2016 in case M.7637 – Liberty Global/BASE 
Belgium, para graph 64.  
25  Commission decision of 27 November 2018 in case M.8792  – T-Mobile NL/Tele2 NL, para graph 271; 
Commission decision of 15 July 2019 in case M.9370 – Teleno r/DNA;  Commission decision of 
27 July 2018 in case M.8883  – PPF/Telenor Target Companies; Commission decision of 3 August 2016 in 
 
 
 
8 regulation in the telecommunications sector, the supply of upstream wholesale 
services on a nat ional basis, as well as the fact that the pricing policies of 
telecommunications providers are predominantly national .26 
(36) The Notifying Part ies considers the market to be national in scope, based on the 
Commission's precedents. 
(37) The Commission observes that nothing in the present case indicates that the market should be defined differently in the present case – in particular taking into account the 
importance of national regulation in the telecommunications sector and the fact that  
the upstream wholesale services are provided on a national basis. Consequently, for the purpose of the present decision and in line with its previous decisional practice, 
the Commission considers that the market for the supply of fixed telecommunications 
services is national in scope. 
4.4. Retail supply of mobile telecommunications services  
(38) Mobile tele communications services to end customers  include services for national 
and international voice calls, SMS (including MMS and other messages), mobile 
internet with data services, access to content via the mobile network and retail 
international roaming services . 
4.4.1. Product market definition  
(39) In previous decisions, the Commission has not further segmented the overall retail 
mobile market based on the type of service (voi ce calls, SMS, MMS, mobile Internet 
data services), or the type of network technology. The Commission has considered 
possible segments of the overall retail market for mobile telecommunication services 
by distinguishing between pre -paid and post-paid servi ces and between private 
customers and business customers , concluding that these did not constitute separate 
product markets but were rather market segments within an overall retail market .
27  
(40) The Notifying Parties do not object to the Commission’s previous decisional practice, 
i.e., as the overall retail market for the mobile telecommunication services without 
further segmentation.  
(41) For the purpose of the present decision, the Commission considers that the exact 
product market definition in relation to the provision of retail mobile 
telecommunications services (whether there is an overall market for retail mobile 
communication services or whether this market should be segmented between pre -
                                                                                                                                  
case M.7978 – Vodafone/Liberty Global/Dutch JV, para graph 40; Commission decision of 
4 February  2016 in case M.7637 – Liberty Global/BASE Belgium, para graph 64.  
26  Commission decision of 27 November 2018 in case M.8792  – T-Mobile NL/Tele2 NL, paragraph  274; 
Commission decision of 15 July 2019 in case M.9370 – Teleno r/DNA;  Commission dec ision of 
27 July 2018 in case  M.8883 – PPF/Telenor Target Companies, paragraph 22; Commission decision of 
3 August 2016 in case M.7978, Vodafone/Liberty Global/Dutch JV, paragraph  40; Commission decision 
of 4 February 2016 in case M.7637 – Liberty Global/BASE Belgium, paragraph  73. 
27  Commission decision of 15 July 2019 in case M.9370 – Telenor/DNA , paragraphs 40- 42; Commission 
decision of 27 July 2018 in case M.8883 – PPF/Telenor Target Companies , paragraphs 12- 13; 
Commission decision of 27 November 2018 in case M.8792 – T-Mobile NL/T ele2 NL , 
paragraphs  157- 160; Commission decision of 4 April 2007 in Case M.4591  – Weather Investments/Hellas 
Telecommunications, paragraph  10. 
 
 
9 paid and post -paid or between private and business customers) can be l eft open as the 
Transaction does not give rise to serious doubts as to its compatibility with the 
internal market  or the functioning of the EEA Agreement  under any such product 
market definition.  
4.4.2. Geographic market definition  
(42) In previous decisions, the Commission has consistently found the market for retail 
mobile communication services to be national in scope.28 
(43) The Notifying Parties do not object that the market should be considered national in 
scope in line with previous Commission decisions.  
(44) The Commi ssion observes that nothing in the present case indicates that  the market 
should be defined differently in the present case  – in particular considering that 
licences to mobile operators are granted on a national basis. Consequently, for the 
purpose of the present decision and in line with its previous decisional practice, the 
Commission considers the market for retail mobile telecommunications services to be national in scope.  
5. C
OMPETITIVE ASSESSMEN T 
5.1. Analytical framework  
(45) Under Article 2(2) and (3) of the Me rger Regulation, the Commission must assess 
whether a proposed concentration would significantly impede effective competition in the internal market or in a substantial part of it, in particular through the creation or strengthening of a dominant position.  
(46) In this respect, a merger may entail horizontal and/or non-horizontal effects. 
Horizontal effects are those deriving from a concentration where the undertakings 
concerned are actual or potential competitors of each other in one or more of the 
relevant ma rkets concerned. Non-horizontal effects are those deriving from a 
concentration where the undertakings concerned are active on different relevant markets. 
(47) With regard to non-horizontal mergers, two broad types can be distinguished: vertical 
and conglomerat e mergers. Vertical mergers involve companies operating at different 
supply chain levels.  
(48) The Commission appraises horizontal effects in accordance with the guidance set out 
in the Horizontal Merger Guidelines
29 while  non-horizontal effects are appraised i n 
accordance with the guidance set out in the Non-Horizontal Merger Guidelines.30 
                                                 
28  Commission decision of 18 July 2019 in case M.8864 – Vodafone/Certain Liberty Global Assets, 
paragraph 67; Commission decision of 15 July 2019 in case M.9370 – Telenor/DNA, paragraphs 44- 46; 
Commission decision of 27 July 2018 in case M.8883 – PPF/Telenor Target Companies , 
paragraphs  15-16; Commission decision of 27 November 2018 in case M.8792 – T -Mobile NL/Te le2 NL . 
29  Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of 
concentrations between undertakings ("Horizontal Merger Guidelines"), OJ C 31, 05.02.2004.  
 
 
10 (49) A merger between companies which operate at different levels of the supply chain 
may significantly impede effective competition if such merger gives rise to 
foreclosure.31 Foreclosure occurs where actual or potential competitors' access to 
supplies or markets is hampered or eliminated as a result of the merger, thereby 
reducing those companies’ ability and/or incentive to compete.32 Such foreclosure 
may discourage entry or expans ion of competitors or encourage their exit.33 
(50) The Non-Horizontal Merger Guidelines distinguish between two forms of foreclosure. 
Input foreclosure occurs where the merger is likely to raise the costs of downstream 
competitors by restricting their access to an important input. Customer foreclosure 
occu rs where the merger is likely to foreclose upstream competitors by restricting 
their access to a sufficient customer base .34  
(51) Pursuant to the Non-Horizontal Merger Guidelines, input foreclosure  arises where, 
post-merger, the new entity would be likely to restrict access to the products or 
services that it would have otherwise supplied absent the merger, thereby raising its 
downstream rivals’ costs by making it harder for them to obtain supplies of the input 
under similar prices and conditions as absent the merger.35 
(52) For input foreclosure to be a concern, the merged entity should have a significant 
degree of market power in the upstream market. Only when the merged entity has 
such a significant deg ree of market power, can it be expected that it will significantly 
influence the conditions of competition in the upstream market and thus, possibly, the 
prices and supply conditions in the downstream market .36 
(53) In assessing the likelihood of an anticompetit ive input foreclosure scenario, the 
Commission examines, first, whether the merged entity would have, post -merger, the 
ability to substantially foreclose access to inputs, second, whether it would have the 
incentive to do so, and third, whether a foreclosure strategy would have a significant 
detrimental effect on competition downstream.37 The three criteria are cumulative.38 
(54) Pursuant to the Non-Horizontal Merger Guidelines, customer foreclosure  may occur 
when a supplier integrates with an important customer i n the downstream market and 
because of this downstream presence, the merged entity may foreclose access to a sufficient customer base to its actual or potential rivals in the upstream market (the 
input market) and reduce their ability or incentive to compe te, which in turn, may 
raise downstream rivals ’ costs by making it harder for them to obtain supplies of the 
                                                                                                                                  
30  Guidelines on the assessment of non- horizontal merger s under the Council Regulation on the control of 
concentrations between undertakings ("Non- Horizontal Merger Guidelines"), OJ C 265, 18.10.2008.  
31  Guidelines on the assessment of non- horizontal mergers under the Council Regulation on the control of 
concen trations between undertakings ("Non- Horizontal Merger Guidelines"), OJ C 265, 18.10.2008, p. 11, 
paragraphs.  17-18. 
32  Non-Horizontal Guidelines, paragraph  18. 
33  Non-Horizontal Guidelines, paragraph 29.  
34  Non-Horizontal Guidelines, paragraph 30.  
35  Non-Horizontal Guidelines, paragraph 31.  
36  Non-Horizontal Guidelines, paragraph 35.  
37  Non-Horizontal Guidelines, paragraph 32.  
38  Judgements of the General Court  of 23 May 2019, Case KPN v Commission , T‑370/17, 
ECLI:EU:T:2019:354, paragraph 119 and of 27 January 2021, Case  KPN v Commission , T-691/18, 
ECLI:EU:T:2021:43, paragraph 112.  
 
 
11 input under similar prices and conditions as absent the merger. This may allow the 
merged entity profitably to establish higher prices on the downs tream market .39 
(55) For customer foreclosure to be a concern, a vertical merger must involve a company 
which is an important customer with a significant degree of market power in the 
downstream market. If, on the contrary, there is a sufficiently large customer base, at 
present or in the future, that is likely to turn to independent suppliers, the Commission is unlikely to raise competition concerns on that ground.
40  
(56) In assessing the likelihood of an anticompetitive customer foreclosure scenario, the Commission examines, first, whether the merged entity would have the ability to 
foreclose access to downstream markets by reducing its purchases from its upstream 
rivals, second, whether it would have the incentive to reduce its purchases upstream, 
and third, whether a foreclosure strategy would have a significant detrimental effect 
on consumers in the downstream market.
41 
5.2. Identification of affected markets  
(57) The Transaction gives rise to the following vertically affected markets : 
a. the upstream market for wholesale call t ermination services on fixed 
networks  in connection to the downstream market for retail supply of fixed 
telecommunications services , and  
b. the upstream market for wholesale call termination services on fixed 
networks and the downstream market for retail sup ply of mobile 
telecommunications services .  
(58) Call termination service s are wholesale service s provided by network operators that 
allows users of different networks t o communicate with each other. The market for 
wholesale termination of calls on fixed networks is therefore vertically related to the retail markets for fixed and mobile telephony services  with the following respective 
market shares .  
                                                 
39  See Non -Horizontal Guidelines, paragraph 58.  
40  See Non -Horizontal Guidelines, paragraph 61.  
41  See Non -Horizontal Guidelines, paragraph 59.  
 
 
12 Table 1: Vertically affected markets in Germany  
Upstream market  Downstream markets  
Wholesale fixed call termination in 
Germany:  
- United Internet: [90-100]%;  
- Tele Columbus: [90-100]%  Retail fixed telecommunications 
services in Germany:  
- United Internet: [5-10]% by revenue or 
[10-20]% by volume;  
- Tele Columbus: [0-5]% by revenue or 
[0-5]% by volume  
Retail mobile telecommunications 
services in Germany:  
- United Internet: [5-10]% by revenue 
or [5-10]% by volume  
 
(59) As regards the upstream market for wholesale call termination services on fixed 
networks, by definition, each network operator holds a market share of 100% on the 
calls terminating on their own respective networks .42 
(60) The German downstream retail market for fixed telephony services is charact erised by 
the presence of the incumbents Deutsche Telekom and Vodafone  with respectively 
[40-50]% and [20-30]% of the market based on subscriptions as of end 2019. Tele 
Columbus and United Internet’s activities on that market are limited at a combined 
share of [10-20]%  with a market share increment brought about by the Transaction of 
[0-5]%.43 Moreover, t he combined market share s of United Internet and Tele 
Columbus remain below 20% even under the narrowest plausible market 
segment ation  of the retail market for fixed telephony services  (as discussed above 
under paragraph (34)).  
(61) The German downstream retail market for mobile  telephony services is characterised 
by the presence of the market leaders  Deutsche Telekom, Vodafone and Telefonica  
with respectively [30-40]%, [20-30]% and [10-20]% of the market based on revenues  
as of end 2019. United Internet had a market share of [5-10]% based on revenues in 
2019, while Tele Columbus exited the market in January 2020.44 
(62) The Commission considers that the Transaction does not give rise to serious doubts as 
to its compatibility with the internal market in relation to the vertical link s between 
the upstream market  for wholesale fixed call termination services and the downstream 
markets for retail supply of fixed telephony services and retail supply of mobile 
telecommunication services, for the following reasons.  
                                                 
42  As confirmed in Commis sion decision of 18 July 2019 in case M.8864, Vodafone/Certain Liberty Global 
Assets, paragraph 1584.  
43  Form CO, paragraph 206 (based on data from United Internet, Tele Columbus, the BNetzA  and publicly 
available information ). 
44  Form CO, paragraph 222 (based on data from United Internet, Tele Columbus, the BNetzA  and publicly 
available information ). 
 
 
13 5.3. Input foreclosure  
5.3.1. Notif ying Parties’ arguments  
(63) The Notifying Part ies consider that the Transaction is unlikely to raise any vertical 
input foreclosure effects with regard to wholesale call termination on fixed networks 
and the downstream retail supply of fixed and mobile telecommunication services. 
(64) The Not ifying Parties argue that it cannot materialize to the extent that the provision 
of wholesale call termination services on fixed networks in Germany is subject to ex-
ante regulation by the German telecommunications regulator (Bundesnetzagentur or 
“BNetzA”)  and that, thereby, the regulator warrants that access to call termination is 
granted on reasonable and non-discriminatory conditions.45 Therefore, the Notifying 
Parties argue that United Internet and Tele Columbus will not have any ability to restrict or l imit access to call termination on fixed networks. 
(65) Irrespective of the regulatory obligations, the Notifying Parties further argue that United Internet and Tele Columbus would not have any incentive to foreclose access 
to their fixed networks with respect to call termination vis -à-vis downstream 
competitors (e.g., Deutsche Telekom or Vodafone) as it would deprive their own 
retail customers of the ability to be called by customers from other (significantly 
larger) networks and, rather, give them the opportunity to switch to other suppliers. 
Such a practice would harm United Internet and Tele Columbus’ own market 
positions by significantly degrading the attractiveness of their telecommunication 
services.  
5.3.2. Commission’s assessment  
5.3.2.1. Ability to engage in input foreclosure  
(66) The Commission considers that the Parties will not have the ability to engage in input 
foreclosure by restricting access to their respective upstream call termination 
networks to the downstream rivals and thereby discriminate against them or ot herwise 
degrade terms and conditions for the provision of wholesale fixed call termination 
services in Germany.  
(67) The Commission notes that there are regulatory obligations applying to the wholesale 
fixed call termination markets in Germany based on decisions of the BNetzA . Those 
regulatory obligations include access to specific network facilities, transparency (including publication of draft interconnection agreements on the network operator’s 
website), non-discrimination and price control. Furthermore, as established by 
Article  75 of the European Electronic Communications Code, on 21 December 2020 
the Commission adopt ed a delegated act setting the Eurorates (a single Union- wide 
mobile and a single Union-wide fixed  termination rate). That means that as soon as 
the rates set out by the Delegated Regulation will be applicable to the termination 
services included in its scope (which is expected by mid-2021 depending on when the 
regulation enters into force), the termination rates currently imposed by the German 
regulator will no longer apply.  
                                                 
45  Form CO, paragraph 228.  
 
 
14 5.3.2.2. Incentive to engage in input foreclosure  
(68) The Commission notes that the three conditions  for the vertical input foreclosure 
scenario being cumulative, the absence of the ability to foreclose would be sufficient 
to rule out any such strategy. T he Commission nevertheless assess es for 
completentess the existence of an incentive  to foreclose . 
(69) Pursuant to the Horizontal Merger Guidelines46 as well as by its previous decision 
practice47, the Commission notes that joint control preve nts foreclosure strategies that 
do not benefit all jointly controlling shareholders . While United Internet may have an 
incentive to engage in  input foreclosure  practices  vis-à-vis downstream retail fixed or 
mobile competitors48 by not giving them wholesale access to t he Parties’ respective 
fixed telephony networks , the Commission considers that Morgan Stanley’s own 
incentive to maximize their financial return will prevent United Internet from giving 
itself any potential benefit in the downstream market s given that it  has no 
shareholding in United Internet.49  
(70) In addition, i n view of the limited relative importance the Parties at wholesale fixed 
call termination services level in Germany  when compared to the major network 
providers (i.e., Deutsche Telekom  and Vodafone), the Commission considers that the 
Parties  will not have an incentive to discriminate against or otherwise degrade the 
terms and conditions for the provision of such services  to their retail fixed or mobile 
competitors to the extent that those  are, in large part, the same as the upstream 
network providers and the Parties would stand losing much more if any of those  
competitors were to retaliate and cut off the Parties from their respective upstream networks  as, in such s ituation s, the Parties w ould no longer be able to connect their 
own retail customers to the (much ) wider networks of their competitors  and thereby 
significantly limit the commercial and operational attractiveness of their own retail 
fixed telephony and mobile telecommunication se rvices . 
(71) For the reasons set out above, the Commission concludes that the Parties  would not 
have the incentive to foreclosure rival operators by engaging in input foreclosure 
practices . 
5.3.2.3. Impact on effective competition 
(72) The Commission considers that due to the lack of ability and incentive, it is not 
necessary  to conclude whether any input foreclosure strategy would have a negative 
impact on effective competition, the three criteria being cumulative .  
                                                 
46  European Commission, Guidelines on the assessment of non- horizontal mergers under the Council 
Regulation on the control of concentrations between undertakings, 2008/C 265/07, para graph 45, 
footnote  6.  
47  Commission decision dated 6 February 2012 in case M.6411 –  Avent/Maxam, paragraph 84; Commission 
decision dated 4 April 2007 in case M.4403 – Thales/Finmeccanica/Alcatel Alen ia Space & Telespazio, 
paragraphs 121 and 268.  
48  United Internet has a share of maximum [10- 20]% of the market for the retail supply of fixed telephony 
services (where Tele Columbus has a share of maximum [0 -5]%) and [5 -10]% of the market for the retail 
supply of mobile telecommunication services (where Tele Columbus is no longer active).  
49  In addition, the Commission notes that Tele Columbus has a share of only [0 -5]% in the downstream 
market for the retail supply of fixed telephony services. It is uncl ear how this could affect Morgan 
Stanley’ s incentives to engage in input foreclosure.  
 
 
15 (73) Finally, t he Commission notes that the majority of the respondents to the market 
investigation did not raise any concerns related to input foreclosure  issues arising 
from the Transaction in the market for wholesale fixed call termination services on 
the one hand, and the retail supply of fixed telephony services or the  retail mobile 
telecommunication  services on the other hand.50 
5.3.2.4. Conclusion  
(74) In light of the above, the Commission concludes that the Transaction does not raise 
serious doubts as to the compatibility with t he internal market with respect to possible 
input foreclosure practices on the markets for the retail supply of fixed telephony 
services on the one hand and mobile telecommunication services on the other hand  in 
Germany. 
5.4. Customer foreclosure  
5.4.1. Notifying Parties ’ arguments  
(75) The Notifying Parties submit that, given the  market shares of United Internet and 
Tele Columbus even under the narrowerst plausible downstream markets definitions 
discussed above  under paragraphs (34) and (41) are well below 30%, any customer 
foreclosure tactics would not have any effect on competition.   
5.4.2. Commission’s assessment  
5.4.2.1. Ability to engage in customer  foreclosure  
(76) The Commission considers that  the Parties will not have the ability to implement 
customer foreclosure tactics at the expense of their competitors on the upstream 
market for fixed call termination services . 
(77) Indeed, i n view of the limited market share of United Internet and Tele Columbus on 
the retail market for fixed telephony and the limited market share of United Internet 
on the retail market for mobile telecommunication s services51, the Commission 
considers that the Parties will not have the ability to implement customer foreclosure 
tactics  that would result in raising the costs of their rivals on the downstream markets 
as the upstream network providers will always remain with a large enough customer base outside the Parties to sell their services to.  
5.4.2.2. Incentive to engage in customer foreclosure  
(78) The Commission notes that the three conditions  for the vertical customer foreclosure 
scenario being cumulative, the absence of the ability to foreclose would be sufficient 
to rule out any such strategy. The Commission nevertheless assess es for 
completentess the existence of an incentive  to foreclose . 
(79) The Commission consi ders that the Parties do not have the incentive to engage in 
customer foreclosure as any such attempt would be counter-productive and harmful 
                                                 
50  See replies to questionnaire Q1 to Telecom Competitors, questions 4.1, 4.2. and 4.4.  
51  And in any event significantly below the thresholds of 30% under which the Comm ission tradionally 
considers that there will be no possible vertical effect from a transaction.  
 
 
16 (hence unprofitable) to the Parties should the competitors they would be trying to 
harm decide to retaliate in the same way . Indeed, such retaliation would be likely 
more harmful for the Parties than any potential profit from their own foreclosing 
strategy given the the much larger size of t he networks of their  respective 
competitors. 
(80) The need of the Parties to rel y on their competitors’ networks to connect their own 
retail customers to whatever number these customers may be calling outside the 
Parties’ own networks  results in the lack of incentive for the Parties to consider any 
customer foreclosure tactic . 
5.4.2.3. Impact on effective competition 
(81) The Commission considers that due to the lack of ability and incentive, it is not 
needed to assess whether any foreclosure strate gy would have a negative impact on 
effective competition, the three criteria being cumulative . 
(82) The Commission further notes that the majority of the respondents to the market 
investigation did not raise any concerns related to customer foreclosure  issues a rising 
from the Transaction in the market for wholesale fixed call termination services on the one hand, and the retail supply of fixed telephony services or the  retail mobile 
telecommunication  services on the other hand.
52 
5.4.2.4. Conclusion  
(83) In light of the above, the Commission concludes that the Transaction does not raise 
serious doubts as to the compatibility with the internal market with respect to possible 
customer foreclosure practices on the markets for the retail supply of fixed telephony 
services on the one hand and mobile telecommunication services on the other hand in 
Germany. 
6. CONCLUSION  
(84) For the above reasons, the European Commission has decided not to oppose the 
notified operation and to declare it compatible with the internal  marke t and with the 
EEA Agreement. This decision is adopted in application of Article 6(1)(b) of the 
Merger Regulation and Article 57 of the EEA Agreement . 
 For the Commission  
 
 
(Signed)  
Margrethe VESTAGER  
Executive Vice -President  
                                                 
52  See replies to questionnaire Q1 to Telecom Competitors, questions 4.1, 4.2. and 4.4.