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, 07.07.2020  
C(2020 ) 4736  final       
     PUBLIC VERSION  
 
To the notifying parties  
Subject : Case M. 9843  – Colony Capital / PSP / NGD  
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 2 June 2020 , the European Commission received notification of a proposed 
concentration pursuant to Article 4 of the Merger Regulation by which Colony 
Capital, Inc., United States (“Colony Capital”) and Public Sector Pension Investment 
Board, Canada (“PSP”) will,  indirectly, acquire joint control of Next Generation 
Data Limited, United Kingdom (“NGD”  or “Target” ) within the  meaning of Article 
(3)(1)(b) and 3(4) of the EUMR  (the “Transaction”)3. Colony Capital  and PSP are 
designated hereinafter as the “Notifying P arties ” or, together with NGD,  as the 
“Parties ”. 
                                                 
1  OJ L 24, 29.1.2004, p. 1 (the “Merger Regulation ” or “EUMR” ). 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, 3.1.19 94, p. 3 (the “EEA Agreement”).  
3  Publication in the Official Journal of the European Union No C 193 , 9.6.2020 , p. 32 -33. 

 
 
2 1. THE PARTIES  
(2) Colony Capital is a publicly traded real estate and investment management firm 
headquartered in the United  States. Colony Capital manages a global portfolio 
composed of, amongst other, investments in digital infrastructure, including macro 
cell towers, data centres, small cell networks and fibre networks.  
(3) PSP is the pension investment manager of the pension p lans of the Canadian Federal 
Public Service, the Canadian Forces, the Royal Canadian Mounted Police and the 
Reserve Force. It manages a diversified global portfolio including stocks, bonds and 
other fixed -income securities as well as investments in private  equity, real estate, 
infrastructure, natural resources and credit investments.  
(4) NGD is a private company limited by shares incorporated and existing under the 
laws of England and Wales. NGD is active in the design, build, operation and 
ongoing management of data centre solutions in the U nited Kingdom (“UK”) . 
(5) Colony Capital controls the subsidiaries  Zayo Group Holdings Inc.  (“Zayo ”) (active 
in IT outsourcing and retail business connectivity) and Aptum Technologies  
(“Aptum”)4 (only active in IT outsourcing), which operate in markets that are 
vertically related to the market for colocation where NGD is active.  
2. THE CONCENTRATION  
(6) By virtue of the Transaction, each of Colony Capital and PSP will indirectly acquire 
joint control of  NGD within the meaning of Article 3(1)(b) of the EUMR  and 3(4) . 
(7) The acquisition of the Target will occur through a non -full function joint venture 
company, namely a Cayman Islands exempted limited partnership, F1 Europe JV, 
LP, which is jointly and indire ctly controlled by Colony Capital and PSP.  
(8) Colony Capital holds a jointly controlling stake in F1 Europe JV, LP via  
[Confidential]  
(9) PSP holds a jointly controlling stake in F1 Europe JV, LP via [Confidential] . Each of 
Colony Capital and PSP have joint cont rol through unilateral veto rights over the F1 
Europe Reserved Matters (budget, business plan, appointment/removal of the CEO 
and COO). These rights do not apply to F1 Europe JV, LP only, but also to BidCo, 
and, post -closing, NGD (as NGD will become an ind irect wholly -owned subsidiary 
of BidCo).  
(10) At closing of the Transaction, F1 Europe JV, LP will acquire 100% of shares and 
sole control in Next Generation Data Infrastructure 1 Limited (the ultimate holding 
company of NGD Group) through its indirect wholly -owned subsidiary Vantage 
Data Centers UK BidCo Limited (“BidCo”), a private company limited by shares 
incorporated and existing under the laws of England and Wales.  
 
                                                 
4  The company was incorporated as Cogeco Peer 1 . Inc and was renamed to Aptum Technologies in 2019.  
 
 
3 (11) In terms of shareholdings after the closing of the Transaction, NGD’s equity will be 
distri buted as follows:  
(a) [An LP under the sole control of]  Colony Capital  will indirectly hold 
approximately a 45.9% equity stake in NGD;  
(b) PSP [Confidential] will hold approximately a 23% equity stake in NGD 
[Confidential] ; 
(c) NGD m anagement will hold a non -controll ing equity stake in NGD of 
approximately 8.2%; and  
(d) the remaining 23% equity stake in NGD will be indirectly held by non -
controlling minority investors [Confidential] . 
(12) NGD has sufficient own staff, financial resources and dedicated management for its 
operat ion and for the management of business interests. NGD generated in FY18 
almost EUR 33.5 million from the provision of colocation data center services and 
ancillary services to third party hyperscale and enterprise customers in the UK and 
post-closing will continue to sell these services to a similar wide range of customers 
in the UK (and will not rely almost entirely on sales to or purchases from Colony 
Capital and PSP). NGD has a market presence, does not have significant sale or 
purchase relationships wit h its parents and is intended to operate on a lasting basis. 
Therefore, NGD is and will remain full y functional.   
(13) Therefore, the Transaction will result in the acquisition of joint control by Colony 
Capital and PSP over NGD pursuant to Articles 3(1)(b) an d 3(4) of the EUMR.  
3. EU DIMENSION   
(14) The notified operation has a Union dimension pursuant to Article 1(2) of the Merger 
Regulation.  The undertakings concerned have a combined aggregate worldwide 
turnover of more than EUR 5 000 million5 (Combined: [Confidenti al], Colony 
Capital: [Confidential] , PSP: [Confidential] , NGD: EUR 33.45 million). Each of the 
Notifying Parties has an EU -wide turnover in excess of EUR 250 million ; Colony 
Capital:  [Confidential] , PSP: [Confidential] ). Each of the undertakings concerned 
does not achieve more than two -thirds of its aggregate Union -wide turnover within 
one and the same Member State.  
4. RELEVANT MARKETS  
(15) The Parties are active in a number of markets of the internet connectiv ity value 
chain . NGD is active in the design, build, op eration and ongoing management of 
data centre solutions in the UK. In particular, NGD provides carrier -neutral, 
wholesale colocation space through its data centre located in Newport, South Wales, 
                                                 
5  Turnover calculated in accord ance with Article 5 of the Merger Regulation . 
 
 
4 which encompasses 750,000 sqm of gross space, 18,000 rack ca pacity over three 
floors and 72 MW of sellable IT load.6 
(16) Colony Capital , through its subsidiary Digital Colony, invests in digital 
infrastructure such as macro cell towers, data centres, small cells and fibre networks. 
In fact, Digital Colony controls the following portfolio companies with activities in 
the colocation data centre services market or in the broader telecommunications 
market in the EEA:  
a. Etix Group SA (“Etix”)  - On 10 February 2020, Colony Capital and PSP 
acquired joint control of Etix, a public lim ited liability company based in 
Luxembourg. Etix designs and operates data centres, in which it provides 
colocation services to medium and large companies operating in various 
industries. Etix has a worldwide network of carrier -neutral data centres located 
in (a) the EEA (11 data centres located in (i) Liège (Belgium); (ii) les Sables 
d’Olonne, la Roche -sur-Yon, Nantes and Lille (France); (iii) Asgard, Fitjar and 
Blön duós (Iceland) and (iv) Jokkmokk (Sweden) as well as a data centre under 
construction in Frankfurt (Germany)), (b) Africa (two data centres in Morocco 
and Ghana) and (c) Latin America (one data centre in Colombia). Etix does not 
operate in the UK. 
b. Zayo – Since 9 March 2020, Digital Colony has a jointly controlling interest of 
[Confidential] in Zayo, a global network solutions provider listed on the New 
York Stock Exchange and headquartered in Boulder, Colorado in the United 
States. Zayo provides medium and large enterprises in North America and 
Europe with communications infrastructure services including metro dark fibre, 
private data networks, wavelength connections, Ethernet, IP connectivity, cloud 
offerings, colocation services and other high -bandwidth of ferings. Zayo’s 
colocation segment provides carrier -neutral colocation space in the United 
States, Canada and the EEA.7 Specifically in the UK, Zayo owns and operates a 
long-haul dark fibre network as well as a metro dark fibre network, with a wide 
coverag e across the UK. Zayo is not active in public cloud services in the UK. 
Some of its activities , on the other hand,  fall under the relevant product markets 
for retail business connectivity services,8 IT outsourcing (cloud IaaS) and 
colocation services.9 
c. Aptum  – the Canada -based Aptum provides essential business -to-business 
products and services such as colocation, network connectivity, managed 
                                                 
6  NGD further offers its colocation customers in Newport certain complementary ancillary services in the 
form of a bundle such as (i) NGD cloud gateway, enabling  NGD colocation customers to connect to cloud 
provider s without go ing through the public Internet; (ii) NGD Connect, enabling  NGD customers across 
the NGD Connect network (including Newport, Bristol, Swindon, Slough, Bir mingham, Leicester and 
London)  to have a high speed, relatively low one -way latency (1.5ms) broadband access to NGD’s data 
centre in Newport ; and (iii) Broadband re -sale. The total turnover generated through such services is 
limited to circa [Confidential] . Neither Colony Capital nor PSP provides such services, and no vertical 
links are created either. Hence, those services are not discussed further in this decision . 
7  Zayo owns and operates seven data centres in Brussels (Belgium), Düsseldorf (Germany), Paris, 
Montpellier and Toulouse (France), Amsterdam (the Netherlan ds) and London (UK ). 
8  These are dedica ted internet access (DIA), interconnection services, Ethernet services, SONET services, 
wavelength services and IP transit . 
9  Colocation services to enterprise customers through its carrier -neutral data centre located in Feltham, 
which encompasses [Confidential]  square metres , has a capacity of [Confidential]  and offers connectivity 
to six different carriers . 
 
 
5 hosting, cloud services and managed services through its two -way broadband 
cable networks in Canada, United State s and Europe. Aptum also operates in the 
business information and communications technology services industry in North 
America and Europe. Specifically in the UK, Aptum provides the following 
services: (i) colocation services through its data centre in Por tsmouth, which 
encompasses [Confidential]  square feet and an available capacity of 
[Confidential] ; and (ii) IT outsourcing services.10  
(17) As explained above, PSP, together with Colony Capital, has joint control of Etix, 
which is active in the market for coloc ation services provided by third party data 
centres in the EEA, Africa and Latin America. Etix, however, is not active in the 
UK.  
4.1. Colocation services provided by third party data centres  
(18) Colocation services consist of the building, power, cooling, connect ivity and security 
services provided in data centres (dedicated facilities sometimes purpose -built) in 
which companies house and operate IT equipment that supports their business (such 
as servers and data storage).  
4.1.1.  Product market  definition  
4.1.1.1.  Commission precedent s 
(19) The Commission has  previous ly11 defined a market for colocation services provided 
by third party data centres (ex cluding in -house data centres) .12 The Commission 
considered that it was not appropriate to sub -divide this product market depending 
on (i)  carrier -owned and carrier -neutral data centres, (ii) wholesale and retail data 
centres, and (iii) type of customer.13 
(20) Further, the Commission has briefly touched upon the question whether 
interconnection services (i.e. connections via physical cable betwee n the IT 
equipment of a data centre customer and that of another customer of the same data 
centre) and managed IT services (i.e. simple operations or maintenance tasks on 
behalf of data centre customers) could constitute separate markets. The Commission 
noted, in that respect, that interconnection services and managed IT services are part 
of the services that are typically provided by data centres operators on top of and in 
addition to colocation services; hence, the Commission considered that it was not 
necessary to assess the existence of possible separate markets for the provision of 
these services.14  
                                                 
10  These services include (i) standard and complex managed hosting and associated services to manage 
Aptum’s customers ho sting and (ii ) cloud services and, in particular, access and migration services to 
public clouds, such as Microsoft Azure, in exchange for a fee based on the customer’s monthly usage.  
11  Case  M.8251 Bite/Tele 2/Telia Lietuva/JV  and case M.7678 Equinix/Telecity . 
12  In case M.7678 Equinix/Telecity , paras. 16 -17, the Commission found that third party data centres are not 
substitutable in terms of product characteristics and price with storing data in -house given in -house data 
centres require expertise and high investments rendering the customers unable to realise economies of 
scale associated with third party data centres.  
13  Case M.7678 Equinix/Telecity , paras. 23-24. 
14  Case M.7678 Equinix/Telecity , paras. 7-8. 
 
 
6 4.1.1.2.  Notifying Part ies’ views  
(21) The Notifying Parties do not co ntest the Commission precedent s and argue  that, 
insofar as NGD exclusively provides colocation services through its data centre in 
Newport, South Wales, the relevant product market for its activities is the market for 
colocation services provided by third party data centres. Colony Capital (via A ptum, 
Zayo and Etix) and PSP (via Etix) also provide colocation services in the EEA (but 
not in the UK). In any event, the Notifying Part ies add , the precise definition of the 
product market can be left open in the present case since the Transaction does n ot 
give rise to any competition concerns irrespective of how the market is defined.  
4.1.1.3.  Commission’s assessment  
(22) The Commission considers that in the present case the relevant product market is 
colocation services provided by third party data centres (excludin g in-house data 
centres) as nothing in the case file suggests a need to depart from the Commission’s 
precedent s.  
4.1.2.   Geographic market  defin ition 
4.1.2.1.  Commission precedent s 
(23) The Commission has previously defined the relevant geographic market for 
colocation servic es provided by third party data centres as each metropolitan area 
corresponding to a radius of around 50 km from the centre of the city concerned .15 
(24) This is because most customers target very specific metropolitan areas when seeking 
to source colocation ser vices and, hence, the different metropolitan areas do not 
appear substitutable from the demand side. In concluding that 50 km from the city 
centre is the appropriate geographic scope, the Commission took also into 
consideration the following: (i) the data centre should not be located too far from the 
city centre to allow the customers’ IT teams to access and install equipment in the 
data centres; (ii) there is normally a sufficient concentration of network operators in  
metropolitan areas to allow customers  to connect to third parties with low latency; 
and (iii) the maximum distance between the data centre  and the city centre  should be 
50 km to allow customers to connect through another data centre using Dense 
Wavelength Division Multiplexing (DWDM).16 
4.1.2.2.  Notify ing Parties’ views  
(25) The Notifying  Parties submit  that the same geographic scope applies to the 
Transaction. Colony Capital (via Aptum, Zayo and Etix) and PSP (via Etix) are not 
active in the same metropolitan areas as NGD. Therefore, there are no horizontal  
overlaps between the activities of the Parties and NGD.  
(26) In any event, the Notifying Parties argue  that the precise definition of the relevant 
geographic market can be left open in the present case since the Transaction does not 
raise any competition conce rns under any plausible geographic market definition.  
                                                 
15  Case  M.8251 Bite/Tele 2/Telia Lietuva/JV  and case M.7678 Equinix/Telecity . 
16  Case M.8251 Bite/Tele 2/Telia Lietuva/JV , para. 72 and Case M.7678 Equinix/Telecity , para. 37. 
 
 
7 4.1.2.3.  Commission ’s assessment  
(27) The Commission considers that in the present case the relevant geographic market is 
metropolitan area corresponding to a radius of around 50 km from the city centre as 
nothing in  the case file suggests a need to depart from the Commission’s precedent. 
In addition, t he majority of the respondents  to the Commission’s market 
investigation that gave a view confirmed  that they procure colocation services within 
a 50km radius from the c ity centre.17  
4.1.3.  Conclusion  
(28) In light of the above, in this Decision the Commission assesses the effects of the 
Transaction with respect to the market for colocation services provided by third 
party data centres (excluding in -house data centres) within the met ropolitan area 
corresponding to a radius of around 50km radius from the city centre.  
4.2. Retail business connectivity services  
(29)  Retail business connectivity services consist of fixed telecommunications services 
that are purchased by large businesses, enterprises and public sector customers to 
provide data connectivity between multiple sites.  
4.2.1.   Product market definition  
4.2.1.1.  Commission preceden ts 
(30) In previous decisions,18 the Commission has considered a separate product market 
for retail business connectivity s ervices . These services include various offerings 
such as virtual private network (VPN) technology, capacity services (retail leased 
lines), dark fibre (fibre connections that are not yet activated) and wavelengths 
(segmentations of dark fibre that functio n as separate channels for communication 
and transfer of data between end points).19 
(31) The Commission took into consideration differences between the services provided 
to residential customers and those provided to B2B customers. Indeed, the 
Commission noted that large businesses and public sector customers require internet 
access services based on higher performance in terms of security bandwidth and 
functionality as well as more complex, flexible and integrated solutions, which are 
often tailor -made to fit t heir existing systems. In addition, these customers require 
specific services such as dedicated internet access, leased lines and VPN technology. 
However, the precise product market definition was ultimately left open.20  
(32) The Commission further considered t hat the market for retail business connectivity 
services can be further segmented into: (i) Internet access services; (ii) leased lines 
(also known as dedicated internet access (DIA)); and (iii) VPN services, but 
                                                 
17     Replies to Questionnaire Q1 to market participants of 4 June 2020, question 3.  
18  Cases M.8792 T Mobile NL/Tele2 NL , para. 281, M.7421 Jazztel/Orange , para. 42, M.7499 Altice/PT 
Portugal  para.17, M.7109 Deutsche Telekom/GTS , para. 26 and M.6584 Vodafone/Cable & Wireless , 
paras. 8 -9. 
19  Case M.8131 Tele2 Sverige/TDC Sverige , para. 37. 
20  Cases M.8131 Tele2 Sverige/TDC Sverige , para. 41, M.5730 Telefonica/Hansenet , para. 12, and M.4417 
Telecom Italia/AOL German Access Business , paras 19 -20. 
 
 
8 ultimately left the precise product market definition open.21 The Commission also 
considered retail business connectivity services as one of the markets related to 
business -to-business (“B2B”) telecommunications services, but ultimately left the 
precise product market definition open.22 
4.2.1.2.  Notifying Par ties’ view  
(33) In the Notifying Parties’ view, the relevant product market is retail business 
connectivity services . The Notifying Parties argue that in any event the exact market 
definition can be left open , since the Transaction does not give rise to any 
competition concerns irrespective of how the market is defined.  
4.2.1.3.  Commission’s assessment  
(34) The Commission considers that in the present case the exact delineation of the 
relevant product market for the provision of retail business connectivity services can 
be le ft open since the proposed transaction does not give rise to competition 
concerns under any alternative market definition.23  
4.2.2.   Geographic market definition  
4.2.2.1.  Commission precedents  
(35) In previous decisions, the Commission considered the retail supply of business 
connectivity services to be national in scope.24 In another decision, when considering 
the geographic scope for B2B telecommunications services, including business 
connectivity services, the Commission found that the geographic market was likely 
to be natio nal in scope  (especially from the demand side) , but left the geographic 
market definition open.25 
4.2.2.2.  Notifying Parties’ view  
The Notifying Parties do not contest the Commission’s previous findings and 
conclude that in any event the precise definition of the relevant geographic market 
can be left open.  
4.2.2.3.  Commission’s assessment  
(36) The Commission considers that i n the present case, the precise geographic market 
definition can be left open since the Transaction does not give rise to any serious 
doubts as regards its compatibility with the internal market regardless of whether the 
market is national or EEA -wide in scope.  
                                                 
21  Cases M.7499 Altice/PT Portugal , paras. 54-57, M.7109 Deutsche Telekom/GTS , paras. 26-29, and 
M.6584 Vodafone/ Cable Wireless , para. 9. 
22  M.7499 Altice/PT Portugal , paras. 54-57 
23  See below, Section 5.2. 2. 
24  Cases M.6584 Vodafone/Cable Wireless , para. 10, M.5532 Carphone Warehouse/ Tiscali UK , paras. 56 
and M.7109 Deutsche Telekom/GTS , paras. 30 -33. 
25  Cases COMP/M.7499 Altice / PT  Portugal , paras. 58-62,  M. 6921 IBM Italia/UBIS , of 19 June 2013, 
paragraph 30.  
 
 
9 4.2.3.  Conclusion  
(37) For the purpose of thi s Decision , the precise scope of the market for retail supply of 
business connectivity services can be left open as t he Transaction does not give rise 
to serious doubts  as regards its compatibility with the internal market  irrespective of 
whether there is an overall market for retail supply of business connectivity services , 
or whether this overall market is segmented on the basis of the type of customer 
(residential or B2B customers), or segmented into (i) Internet access services; (ii) 
leased lines (also known as dedicated internet access (DIA)); and (iii) VPN services , 
or into (i) services provided to residential custo mers and (ii) those provided to B2B 
customers, on a national or an EEA wide market .    
4.3.  IT outsourcing   
4.3.1.   Product market definition  
4.3.1.1.  Commission precedent s 
(38) In previous decisions,26 the Commission has considered a segment of the IT services 
market that encompas ses IT outsourcing, which could be further segmented into (i) 
public cloud computing services; (ii) Infrastructure as a Service (“ IaaS”); (iii) 
infrastructure outsourcing services (including potential further sub -segments for data 
centre services, network outsourcing, end -user device outsourcing and help desk 
outsourcing); and (iv) application outsourcing services. The Commission ultimately  
left open the market definition.  
4.3.1.2.  Notifying Parties’ view  
(39) In the Notifying Part ies’ view, in the present case, Colony C apital (via Aptum and 
Zayo) offers cloud computing services, IaaS and managed hosting ( infrastructure 
outsourcing services ). According to the Notifying Parties , these services fall under 
the relevant product market for IT outsourcing without further sub -segmentations.  
(40) The Notifying Part ies argue  that i n the present case, the precise product market 
definition can be left open since the Transaction does not give rise to any 
competition concerns irrespective of how the market is defined.  
4.3.1.3.  Commission’s assessment  
(41) The Commission considers that in the present case the exact delineation of the 
relevant product market for IT outsourcing can be left open since the propose d 
transaction does not give rise to competition concerns under any alternative market 
definition. 27 
                                                 
26  Cases M.8180 Verizon/Yahoo , para. 72, M.6921 IBM Italia/UBIS , paras. 14-17, and M.7458 IBM/INF 
Business of Deutsche Lufthansa , paras, 20 -29. 
27  See below, Sections 5.2.1 and 5.2.3.  
 
 
10 4.3.2.  Geographic market definition  
4.3.2.1.  Commission precedent s 
(42) The Commission has previously considered both EEA -wide28 and national29 
markets. The Commissio n’s market i nvestigation showed in those cases  that IT 
solutions are often customised according to language and local business 
particularities whilst IT service suppliers need to also provide logistics, marketing, 
sales branches, distribution network and after sales m aintenance services at national 
level.30 However, the Commission ultimately left the relevant geographic market 
definition open.  
4.3.2.2.  Notifying Parties’ view  
(43) The Notifying Part ies submit that the precise definition of the relevant geographic 
market can be left o pen in the present case since the Transaction does not raise any 
competition concerns under any plausible geographic market definition.  
4.3.2.3.  Commission’s assessment  
(44) n the present case, the precise geographic market definition can be left open since the 
Transaction does not give rise to any serious doubts as regards its compatibility with 
the internal market regardless of whether the market is national or EEA -wide in 
scope.31 
4.3.3.  Conclusion  
(45) For the purpose of thi s Decision , the precise scope of the market for IT outsourcing 
can be left open  as the Transaction does not give rise to serious doubts as regards its 
compatibility with the internal market irrespective of whether there is an overall 
market for IT outsourcing or whether the overall market is further seg mented into (i) 
public cloud computing services; (ii) IaaS; (iii) infrastructure outsourcing services 
(including potential further sub -segments for data centre services, network 
outsourcing, end -user device outsourcing and help desk outsourcing); and (iv) 
application outsourcing services . 
5. COMPETITIVE ASSESSMEN T 
5.1.  Horizontal overlaps  (colocation services)  
(46) The Transaction does not give rise to any horizontal overlaps in the catchment area 
of Newport where NGD is active.  
(47)  Both Colony Capital and PSP have contro lling stakes in companies that offer 
colocation services through their data centres in the EEA: (i) Colony Capital through 
Zayo, Aptum and Etix; and (ii) PSP through Etix. However, Etix does not have any 
data centres in the UK, while Aptum and Zayo operate  smaller data centres that are 
much further than the 50 km, or even 100 km radius around the city centre of 
                                                 
28  Case M.8180 Verizon/Yahoo , para. 75, and M.7458 IBM/INF Business of Deutsche Lufthansa , para. 32. 
29  Case M.5301 Capgemini/BAS , para. 19.  
30  Case M.6921 IBM Italia/Ubis , para. 29. 
31  See below, Sections 5.2.1 and 5.2.3.  
 
 
11 Newport (South Wales) where NGD operates its data centre. In fact, Zayo has a 
single data centre in the UK in Feltham (near London) and Aptum also h as a single 
data centre in the UK in Portsmouth.  
(48) The Notifying Parties observe that certain types of customers, such as large 
enterprise customers or hyperscale customers (e.g. Amazon, Google, Microsoft) 
might be less sensitive to distance, as they are glo bal players that procure their 
requirements on a UK or even Western European basis. However, in a UK -wide 
colocation market, the horizontal overlap that would be triggered would remain well 
below [0-10%] by value and volume sold ( megawatt ) on a UK basis with Aptum and 
Zayo adding a limited share to NGD’s pre -existing share ( [5-10%] both for value 
and volume in 2019).  
(49) The majority of the respondents to the market investigation expressed a neutral view 
on the Transaction with regard to coloc ation services.32 None of the respondents 
expressed a negative view or raised concerns regarding the effects of the Transaction 
on the market for colocation services provided by third party data centres.  All of the 
respondents confirmed that a sufficient nu mber of alternative providers of col ocation 
services  will remain post -Transaction .33 
(50) In light of the above, the Commission considers that the Transaction does not raise 
serious doubts as to its compatibility with the internal market with regard to  the 
marke t for colocation services.  
5.2. Non-horizontal  overlaps  
(51) Vertical mergers involve companies operating at different levels of the same supply 
chain. For instance, a vertical merger occurs when a manufacturer of a certain 
product merges with one of its distributo rs.  
(52) Pursuant to the Commission Guidelines on the assessment of non -horizontal mergers 
under the Council Regulation on the control of concentrations between undertakings 
(the "Non -Horizontal Merger Guidelines"),34 vertical mergers do not entail the loss 
of direct competition between merging firms in the same relevant market and 
provide scope for efficiencies.  
(53) However, there are circumstances in which vertical mergers may significantly 
impede effective competition. This is in particular the case if they give  rise to 
foreclosure.35 
(54) The Non -Horizontal Merger Guidelines distinguish between two forms of 
foreclosure: input foreclosure, where the merger is likely to raise costs of 
downstream rivals by restricting their access to an important input, and customer 
foreclosure, where the merger is likely to foreclose upstream rivals by restricting 
their access to a sufficient customer base.36 
                                                 
32  Replies to Question naire Q1 to market participants of 4 June 2020, question 5.1.  
33  Replies to Questionnaire Q1 to market participants of 4 June 2020, question 5.3.  
34  OJ C 265, 18.10.2008, p. 6.  
35  Non-Horizontal Merger Guidelines, para 18.  
36  Non-Horizontal Merger Guidelines, para 30.  
 
 
12 (55) Pursuant to the Non -Horizontal Merger Guidelines, input foreclosure arises where, 
post-merger, the new entity would be likely to re strict 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 m erger.37  
(56) 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 degree of market power, can it be expected that it will significan tly 
influence the conditions of competition in the upstream market and thus, possibly, 
the prices and supply conditions in the downstream market.38 
(57) Pursuant to the Non -Horizontal Merger Guidelines, customer foreclosure may occur 
when a supplier integrates w ith an important customer in 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 ab ility or incentive to compete which in turn, may 
raise downstream rivals' costs by making it harder for them to obtain supplies of the 
input under similar prices and conditions as absent the merger. This may allow the 
merged entity profitably to establish higher prices on the downstream market.39 
(58) 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 s ufficiently 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 
(59) Three vertically affected markets arise from the p otential vertical lin ks between 
Colony Capital and NGD in the UK:  
(a) Colocation services  (NGD)  as a downstream market  to IT outsourcing (Zayo, 
Aptum) ; 
(b) Colocation services  (NGD)  as a downstream market to retail business 
connectivity  (Zayo) ; and  
(c)  Colocation services  (NGD)  as an upstream market to IT outsourcing  (Zayo, 
Aptum) . 
(60) The table below reflects the Parties’ market shares in the markets in which they are 
active:  
 
 
 
                                                 
37  Non-Horizontal Merger Guidelines, para 31.  
38  Non-Horizontal Merger Guidelines, para 35.  
39  Non-Horizontal Merger Guidelines, para 58.  
40  Non-Horizontal Merger Guidelines, para 61.  



 
 
16 Link, Iomart, Node4 and Centerserv and data centre providers with 
retail/interconnection focus such as Equinix, interxion and Telehouse.  
(68) According to the Notifying Parties , NGD can also be constrained by its competitors. 
This is reflected in the Information Memorandum for the Transaction, which 
identifies several hyperscale data centre providers as its main competitors in the UK, 
such as Virtus, Digital Realty,  Ark Corsham, Colt and CyrusOne . Even  though these 
providers are located outside the 50km radius from the city centre,  it appears that 
NGD faces competitive constraints by these players on a UK basis. On a UK basis, 
NGD’s market share is [0-10%]  by volume sold and value compared to vari ous 
strong players such as Equinix and Digital Realty with [30-40%]  and [10-20%]  
market shares by value in FY19 respectively.  
5.2.1.2.  Commission’s assessment  
(69) The Commission considers that the Transaction is unlikely to raise serious doubts as 
to its compatibility with the internal market as regards the position of NGD in the 
market for colocation services as a downstream market to IT outsourcing.  
(70) As a preliminary point , the Commission notes that  NGD’s market share in Newport 
is mainly created  by one single large cu stomer that can easily switch provider s. This 
is [Confidential]  which is NGD’s hyperscale customer representing [70-80%]  by 
volume. In their reply to the market investigation, [Confidential]  confirmed that 
there is no shortage of alternatives  and that they  already have contracts in place with 
other .41 Therefore,  as NGD is largely dependent on one single customer that can 
easily switch to other providers, the high market share within the Newport 
metro politan  area is not sufficient in itself to raise foreclosu re concerns.  
(71) The Commission considers that the combined entity will lack both the ability and the 
incentive to engage into input foreclosure . 
(72) First, a s regards the ability to engage into input foreclosure, the Commission notes 
that i n light of their very low market shares shown in Table  1 above,  neither Zayo 
nor Aptum has market power in the upstream market for IT outsourcing as their 
market shares are very limited  under any possible product and geographic market 
delineation .  
(73) Second , the Commission considers that the combined entity will lack the incentive to 
engage into input foreclosure: because of the low market shares of Aptum and Z ayo, 
the combined entity will not be in a position of generating additional profit by 
foreclosing NGD’s rivals downs tream.  
(74) Third , there will remain a large number of competitors in the market for IT 
outsourcing that could meet the demand in case of input foreclosure strategy by the 
combined entity.  
(75) Fourth , the above points have also been confirmed by market investigat ion as none 
of the respondents indicated any concern that could potentially arise from the 
                                                 
41  Replies to Questionnaire Q1 to market participan ts of 4 June 2020, question 5.3.1.  
 
 
17 creation of a vertical link between IT outsourcing on the upstream market and 
colocation services on the downstream market .42 
(76) The Commission considers that the combin ed entity will lack both the ability and the 
incentive to engage into customer foreclosure . 
(77) First, as regards the ability to engage into customer foreclosure, the Commission 
notes that in light of their very low market shares shown in Table 1 above, neithe r 
Zayo nor Aptum has market power in the upstream market for IT outsourcing as 
their market shares are very limited under any possible product and geographic 
market delineation.  
(78) Second, data centres represent only a tiny fraction of the total demand for I T 
outsourcing. Data centres represented less than 5% of Aptum and Zayo’s turnover in 
the UK and in the EEA . 
(79) Third , Zayo’s [Confidential]  IT outsourcing customer, [Confidential] . 
(80) Fourth , NGD’s share of demand for IT outsourcing is [0-5%] on a UK basis.43 Even 
if NGD decided to switch its sourcing of IT outsourcing to only Aptum and Zayo, 
the other competing suppliers of IT outsourc ing would continue to have a wide range 
of alternative data centres in the UK to whom they could offer their services.  
(81) Fifth , the market investigation confirmed the above finding s as all the respondents 
expressed the view that the Transaction will not have a negative impact on the 
market for IT outsourcing as a result of its link to the market for colocation 
services.44 
(82) In light of th e above, the Commission considers that the Transaction does not give 
rise to  serious doubts as to its compatibility with the internal market as regards the 
position of NGD in the market for colocation services as a downstream market to IT 
outsourcing .45 
5.2.2.  Colocation services as a downstream market to retail business connectivity  
5.2.2.1.  The Notifying Parties’ views  
(83) The Notifying Parties submit that NGD’s [70-80%]  market share in Newport does 
not confer market power to NGD in the Newport metropolitan area.  
(84) In the Noti fying Parties’ view,  as explained in paragraphs (66) – (68) above,  NGD is 
constrained by its customers, in particular the largest ones. NGD can also be 
constrained by its competitors  even if they are located further away than the 50km 
radius from the city centre .  
                                                 
42  Replies to Questionnaire Q1 to market participants of 4 June 2020, question 5.4.  
43  As NGD is only present in the UK, its share of demand will be even further diluted on an EEA -wide basis.  
44    Replies to Questionnaire  Q1 to market participants of 4 June 2020, questions 5.2 and 5.4.  
45  This assessment also applies to all plausible market subsegmentations in which the Parties are active, 
namely: Public cloud computing services, Infrastructure as a service (incl. managed hosting), and 
Infrastructure outsourcing services for data centres, both on a UK and EEA market (see Table 1).  
 
 
18 5.2.2.2.  Commission’s assessment  
(85) The Commission considers that the Transaction is unlikely to raise serious doubts as 
to its compatibility with the internal market as regards the position of NGD in the 
market for colocation services as a downstream market to retail business 
connectivity services.  
(86) As explained in paragraph 70 above, t he Commission notes that NGD’s market share 
in Newport is mainly created by one single large customer that can easily switch 
providers. This is [Confidential]  which is NGD’s hyp erscale customer representing 
[70-80%]  by volume. In their reply to the market investigation, [Confidential]  
confirmed that there is no shortage of alternatives and that they already have 
contracts in place with other s.46 Therefore, as NGD is largely dependent on one 
single customer that can easily switch to other providers, the high market share 
within the Newport metropolitan area is not sufficient in itself to raise foreclosure 
concerns.  
(87) The Commission considers that t he combined entity will lack both the ability and the 
incentive to engage into input foreclosure . 
(88) First, as regards the ability to engage into input foreclosure, the Commission notes 
that in light of its very low market shares shown in Table 1 above, Zayo does not 
have market power in the upstream market for retail business connectivity as its 
market shares are very limited under any possible product and geographic market 
delineation.  
(89) Second, the Commission considers that the combined entity will lack the incentive to 
engage into input foreclosure: because of the low market shares of Zayo, the 
combined entity will not be in a position of generating additional profit by 
foreclosing NGD’s rivals downstream.  
(90) Third, there will remain a large number of competit ors in the market for IT 
outsourcing that could meet the demand in case of input foreclosure strategy by the 
combined entity.  
(91) Fourth, the above points have also been confirmed by market investigation as none 
of the respondents indicated any concern that c ould potentially arise from the 
transaction.47 
(92) The Commission considers that the combined entity will lack both the ability and the 
incentive to engage into customer foreclosure.  
(93) First, as regards the ability to engage into customer foreclosure, the Commiss ion 
notes that in light of their very low market shares shown in Table 1 above, Zayo 
does not have market power in the upstream market for retail business connectivity 
services as its market shares are very limited under any possible product and 
geographic  market delineation  
(94) Second, as regards the incentive to engage into customer foreclosure, it is noted that 
data centres represent only a tiny fraction of the total demand for retail business 
                                                 
46  Replies to Questionnaire Q1 to market participants of 4 June 2020, question 5.3.1.  
47  Replies to Questionnaire Q1 to market participants of 4  June 2020, question 5.4.  
 
 
19 connectivity services. Data centres represented less than 5% of Zayo’s turnover in 
the UK and in the EEA.  
(95) Third , NGD’s share of demand for retail business connectivity services is [0-5%] on 
a UK basis.48 Even if NGD decided to switch its sourcing of retail business 
connectivity to Zayo, the other competing suppliers of I T outsourcing would 
continue to have a wide range of alternative data centres in the UK to whom they 
could offer their services.  
(96) Fourth, the market investigation confirmed the above findings as all the respondents 
expressed the view that the Transaction wi ll not have a negative impa ct on the 
market  for retail business connectivity services as a result of its link to the market for 
colocation services.49 
(97) In light of the above, the Commission considers that the Transaction does not give 
rise to serious doubts as to its compatibility with the internal market as regards the 
position of NGD in the market for colocation services as a downstream market to  
retail business connectivity services.50 
5.2.3.   Colocation services as an upstream market to IT outsourcing  
(98) The marke t for colocation services provided by third party data centres could also be 
viewed as an upstream market to the market for IT outsourcing to the extent that IT 
outsourci ng service providers need to co locate their IT equipment in third party data 
centres  for the provision of cloud computing or managed hosting services in the UK.  
5.2.3.1.  The Notifying Parties’ views  
(99) The Notifying Parties submit that from the perspective of IT outsourcing providers, 
all colocation data centres within the UK are substitutable.  The geographic 
limitations that apply to colocation data centres (i.e., geographic market of 50 km 
radius around the city centre) are not relevant for IT outsourcing providers, as they 
can source their colocation requirements across multiple locations in the UK or even 
on an EEA -wide basis (depending on the scope of their backbone network).  
5.2.3.2.  Commission’s assessment  
(100)   The Commission considers that the Transaction does not  raise serious doubts as to 
its compatibility with the internal market as regards the pos ition of NGD in the 
market for colocation services as an upstream market to IT outsourcing.  
(101)  The Commission considers that the combined entity will not have the ability nor the 
incentive to engage into input foreclosure  vis-à-vis its IT outsourcing rivals  that 
purchase collocation services.  
                                                 
48  As NGD is only present in the UK, its share of demand will be even further diluted on an EEA -wide basis.  
49    Replies to Questionnaire Q1 to market participants of 4 June 2020, questions 5.2 and 5.4..  
50  This assessment also ap plies to all plausible market sub -segmentations in which the Parties are active, 
namely: Internet access services and Leased lines (including traditional leased copper and fibre lines, 
ethernet circuits and dark fibre); services offered to medium and large  customers (B2B); or Internet access 
services offered to B2B customers,  and l eased lines  offered to B2B customers  both on a UK and EEA 
market (see Table 1).  
 
 
20 (102)  First, NGD does not have  the ability to engage into input foreclosure as it does not 
have  real market power in the market for colocation services. As explained in 
paragraph 70 above, the Commission notes that NGD’s marke t share in Newport is 
mainly created by one single large customer that can easily switch providers. This is 
[Confidential]  which is NGD’s hyperscale customer representing [70-80%] by 
volume. In their reply to the market investigation, [Confidential]  confir med that 
there is no shortage of alternatives and that they already have contracts in place with 
other. Therefore, as NGD is largely dependent on one single customer that can easily 
switch to other providers, the high market share within the Newport metrop olitan 
area is not sufficient in itself to raise foreclosure concerns.   
(103)  Second, the Commission considers that the combined entity will also lack the 
incentive to engage into input foreclosure: t he market for IT outsourcing is national 
or EEA -wide, and not  local. The geographic limitations that apply to colocation data 
centres (i.e., geographic corresponding to a 50 km radius around the city centre) are 
not relevant for IT outsourcing providers, as they can source their colocation 
requirements across multip le locations in the UK or even on an EEA -wide basis 
(depending on the scope of their backbone network).  
(104)  Third, there will remain numerous other colocation data centre providers in the UK, 
given that NGD’s share is well below 10% (by value and volume sold)  on a UK  
basis . 
(105)  Fourth, the market investigation confirmed the above findings as all the respondents 
expressed the view that the Transaction will not have a negative impact on the 
market for retail business connectivity services as a result of its link to the market for 
colocation services.51 
(106)  The Commission considers that the combined entity will not have the ability nor the 
incentive to engage into customer foreclosure  vis-à-vis its IT outsourcing customers 
that purchase collocation services.  
(107)  First, NGD do es not have the ability to engage into customer  foreclosure as it does 
not have real market power in the market for colocation services. As explained in 
paragraph 70 above, the Commission notes that NGD’s market share in Newport is 
mainly created by one si ngle large customer that can easily switch providers.  
(108)  Second, the Commission considers that the combined entity would lack the incentive 
to engage into customer for eclosure given the very small market shares of Zayo and 
Aptum in the market for IT outsourcing.   
(109)  Third, e ven if NGD decided to switch its offering  of colocation services  excusively  
to Zayo and Aptum, the customers of NGD would have a very wide range of 
alternative data centres in the UK from whom they could source colocation  services.  
(110)  Fourth, t he market investigation confirmed the above finding as all the respondents 
expressed the view that the Transaction will not have a negative impact on the 
market for IT outsourcing as a result of its link to the market for colocation services  
                                                 
51  Replies to Questionnaire Q1 to market participa nts of 4 June 2020, questions 5.1  and 5.4..  
 
 
21 as an u pstream market , and that a large number of alternative colocation services 
providers would remain post -transaction .52 
(111)   In light of the above, the Commission considers that the Transaction does not give 
rise to  serious doubts as to its compatibility with the  internal market as regards the 
position of NGD in the market for colocation services as an upstream market to IT 
outsourcing.53 
6. CONCLUSION  
(112)  For the above reasons, the European Commission has decided not to oppose the 
notified operation and to declare it com patible with the internal market 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    Replies to Questionnaire Q1 to market participants of 4 June 2020, question  5.1, 5.3 and  5.4. 
53  This assessment also applies to all plausible market subsegmentations of the market for IT outsourcing in 
which the Parties are active, namely: Public cloud co mputing services, Infrastructure as a service (incl. 
managed hosting), and Infrastructure outsourcing services for data centres, both on a UK and EEA market 
(see Table 1).