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 -MERG ER-REGISTRY@ec.europa.eu .  EUROPEAN COMMISSION  
Brussels , 18.10.2019  
C(2019 ) 7599 final  
PUBLIC VERSION  
 
To the notifying party   
Subject : Case M.9433 – MEIF 6 Fibre / KCOM Group  
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 13 September 2019, the European Commission received notification of a 
proposed concentration pursuant to Article 4 of the Merger Regulation by which 
MEIF 6 Fibre Limited (“MEIF 6 Fibre” or the “Notifying Party”, UK), controlled by 
Macquarie Group Limite d (“Macquarie” , Australia), acquires within the meaning of 
Article 3(1)(b) of the Merger Regulation sole control of KCOM Group Public 
Limited Company (“KCOM”, U K) (the “Transaction”).  Macquarie and KCOM are 
collectively referred to as the “Parties”.3  
                                                 
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 ( the “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  Publication in the Official Journal of the European Union No C 316 , 20.9.2019 , p. 9. 
In the published version of this decision, 
some information has been omitted 
pursuant to Article 17(2) of Council 
Regulation (EC) No 139/2004 
concerning non -disclosure of business 
secrets and other  confidential 
information. The omissions are shown 
thus […] . Where possible the 
information omitted has been replaced by 
ranges of figures or a general description.  
 
 
2 1. THE PARTIES  
(2) MEIF 6 Fibre is a wholly -owned indirect subsidiary of Macquarie European 
Infrastructure Fund 6 SCSp (“MEIF 6”), managed, in turn, by Macquarie 
Infrastructure and Real Assets (“MIRA”). Macquarie is a diversified financial 
services group that has est ablished leading positions as a global specialist in a wide 
range of sectors, including as owner and investor in telecommunications 
infrastructure. One of MIRA’s investments in the European telecommunications 
sector is a 25% interest in Arqiva Limited (“Ar qiva”) . Arqiva is a provider of 
transmission towers and terrestrial TV and radio broadcasting services in the UK. 
Arqiva joint ly control s Freeview,4 the UK’s main Digital Terrestrial Television 
(“DTT”) platform.  
(3) KCOM  is a provider of IT and communications  services to consumers and 
businesses in the UK. It is primarily active in North -East England in the city of 
Kingston Upon Hull and the surrounding area in the East Riding of Yorkshire ( the 
“Hull area5”), where KCOM is the regulated incumbent. Besides its activities in the 
Hull area, KCOM provides IT, communications and connectivity services to large 
and/or multi -sided enterprises and public sector organisations across the UK.  
2. THE CONCENTRATION  
(4) On 3 June 2019, the boards of MEIF 6 Fibre and KCOM announced that they had 
agree d on the terms of a recommended cash offer, to be made by MEIF 6 Fibre, for 
the entire issued and to be issued ordinary share capital of KCOM, including all 
voting rights attached to the shares.  
(5) On 4 July 2019, the UK Takeover Panel ann ounced that a public auction in respect 
of KCOM would be required to take place. The auction commenced on 8 July 2019 
in accordance with a timetable and rules mandated by the Takeover Panel.  
(6) On 12 July 2019, MEIF 6 Fibre submitted a revised increased offer  of approximately 
EUR 698.3 million, which the directors of KCOM recommended unanimously.  
(7) On 26 July 2019, MEIF 6 Fibre’s acquisition of the shares received unconditional 
approval from the UK’s Financial Conduct Authority, and the scheme of 
arrangement be came effective on 1 August 2019.6 MEIF 6 Fibre now owns 100% of 
the share capital in KCOM.7 
                                                 
4  The other four shareholders are public service broadcasters Channel 4, ITV and BBC, as well as  the 
broadcaster Sky . Form CO, paragraph 16.  
5  The Hull area, as defined by the Office of communications (“Ofcom”), the UK’s communications 
regulator, refers to the area where KCOM operates as the incumbent and consists of the Kingston upon 
Hull City Council area and some parts of the East Riding of Yo rkshire Council area.   
6  Macquarie is subject to Article 7(2)(b) of the Merger Regulation. While the public offer to acquire KCOM 
has closed, Macquarie must not exercise its voting rights until the Transaction has been declared 
compatible with the intern al market.   
7  KCOM used to be listed on the main market of the London Stock Exchange . KCOM applied for the 
cancellation of the listing and trading of KCOM shares to take effect from shortly after the scheme 
becomes effective. Accordingly, KCOM has now be en removed from the London Stock Exchange and 
will be re -registered as a private limited company.   
 
 
3 (8) Therefore, the Transaction consists of the acquisition of sole control by MEIF 6 
Fibre over KCOM within the meaning of Article 3(1)(b) of the Merger Regulation.  
3. UNION DIMENSION  
(9) The undertakings concerned have a combined aggregate world -wide turnover of 
more than EUR 5 000 million (Macquarie : EUR […], KCOM : EUR 342 million) .8 
Each of them has an EU -wide turnover in excess of EUR 250 million (Macquarie : 
EUR […], KCOM : EUR 342 million) , but they do not achieve more than two -thirds 
of their aggregate EU -wide turnover within one and the same Member State. The 
notified operation therefore has an U nion dimension pursuant to Article 1(2) of the 
Merger Regulation.  
4. RELEVANT MA RKETS  
(10) The Parties are active in several telecommunications and TV markets in the UK.  
KCOM is active, at the retail level, in fixed telephony and in fixed internet access 
services, while Macquarie , via its shareholding in Arqiva, which in turn holds 
negative joint control over Freeview, the UK’s main DTT platform , is active in retail 
TV services. The corresponding relevant markets are examined in sections 4.1 to 4.4 
below.  
(11) In addition, the Parties are  both active in retail business connectivity services . 
Macquarie , through its shareholding in Arqiva , is active in site shar ing services and 
KCOM is active in colocation services. However, due to the Parties’ limited 
positions, t he Transaction does not give rise to any horizontally9 or vertically 
affected markets .10 Therefore, for the purpose of the present decision, the 
Commiss ion will not discuss further the Parties’ activities in retail business 
connectivity, site sharing and colocation services.  
                                                 
8  Turnover calculated in accordance with Article 5 of the Merger Regulation.  
9  Even if the Parties’ fixed -only (KCOM) and fixed -wireless (Macquarie, via i ts stake in Voneus)  activities 
in retail fixed internet access and business connectivity services were considered as part of the same 
product and geographic (national) market, the Parties’ combined market share and increment resulting 
from the Transaction  would be negligible in light of the limited scope of Voneus’ activities ( i.e. amount to 
approximately [0-5]% in retail fixed internet access services and [0-5]% in retail business connectivity 
services). In colocation services, Arqiva no longer actively ma rkets its services  since June 2013 although 
it does provide excess data centre capacity to existing customers on an incidental basis.  The only 
conceivable geographic overlap between KCOM ’s and Arqiva ’s activities  would be in London, where the 
merged entity  would hold a combined market share below [0-5]%. 
10  Although Arqiva provides site sharing services to KCOM and KCOM provides fixed telephony services 
and business connectivity services to a number of non -customer facing business divisions of Arqiva, these  
services do not give rise to a meaningful vertical relationship between the Parties as they do not constitute 
important inputs under the meaning of paragraph 34 of the Commission’s Guidelines on the assessment of 
non-horizontal mergers under the Council R egulation  on the control of concentrations between 
undertakings (“Non -Horizontal Merger Guidelines”), OJ C 265, 18.10.2008.  This is because these 
services (i) do not represent a significant cost factor relative to the price of Parties’ respective services; (ii) 
are not a critical component  without which the Parties’ respective services could not be effectively 
offered ; (iii) do not represent a significant source of product differentiation for the P arties’ respective  
services; and (iv) the cost of switching to alternative suppliers of these inputs would not be relatively high, 
given the numerous alternative suppliers . Notifying Party’s reply of 4 October 2019 to RFI 6, questions 4 
and 5.  
 
 
4 4.1. Retail supply of fixed telephony services  
(12) Fixed telephony services to end customers comprise  the provision of subscriptions 
enabling  access to public telephone networks at a fixed location for the purpose of 
making and/or receiving calls and related services .11   
(13) KCOM is the incumbent provider of fixed telephony services to consumers and 
businesses based on its own copper and fibre networks  in the Hull area. In addition, 
KCOM provides fixed telephony services to business  throughout the UK.12 
(14) Macquarie is not active in the retail supply of fixed telephony services in the UK.  
4.1.1.  Product market definition  
4.1.1.1.  Commission precedents  
(15) In previous decisions13, the Commission considered whether a distinction between 
local/national and international calls as well as between residential and non -
residential customers should be drawn , on the basis of the distinctions in the 
Commis sion Recommendation 2003/ 311/EC14, but ultimately left the exact product 
market definition open.  
(16) More recently, the Commission also considered that managed Voice over Internet 
Protocol (“VoIP”)  services15 and traditional telephony are interchangeable and 
therefore belong to the sam e market.16 In recent decisions, the Commission 
considered that an overall retail market for fixed telephony services exists, which 
includes VoIP services.17  
                                                 
11  Commission decision of 20 September 2013 in case M.6990 – Vodafone/Kabel Deutschland , paragraph 
131; Commission decision of 4 February 2016 in case M.7637 – Liberty Global/Base Belgium , recital  69; 
and Commission decision of 3 August 2016 in case M.7978 – Vodafone/Liberty Global/Dutch JV , 
paragraph 21.  
12  KCOM’s in frastructure in the Hull area and its national long -distance network have been designed as 
separate segments in order to comply with certain regulatory obligations in the Hull area. In fact, 
CityFibre Holdings purchased KCOM’s national network in December 2015, and [Details of relationship 
between KCOM and CityFibre] . Form CO, paragraph 89.  
13  Commission decision of 7 September 2005 in case M.3914 – Tele2/Versatel , paragraph 10; Commission 
decision of 29 June 2009 in case M.5532 – Carphone Warehouse/Tiscali  UK, paragraphs 35 and 39; 
Commission decision of 29 January 2010 in case M.5730 – Telefónica/Hansenet Telekommunikation , 
paragraphs 16 and 17.   
14  Commission Recommendation of 11 February 2003 on relevant product and service markets within the 
electronic  communications sector susceptible to ex ante regulation in accordance with Directive 
2002/21/EC of the European Parliament and of the Council on a common regulatory framework for 
electronic communication networks and services (Text with EEA relevance) (no tified under document 
number C(2003) 497), OJ L 114, 8.5.2003, p. 45 –49. 
15  VoIP is a technology that allows users to make voice calls using a broadband internet connection instead 
of a regular (or analogue) phone line.   
16  Commission decision of 20 Septe mber 2013 in case M.6990 – Vodafone/Kabel Deutschland , paragraph 
131.   
17  Commission decision of 4 February 2016 in case M.7637 – Liberty Global/BASE Belgium , recital 69; 
Commission decision of 3 August 2016 in case M.7978 – Vodafone/Liberty Global/Dutch JV, paragraph 
26.   
 
 
5 4.1.1.2.  The Notifying Party ’s view  
(17) The Notifying Party submit s that, in line with previous Commission decis ions, the 
relevant product market is the overall  retail market for the provision of fixed 
telephon y services including VoIP services, with no  need for further segmentation.  
(18) However, the Notifying Party  consider s that the exact scope of the relevant product  
market can be left open, as no competition concerns arise on any plausible basis.18  
4.1.1.3.  The Commission’s assessment  
(19) The results of the market investigation conducted in the present case generally 
supported the market definition derived from the Commission’s past decisional 
practice, and indicat ed that the retail market for fixed telephony services  includes 
VoIP services.19 Moreover, the majority of respondents to the market investigation 
agreed with  a segmentation between residential customers (including small  business 
customers) and large business customers.20  
(20) The Commission considers that, in any event, for the purposes of this decision, the 
exact product market definition with regard to the retail supply of fixed telephony 
service s can be left open, as the T ransaction does not raise serious doubts as to its 
compatibility with the internal market  or the functioning of the EEA Agreement  
under any plausible  product market definition . 
4.1.2.  Geographic market definition  
4.1.2.1.  Commission precedents  
(21) In previous decisions, the Commission concluded that the retail market for the 
provision of fixed telephony services was national in scope.21 This is  due to the 
continuing importance of national regulation in the telecommunications sector, the 
supply of upstream wholesale services th at works on a national basis, and the fact 
that the pricing policies of telecommunications providers are predominantly 
national.22  
                                                 
18  Form CO, paragraph 151.  
19  Replies to questionnaire Q1 to TV and telecommunication operators, question s 6 and 6.1. Throughout this 
decision, when the Commission refers to the (number of) respondents in relation to a given question of the 
market investigation, this excludes all respondents that have not provided an answer to that question, 
unless stated othe rwise.  
20  Replies to questionnaire Q1 to TV and telecommunication operators, questions 8 and 8.1.  
21  Commission decision of 30 May 2018 in case M.7000 – Liberty Global/Ziggo , paragraph  150; 
Commission decision of 19 May 2015 in case M.7421 – Orange/Jazzt el, recital 37; Commission decision 
of 3 August 2016 in case M.7978 – Vodafone/Liberty Global/ Dutch JV , paragraph  29.  
22  Commission  decision of 29 June 2009 in case M.5532 – Carphone Warehouse/Tiscali UK , paragraph 47; 
Commission decision of 7 December 2 006 in case M.4442 – Carphone Warehouse Group plc/AOL UK , 
paragraph 19; Commission decision of 7 September 2005 in case M.3914 – Tele2/Versatel , paragraph 18.  
 
 
6 4.1.2.2.  The Notifying Party’s view  
(22) The Notifying Party stresses that KCOM’s activities in the retail supply of fixed 
telephony services  focus mainly on the Hull area23, but ultimately agrees with 
previous Commission decisions  defining a national market.24  
(23) However, the Notifying Party consider s that the exact scope of the relevant 
geographic market can be left open, as no competitio n concerns arise on any 
plausible basis.25 
4.1.2.3.  The Commission’s assessment  
(24) A large majority of respondents to the market investigation indicate d that the Hull 
area is a separate geographic market distinct from the rest of the UK for the r etail 
supply of fixed telephony services , since the competitive conditions in said area 
significantly differ  from the rest of the UK.26  
(25) The Commission also notes that Ofcom, in its most recent market review , has 
defined the Hull area as a separate geographic  market in relation to a number of 
wholesale markets  confirming that competitive conditions within the area are 
sufficiently homogenous and appreciabl y different from the surrounding area.27 
(26) However, for the purposes of this decision, the Commission considers that the exact 
geographic market definition with regard to the retail supply of fixed telephony 
services can be left open, as the Transaction does not raise serious doubts as to its 
compatibility with the internal market  or the functioning of the EEA Agreement , 
irrespectiv e of whether the scope of this market is  considered  national or limited to 
the Hull area.   
4.2. Retail supply of fixed internet access services  
(27) Fixed internet access services at the retail level consist of the provision of a fixed 
telecommunications link enabl ing customers to access the internet  through a fixed 
telecommunications connection . 
(28) KCOM is the incumbent provider of fixed internet access services to consumers and 
businesses  based on its own copper and fibre networks  in the Hull area .28 In addition, 
KCOM provides connectivity services to business  throughout the UK .  
                                                 
23  Form CO, paragraph 88.  
24  Form CO, paragraph 152.  
25  Form CO, paragraph 152.  
26  Replies to que stionnaire Q1 to TV and telecommunication operators, questions 11 and 11.1.  
27  Ofcom, “Wholesale Local Access and Wholesale Broadband Access Market Reviews: Review of 
competition in the Hull Area”  (published 31 July 2018) , paragraphs 3.40 and 3.107 -3.110.  
28  In addition, KCOM has [single digit ] fixed -wireless customers in the Hull area, which it supplies on an 
exceptional basis to address the needs of this small number of business customers who needed help in 
gaining access to broadband and were on the edge of KCOM’s full fibre build plan. These  customers 
generate annual revenues of less than EUR [<10 000] , amounting to approximately [0-5]% of KCOM’s 
latest annual revenue. The Commission considers that , for the purpose of its assessment, such marginal 
activity  in the retail supply of fixed -wirele ss internet access services  can be disregarded . Form CO, 
paragraphs 103 -107. 
 
 
7 (29) Macquarie is not active in the retail supply of fixed internet access services in the 
UK. However, as of August 2019 , Macquarie  holds a [Size and nature of Macquarie 
Capital’s shareholding]  stake in operator Voneus Limited (“Voneus”). Voneus 
specialises in the provision of internet access through “fixed -wireless” networks to 
homes and businesses in remote rural communities that do not have access to fibre or 
copper -based network s.  
4.2.1.  Product market definition  
4.2.1.1.  Commission precedents  
(30) In previous  cases, the Commission considered , but ultimately left open , possible 
segmentations within the supply of retail fixed internet access services according to 
(i) product type, distinguishing betw een narrowband, broadband and dedicated 
access and (ii) distribution mode, distinguishing between xDSL, fibre, cable  (fixed -
only)  and internet provided th rough the mobile network infrastructure  (fixed -
wireless) .29 At the same time , the Commission noted that  the retail market for fixed 
internet access services should not be segmented according to download speed.30  
(31) The Commission also considered distinguishing between residential and small 
business customers, on the one hand, and larger business customers and public 
authorities, on the other hand, but ultimately left the question open.31  
4.2.1.2.  The Notifying Par ty’s view  
(32) The Notifying Party argues that fixed -wireless services are  not able to compete with 
fixed -only services and thus these  two technologies belong to s eparate product 
markets. Consequently , there would be  no overlap between KCOM’s fibre and 
copper -based and Voneus’ fixed -wireless offering.32  
(33) However, the Notifying Party considers that the exact scope of the relevant product  
market can be left open, as no competition concern s arise on any possible basis.  
Even if the se two technologies were considered as part of the same product and 
geographic (national) market, the Notifying Party submits that the Parties’ combined 
market sha re and the increment resulting from the Transaction would be margina l.33  
                                                 
29  Commission decision of 29 June 2010 in case M.5532 – Carphone Warehouse/Tiscali UK , paragraphs 7 -
21; Commission decision of 20 September 2013 in case M.6990 – Vodafone/Kabel De utschland , 
paragraphs 192 -194; Commission decision of 3 August 2016 in case M.7978 – Vodafone/Liberty 
Global/Dutch JV , paragraph 38.   
30  Commission decision of 29 June 2010 in case M.5532 – Carphone Warehouse/Tiscali UK , paragraphs 7 -
21; Commission decisi on of 20 September 2013 in case M.6990 – Vodafone/Kabel Deutschland , 
paragraphs 192 -194; Commission decision of 3 August 2016 in case M.7978 – Vodafone/Liberty 
Global/Dutch JV , paragraph 38.   
31  Commission decision of 19 May 2015 in case M.7421 – Orange/J azztel , recital  42; Commission decision 
of 30 May 2018 in case M.7000 – Liberty Global/Ziggo , paragraph 165; Commission decision of 7 
October 2016 in case M.8131 – Tele2 Sverige/TDC Sverige , paragraph 32.  
32  Form CO, paragraphs 108 and 112.  
33  Form CO, par agraph 113.  
 
 
8 4.2.1.3.  The Commission’s assessment  
(34) Responses to the market investigation  provided  mixed views  as to whether the 
relevant product market should include fixed -wireless internet access or shoul d be 
limited to fixed -only internet access. Several  respondents explain ed that it ultimately 
depends on whether the two technologies can deliver the same level of service, 
which may vary from location to location.34 
(35) In this respect, t he Commission notes that Ofcom , in its most recent market review, 
concluded “ [fixed  wireless access] services are not close substitutes to fixed -line 
broadband ” and therefore do not belong to the same product market.35 
(36) The majority of respondents to  the market investigation ag reed with a segmentation 
between residential customers (including small business customers) and large 
business customers.36  
(37) In any event, for the purpose of this decision, the Commission considers that the 
exact product market definition in relation of the  retail supply of fixed internet 
access services can be left open, as the Transaction does not raise serious doubts as 
to its compatibility with the internal market  or the functioning of the EEA 
Agreement  under any plausible  product market definition . 
4.2.2.  Geog raphic market definition  
4.2.2.1.  Commission precedents  
(38) In previous decisions, the Commission concluded that the retail market for the 
provision of fixed internet services was national in scope.37 In Liberty Global/BASE  
Belgium , the Commission considered whether the geographic scope of the market 
should be defined on a national, regional basis or by reference to the footprint of the 
operators’ networks, but ultimately left the question open.38  
4.2.2.2.  The Notifying Party ’s view  
(39) The Noti fying Party submits that there is no geographic overlap between KCOM and 
Voneus since the former primarily provides retail fixed internet access services 
based on its fixed infrastructure in the Hull area, while the latter specifically targets 
rural commun ities that are not yet served by fixed -only internet services.39 
                                                 
34  Replies to questionnaire Q1 to TV and telecommunication operators, questions 7 and 7.1.  
35  Notifying Party’s reply of 20 September 2019 to RFI 5, question 1; Ofcom, “Wholesale Local Access and 
Wholesale Broadband Access Market Reviews – Revi ew of competition in the Hull Area”  (published 31 
July 2018) , paragraph 3.33.  
36  Replies to questionnaire Q1 to TV and telecommunication operators, questions 8 and 8.1.  
37  Commission decision of 29 June 2010 in case M.5532 – Carphone Warehouse/Tiscali UK , paragraph 47; 
Commission decision of 29 January 2010 in c ase M.5730 – Telefónica/Hansenet  Telekommunikation , 
paragraph 28; Commission decision of 20 September 2013 in c ase M.6990 – Vodafone/Kabel 
Deutschland , paragraph 197; Commission decision of 3 August  2016 in case M.7978 – Vodafone/Liberty 
Global/Dutch JV , paragraph 40; and Commission decision of 30 May 2018 in case M.7000 – Liberty 
Global/Ziggo , paragraph  169. 
38  Commission decision of 4 February 2016 in case M.7637 – Liberty Global/BASE Belgium , recitals 62 -64.   
39  Form CO, paragraphs 109 -112. 
 
 
9 (40) However, the Notifying Party  consider s that the exact scope of the relevant 
geographic market can be left open, as no competition concerns arise on any 
plausible basis . Even if the se two techn ologies were considered as part of the same 
product and geographic (national) market, the Notifying Party submits that the 
Parties’ combined market share and the increment resulting from the Transaction 
would  be margina l.40  
4.2.2.3.  The Commission’s assessment  
(41) A large majority of respondents to the market investigation indicate d that the Hull 
area is a separate geographic market from the rest of the UK for the r etail supply of 
fixed internet access services , since the competitive conditions in that area 
significan tly differ from the rest of the UK.41  
(42) The Commission also notes that Ofcom, in its most recent market review , has 
defined the Hull area as a separate geographic  market in relation to a number of 
wholesale markets  confirming that competitive conditions with in the area are 
sufficiently homogenous and appreciabl y different from the surrounding area.42 
(43) However, for the purposes of this decision, the Commission considers that the exact 
geographic market definition with regard to the retail supply of fixed interne t access 
services can be left open, as the Transaction does not raise serious doubts as to its 
compatibility with the internal market or the functioning of the EEA Agreement 
irrespective of the relevant geographic market definition .   
4.3. Retail supply of TV services  
(44) TV distributors either limit themselves to carrying TV channels and making them 
available to end users, or also act as channel aggregators, which “package ” TV 
channels  into “bouquet” retail offers . The TV services supplied by TV distributors to 
end users consist of: (i) packages of linear TV channels (which they have either 
acquired or produced themselves); and (ii) content aggregated in non -linear services, 
such as video on demand (“VOD”), Subscription VOD (“SVOD”), Transactional 
VOD (“TVOD”) and Pay-Per-View (“PPV”). TV content can be delivered to end 
users through a number of technical platforms  including terrestrial (“DTT”), cable, 
satellite and IPTV.43 Over -The-Top (“OTT”) players deliver channels and content in 
both a linear and non -linear fash ion through the use of the internet.  
(45) Macquarie  is active in the retail supply of TV services via its shareholding in  Arqiva, 
which in turn holds negative joint control over  Freeview, the UK’s main DTT  
platform .44 
                                                 
40  Form CO, paragraph 113.  
41  Replies to questionnaire Q1 to TV and telecommunication operators, questions 11 and 11.1.  
42  Ofcom, “Wholesale Local Access and Wholesale Broadband Access Market Reviews: Rev iew of 
competition in the Hull Area”  (published 31 July 2018) , paragraphs 3.40 and 3.107 -3.110.  
43  IPTV is the abbreviation for Internet Protocol TV; it is a system through which television services are 
delivered using the internet protocol over a packet -switched network such as the internet, instead of being 
delivered through traditional terrestrial, satellite signal and cable television formats.  
44  Arqiva also has a stake in another DTT platform, YouView, however, Arqiva is one of seven shareholders 
in Yo uView (the others being the BBC, ITV, Channel 4, Channel 5, BT and TalkTalk ) [Information 
 
 
 
10 (46) KCOM is not active in the retail supply of TV services.45 
4.3.1.  Product market definition  
4.3.1.1.  Commission precedents  
(47) In previous cases, the Commission distinguished two separate markets for the retail 
supply of television services: (i) Free-to-Air (“FTA ”) TV  and (ii) pay-TV.46 The 
Commission also considered whether pay -TV can be segmented further according 
to: ( i) linear vs non -linear pay -TV services;47 (ii) distribution technologies (e.g. 
cable, satellite, or terrestrial );48 and (i ii) premium vs basic pay -TV services.49 In 
certain  countries, due to the large penetration of pay-TV services and the fact that 
such services also carry the main FTA channels, the Commission has identified two 
separate product markets for: (i) basic pay-TV services (including FTA services) and 
(ii) premiu m pay-TV services. In previous cases, the Commission has  left open the 
market definition with regard to each of these potential sub -segments.50 
4.3.1.2.  The Notifying Party’s view  
(48) The Notifying Party argues that neither KCOM nor Arqiva  are active in the market 
for the retail provision of TV services.  According to the Notifying Party, Arqiva ’s 
role in the sector  is limited to the provision  of backbone infrastructure services for 
the broadband and transmission of TV content over the DTT p latform.51 The 
Notifying Party submits that even within the Freeview joint venture, Arqiva’s role is 
that of an infrastructure provider.52 
                                                                                                                                                      
concerning governance and control of YouView].  Notifying Party’s reply of 4 October 2019 to RFI 6, 
question 8.  
45  Previously, KCOM also offered IPTV services in the H ull area, but it ceased these services in April 2006. 
During the period 2012 to 2018, KCOM resold a TV product by YouView, but withdrew the offer [Details 
of KCOM’s former retail TV offering] . In light of this marginal activity, for the purpose of this dec ision, 
KCOM will not be considered active in the retail supply of TV services. Form CO, paragraphs 205 -207. 
46  See for instance the Commission decisions of 18 July 2007 in case M.4504 – SFR/Télé 2 France , recital  
40, and of 25 June 2008 in case M.5121 – News Corp /Premiere , paragraph  20. In other cases this 
question has been left open (see for instance the Commission decisions of 24 February 2015 in case 
M.7194 – Liberty Global/Corelio/W&W/De Vijver Medi a, recital 119-120, of 25 June 2008 in case M.5121 
– News Corp/Premiere, paragraphs  15 and 21, and of 30 May 2018 in case M.7000 – Liberty 
Global/Ziggo , paragraph  135).  
47  Commission decision of 24 February 2015 in case M.7194 – Liberty Global/Corelio/W&W/De Vijver 
Media , recital  124; Commission decision of 25 June 2008 in case M.5121 – News Corp/Premiere, 
paragraph  21; Commission decision of 30 May 2018 in case M.7000 – Liberty Global/Ziggo, paragraph  
135. 
48  Commission decision of 24 February 2015 in case M.7194 – Liberty Global/Corelio/W&W/De Vijver 
Media , recital 127; Commission decision of 25 June 2008 in case M.5121 – News Corp/Premiere , 
paragraph  22; Commission decision of 21 December 2010 in case M.5932 – News Corp/BskyB, paragraph  
105; Commission decision of 30 May 2018 in case M.7000 – Liberty Global/ Ziggo , paragraph  136. 
49  Commission decision of 24 February 2015 in case M.7194 – Liberty Global/Corelio/W&W/De Vijver 
Media , recital  119. 
50  Commission decision of 15 June 2018 in case M.8861 – Comcast/Sky , paragraphs  57-59; Commission 
decision of 7 April 2017 in case M.8354 – Fox/Sky , paragraph 101; .  
51  Form CO, paragraph 214.  
52  Form CO, paragraph 219.  
 
 
11 (49) Moreover, the Notifying Party states that there are no material vertical links between 
Macquarie and KCOM as neither on e is engaged in activities upstream or 
downstream of a market in which the other is active .53 
(50) Based on the above,  the Notifying Party submits that  the relevant market definition 
can be left open, as, regardless of the market definition adopted, the Transact ion 
does not raise competitive concerns.54  
4.3.1.3.  The Commission’s assessment  
(51) The market investigation was inconclusive as to whether market segmentations 
considered in prior Commission decisions in relation to FTA, basic and premium 
pay-TV services are  relevant for the UK retail TV market. Several respondents  
indicated that  past distinctions have become increasingly blurred, mainly due to the 
emergence of streaming television services, which are offered both by traditional TV 
platforms and new players (e.g. Netflix, Amazon).55 Likewise, the majority of 
respondents indicated that t he distinction between lin ear and non -linear TV services 
has become blurred and that these are increasingly viewed as substitutes by 
consumers.56  
(52) Regarding market segmentation s based on the different distribution platforms  for the 
provision of retail TV services (e.g., terrestrial television, cable, IPTV and satellite), 
the results of the market investigation indicate d that those technologies are, in 
general, substitutable  from a consumer perspective .57  
(53) In any event, for the purpose of this decision, the exact product market definition in 
relation to the retail supply of TV services can be left open, as the Transaction does 
not raise serious doubts as to its compatibility with the internal market or the 
functioning of the EEA Agreement under any plausible product market definition . 
4.3.2.  Geographic market definition  
4.3.2.1.  Commission precedents  
(54) The Commission has previously considered that the market for the retail provision of 
TV services is ei ther national, or limited to the geographic coverage of a supplier ’s 
cable network.58  
4.3.2.2.  The Notifying Party’s view  
(55) The Notifying Party submits that, for the assessment of the Transaction, the precise 
geographic market definition relating to Arqiva’s  activities is likely to be national in 
scope at the widest. However, the Notifying Party states  that, in light of the lack of 
                                                 
53  Form CO, paragraph 125.  
54  Form CO, paragraph 222.  
55  Replies to questionnaire Q1 to TV and telecommunication operators, questions 3 and 3.1.  
56  Replies to questionnaire Q1 to TV and telecommunication operators, questions 4 and 4.1.  
57  Replies to questionnaire Q1 to  TV and telecommunication operators, questions 5 and 5.1.  
58  Commission decision of 24 February 2015  in case M.7194 – Liberty Global/Corelio/W&W/De Vijver 
Media . 
 
 
12 any affected market, a precise market definition is not required with respect to each 
of Arqiva’s activities.59 
4.3.2.3.  The Commission’s a ssessment  
(56) The results of the market investigation are consistent with the Commission ’s 
previous findings that the market is either national, or limited to the ge ographic 
coverage of a supplier’ s cable network.60 
(57) In any event, for the purpose of this decision, the exact geographic  market definition 
in relation of the retail supply of TV services can be left open, as the Transaction 
does not raise serious doubts as to its compatibility with the internal market or th e 
functioning of the EEA Agreement under any plausible geographic market 
definition . 
4.4. Retail supply of multiple play services  
(58) The term “multiple play ” relates to offers comprising two or more of the following 
services provided to retail consumers: fixed telephony, fixed internet access , TV and 
mobile telecommunications services. Multiple play comprising two, three or four of 
these services is referred t o as dual play ( “2P”), triple play ( “3P”) and quadruple play 
(“4P”) respectively.   
(59) Three of the four telecommunications serv ices referenced in paragraph  (58) above 
are fixed services, provided over a fixed network such as cable, copper or fibre 
infrastructure, namely fixed telephony, fixed internet access  and TV services.  
Multiple play comprising any combination of two or more of these fixed services 
without a mobile c omponent is referred to as “fixed multiple play ”. 
(60) As explained above, Macquarie , via Arqiva, exercises negative joint control over 
Freeview, the UK’s main DTT platform , while KCOM  is active in the supply of 
retail fixed telephony and fixed internet access services  to consumers in the Hull 
area.61  
(61) Therefore, the Transaction could potentially give the Parties the possibility to offer a 
3P fixed bundle consisting of fixed telephony, fixed internet access and TV services.  
4.4.1.   Product market definition  
4.4.1.1.  Commission precedents  
(62) In previous decisions62, the Commission took into consideration, but ultimately left 
open , the question as to whether there exists a market for multiple play bundles that 
                                                 
59  Form CO, paragraphs 96 and 223.  
60  Replies to questionnaire Q1 to TV and telecommunication operators, questions 10 and 10.1.  
61  KCOM is also [Details of KCOM internal planning].  
62  Commission decision of 4 February 2016 in case M.7637 – Liberty Global/BASE Belgium , recital 96; 
Commission decision of 19 May 2015 in case M.7421 Orange/Jazztel , recitals  86 and 91; Commission 
decision of 20 September 2013 in case M.6990 – Vodafone/Kabel Deutschland , paragraph  261; 
Commission decision of 3 July 2012 in case M.6584 – Vodafone/Cable & Wireless , paragraphs  102-104; 
Commission decision of 16 June 2011 in case M.5900 – LGI/KBW , paragraphs  183-186; Commission 
 
 
 
13 is separate from the markets for each of the components of the bundles.  In its 
previous analysis of this market63, the Commission examined the factors associated 
to the raise in popularity of multiple play offers. In particular, customers choose 
multiple play bundles mainly because of the lower price, additional benefits and 
conve nience of having one supplier/point of contact. From the supply -side, operators 
offer bundled services as a tool to increase customer loyalty and reduce customer 
churn.   
4.4.1.2.  The Notifying Party’s view  
(63) The Notifying Party  considers that there is unlikely to be a separate retail market for 
the provision of multiple play services  due to potential demand -side substitutability 
between multi -play offerings and their separate component services.64 
4.4.1.3.  The Commission’s assessment  
(64) The results of the market investigation on t he possible existence of a separate market 
for the retail provision of multiple play services was inconclusive .65 A number of 
respondents have highlighted the increasing penetration of bundled offers in the UK 
and the competitive strength that such bundles have in attracting consumers and in 
providing them with discounted mobile services offers. It was noted, at the same 
time, that the transition to this new business model is by no means completed and 
that consumer s still have and exercise the option to buy unbundled services.66 
(65) As a result, the market investigation does not allow  establish ing with the required 
degree of certainty the existence of a separate market for multiple play bundles in the 
UK and which combinations of services would be included in such  market, if it were 
to exist.  
(66) In any event, for the purposes of this decision, the exact  product  market definition 
with regard to the retail supply of multiple play service s can be left open, as the 
Transaction does not raise  serious doubts as to its compa tibility with the internal 
market  or the functioning of the EEA Agreement under any plausible product market 
definition.  
4.4.2.  Geographic market definition  
4.4.2.1.  Commission precedents  
(67) In previous decisions, the Commission considered that the geographic scope of any 
possible retail market for multiple play services would be national since the 
components of the multiple play offers are offered individually at national level and 
the bundling of the services would not change the geographic scope of the 
components. It never theless left  the exact geographic delineation of the possi ble 
                                                                                                                                                      
decision of 25 January 2010 in case M.5734 – Liberty Global Europe/Unitymedia , paragraphs  43-48; 
Commission decision of 30 May 2018  in case M.7000 – Liberty Global/Ziggo , para graph  230. 
63  See, for example, Commission decision of 3 August 2016 in case M.7978 – Vodafone/Liberty 
Global/Dutch J V, paragraphs 93 and 102.  
64  Notifying Party’s reply of 14 October 2019 to RFI 7, question 4.  
65  Replies to questionnaire Q1 to TV and telecommunication operators, questions 9 and 9.1.  
66  Replies to questionnaire Q1 to TV and telecommunication operators, q uestion 9.1.  
 
 
14 multiple play market open.67 However, in a recent decision, the Commission noted 
that bundles display their competitive effects on a national basis .68 
4.4.2.2.  The Notifying Party’s view  
(68) The Notifying Part y has not offered  any views on the geographic scope of a possible 
market for the retail provision of multiple play services.  
4.4.2.3.  The Commission’s assessment  
(69) As explained above, the majority of respondents to the market investigation consider 
that the market fo r the provision of retail TV services  is either national, or limited to 
the geographic coverage of a supplier’s cable network69, and that  the markets for 
retail fixed internet access and retail fixed telephony services  is limited to  the Hull 
area.70 
(70) The exact geographic market definition with regard to the retail supply of multiple 
play service s can be left open  for the purpose of this decision , as the Transaction 
does not raise  serious doubts as to its compatibility with the internal market  or the 
functioning of the EEA Agreement  under any plausible  geographic market 
definition.  
5. COMPETITIVE ASSESSMEN T 
(71) Macquarie  will be active in both the retail supply of TV services  (via its stake in 
Arqiva, which jointly controls Freeview) and the retail supply of fixed telephony and 
fixed internet access services in the Hull area  (via KCOM):   
(a) Freeview  is the UK’s main DTT platform. It is a joint venture owned and 
operated by five shareholders , namely Arqiva, which  provides the 
transmission services and infrastructure, and the broadcasters Channel 4, 
ITV, BBC and Sky, each of which has a 20% shareholding.  Arqiva exercises 
a negative joint control over Freeview ;71  
(b) KCOM provides fixed internet access and fixed telephon y services to about 
[…] customers in the  Hull area.  
(72) End customers can procure fixed telephony , fixed internet access and TV services  
from the same provider. Freeview’s TV services can therefore be considered as 
complementary or at least closely related to KCOM’s fixed internet access and fixed 
telephony services within the meaning of paragraph 91 of the Non -Horizontal 
Merger Guidelines . Accordingly, the Commission will examine whether the 
                                                 
67  Commission decision of 19 May 2015 in case M.7421 – Orange/Jazztel , recitals 89 -90; Commission 
decision of 20 September 2013 in case M.6990 – Vodafone/Kabel Deutschland , paragraphs 263 -265; 
Commission decision of 16 June 2011 in case M.5900  – LGI/KBW , paragraphs 183 -186. 
68  Commission decision of 30 May 2018, in case 7000 – Liberty Global/Ziggo , paragraph 232.  
69  Replies to questionnaire Q1 to TV and telecommunication operators, questions 10 and 10.1.  
70  Replies to questionnaire Q1 to TV and  telecommunication operators, questions 11 and 11.1.  
71  More precisely, Arqiva holds a 20% shareholding in DTV Services Limited, which trades under the 
Freeview brand name. Arqiva considers that it exercises negative joint control over Freeview because 
[Information concerning governance and control of Freeview] . Form CO, paragraph 188.  
 
 
15 Transaction may give rise to conglomerate effects in relation to  Freeview’s TV 
services and KCOM’s fixed telephony  and fixed internet access services .72 
5.1. Legal framework  
(73) According to the Non -Horizontal Merger G uidelines , in most circumstances, 
conglomerate mergers  do not lead to competition problems.73  
(74) However, foreclosure effects may arise when the combination of products in related 
markets confer on the economic entity resulting from the Transaction (the “ merged 
entity ”) the ability and incentive to leverage a strong market position from one 
market to another closely related market by means of tying or bundling or other 
exclusionary practices. The Non -Horizontal Merger Guidelines distinguish between 
bundling , which usually refers to the way products are offered and priced by the 
merged entity74 and tying , usually referring to situations where customers that 
purchase one good (the tying good) are required to also purchase another good from 
the producer (the tied good).  
(75) Tying and bundling as such are common practices that often have no anticompetitive 
consequences. Nevertheless, in certain circumstances, these practices may lead to a 
reduction in actual or potential rivals’ ability or incentive to compete. Foreclosure 
may also take more subtle forms, such as the degradation of the quality of the 
standalone product.75 This may reduce the competitive pressure on the merged entity 
allowing it to increase prices.76 
(76) In assessing the likelihood of such a scenario, the Commission examines, first, 
whether the merged firm would have the ability to foreclose its rivals77, second, 
whether it would have the economic incentive  to do so78 and, third, whether a 
foreclosure strategy would have a significant detrimental effect on  competition, thus 
causing harm to consumers.79 In practice, these factors are often examined together 
as they are closely intertwined.  
(77) In order to be able to foreclose competitors, the merged entity must have a 
significant degree of market power, which does not necessarily amount to 
dominance, in one of the markets concerned. The effects of bundling or tyi ng can 
only be expected to be substantial when at least one of the merging parties’ products 
is viewed by many customers as particularly important and there are few relevant 
                                                 
72  The Commission does not carry out a separate analysis of potential vertical effects arising from the 
Transaction, i.e. treating retail TV services as an input in the provi sion of multiple play services . While i t 
is not possible to conclude on the existence of a single multiple play services market in the UK (see 
section 4.4) , in any case, similar considerations would apply in the context of an assessment of vertical 
effects  as those set out in the analysis of conglomerate effects.  
73  Non-Horizontal Merger Guidelines, paragraph 92.  
74  Within bundling practices, the distinction is also made between pure bundling and mixed bundling. In the 
case of pure bundling the products are  only sold jointly in fixed proportions. With mixed bundling the 
products are also available separately, but the sum of the stand -alone prices is higher than the bundled 
price.  
75  Non-Horizontal Merger Guidelines, paragraph 33.  
76  Non-Horizontal Merger Gui delines, paragraph 93.  
77  Non-Horizontal Merger Guidelines, paragraphs 95 to 104.  
78  Non-Horizontal Merger Guidelines, paragraphs 105 to 110.  
79  Non-Horizontal Merger Guidelines, paragraphs 111 to 118. 

 
 
17 (81) Based on this data, Freeview ha d a market share of approximately [30-40]% in the 
retail supply of TV services and approximately [70-80]% in FTA TV services in 
2018.89  
(82) The Parties were not able to provide detailed market share estimates as regards 
KCOM’s activities in the retail supply of fixed telephony and fixed internet access 
services. KCOM is the incumbent operator and owner of the only universal fixed 
network in the Hull area. In its most recent market review of the wholesale local 
access and wholesale broadband access markets,90 Ofcom concluded that KCOM 
holds significant market power (“SMP”) in both markets in the Hull Area. As both 
of these wholesale markets und erpin the provision of retail telecommunication 
services, Ofcom also considered the impact on the retail supply of fixed telephony 
and fixed internet access services within the Hull Area. Ofcom found that, while 
other telecom munication s providers have star ted investing in fibre infrastructure in 
the Hull area, notably Cityfibre and MS3 , KCOM holds a near 100% share  in the 
Hull area .91,92 As a result of these SMP findings, KCOM is subject to a number of 
regulatory requirements including general access obligati ons, non -discrimination and 
cost/pricing obligations, and transparency and reporting requirements.  
(83) Nationwide, KCOM’s market share was below 1% both for the retail supply of fixed 
telephony services and fixed internet access services in 2016, 2017 and 2018 .93 
(84) In light of Freeview’s market share  of over 30% in the market for the retail supply of 
TV services in the UK  and KCOM’s strong position in the Hull area , the Transaction 
may have a significant impact within the meaning of Section 6.4 of the Form CO in 
relation to the retail supply of TV services  and the retail supply of fixed telephony 
and fixed internet access services , which will be examined in section 5.3 below . 
5.3. Conglomerate effects analysis  
(85) Freeview ’s TV offering is complementary to the fixed telephony and fixed internet 
access services supplied by KCOM , because end customers can procure fixed  
telephony, fixed internet access and TV services from one and the same provider . 
The Commission therefore examined whether the Transaction could give rise to 
                                                 
89  The Parties were not able to provide more detailed market share estimates as regards the possible 
segmentation between FTA TV and basic pay -TV vs. premium pay -TV as well as  by linearity of the 
content. In any event, Freeview is a FTA TV distributor and is not active in the provision of premium pay -
TV and non-linear services. Therefore, Freeview does not hold any market share in any possible premium 
pay-TV or non -linear servi ces markets ( Notifying Party’s reply of 20 September 2019 to RFI 5, question 
3). With regard to non -linear services, while Freeview Play allows viewers to access VOD services, it 
only redirects viewers to broadcasters’ own VOD platforms (e.g. BBC iPlayer).  Form CO, paragraph 226.  
90  Ofcom, “Wholesale Local Access and Wholesale Broadband Access Market Reviews: Review of 
competition in the Hull Area”  (published 31 July 2018) . 
91  Notifying Party’s reply of 20 September 2019 to RFI 5, question 1; Notifying Part y’s reply of 4 October 
2019 to RFI 6, question 1.  
92  Nevertheless, Ofcom considered market shares in a hypothetical overall market for the retail supply of 
broadband services ( i.e. including both fixed -wireless and fixed -broadband services). Ofcom found that 
Connexin, Purebroadband and Quickline would have a combined market share of “less than 10% of retail 
broadband consumers in the Hull Area” and that KCOM would “still have a grea ter than 90% share of all 
connections”. Notifying Party’s reply of 20 September 2019 to RFI 5, question 1.  
93  Notifying Party’s reply  of 20 September 2019 to RFI 5, question 2; Notifying Party’s reply  of 4 October 
2019  to RFI 6, question 1.  
 
 
18 conglomerate non -coordinated effects consisting of the potential foreclosure  of fixed 
telephony and fixed internet access services that compete with KCOM, and/or the 
potential foreclosure of suppliers of TV services that compete with Freeview , as a 
result  of a bundling or tying strategy by the merged entity.  
5.3.1.  The Notifying Party’s view  
(86) The Notifying Party considers that there can be no plausible competition concern 
related to the hypothetical bundling of Freeview ’s TV offering with KCOM’s retail 
fixed telephony  and fixed internet access  services.  
(87) The Notifying Party recalls that Freeview is a not -for-profit, public broadcaster -led 
DTT service that is offered free of charge across the entire UK. Since the completion 
of the switchover from analogue to digital television, FTA TV channels in the UK 
have primarily been provided to consumers in the UK throu gh two platforms: (i) 
Freeview, as replacement for the analogue network, and (ii) Freesat, delivered by 
satellite.94 
(88) As the main provider of DTT services in the UK, Freeview transmits 15 high-
definition channels and over 70 standard FTA channels on a subscr iption -free basis, 
available via a Freeview -enabled television  or set-top box . There is no direct 
contractual relationship between Freeview and the end users of its platform since it 
can be accessed automatically, free of charge, by anyone w ith the necessa ry 
equipment. Freeview does not itself manufacture or sell the equipment needed to 
access the platform. The same considerations apply to Freeview Play, which brings 
together Freeview’s linear DTT offering with non -linear, on -demand elements, 
which is also available free  of charge.95,96 
(89) The Notifying Party considers that the merged entity  would not have the ability  to 
bundle Freeview’s and KCOM’s services or to implement any form of foreclosure 
strategy.  
(90) Firstly, Arqiva  only exercises negative joint control over Freeview. As a result, 
although it can block Freeview ’s strategic decisions, it cannot positively influence its 
commercial conduct. In the present case, t he public broadcaster shareholders of 
Freeview are unlikely to agree to any kind of foreclosure strategy because (i) they 
are incentivised to ensure the widest possible dis tribution of their FTA TV channels , 
(ii) they would not  benefit  from  KCOM ’s potential gains resulting  from such a 
strategy , and (iii) they wou ld breach their statutory and regulatory obligations  (see 
paragraph (91) below).97 
                                                 
94  Form CO, par agraph s 229-230. 
95  As of 2015, Freeview also offers Freeview Play. Consumers can access the service via a Freeview Play -
compatible TV, using a Freeview Play recorder, or by installing the Freeview app (available free of 
charge) on their phone or tablet. I n line with the public -service nature of Freeview, the specification for 
Freeview Play is entirely open source, meaning the technologies required to design and implement 
Freeview Play -compatible TVs and boxes are publicly available to broadcasters and manu facturers. Form 
CO, paragraph 231.  
96  Form CO, paragraph 16.  
97  Form CO, paragraph 218.  
 
 
19 (91) Secondly , Freeview’s public service nature is reflected in  Freeview ’s shareholder 
agreement and  the various statutory and regulatory obligations that apply to its 
public broadcas ter shareholders  (i.e. Channel 4, ITV, BBC ) under t he UK’s 
Communications Act 2003 . These rules  include  a “must -offer” obligation to ensure 
that public broadcasters offer high quality programming, free of charge, to viewers  
across the UK.98 
(92) In addition, t he Notifying Party considers that the merged entity would  not have the  
incentive  to bundle the services or to implement any form of foreclosur e strategy  as 
such conduct would be implausible from a commercial and practical perspective. 
Given that Freeview is already available free of charge, there would be no incentive 
to include Freeview in a bundled offer as it would not offer the customer anyt hing 
more than that already freely available via their TV aerial.99  
5.3.2.  The Commission’s assessment  
(93) The Commission considers that the merged entity will  not have the ability and 
incentive to foreclose non -integrated competitors by bundling or tying KCOM’s 
fixed telephony and fixed internet access services and Freeview’s TV offering . Even 
if the merged entity engaged in a strategy to foreclose rivals th rough bundling or 
tying, such strategy would not have a significant detrimental effect on competition.  
5.3.2.1.  Lack of ability  to foreclose  
(94) The merged entity would not have the ability to foreclose rivals by bundl ing 
Freeview’s TV offering  with KCOM’s fixed telephony and fixed internet access 
services . As explained by the Notifying Party and confirmed by the market 
investi gation, Freeview is available free of charge across the entire UK. Customer s 
can access Freeview either via (i) a Freeview -enabled television , or (ii) a set-top box.  
Since  2010, all TV sets in the UK are automatically Freeview -compatible, which 
mean s that customer s simply need  to connect their TV to a working aerial through an 
outlet in the wal l. According to an Ofcom research from August 2018 , 95% of UK 
households have a DTT -compatible digital TV set  and therefore do not even require 
a set -top box .100 For th e remaining 5% of older, analogue models, Freeview can be 
accessed through the one -off purchase of a set -top box.  For both methods of 
accessing, the Freeview platform is free to access and does not require any fixed 
internet access connection.101 
(95) ITV, one of Freeview’s shareholders, thus indicates that  “KCOM is already able to 
‘bundle ’ its services with Freeview (on a non -exclusive basis) as Freeview is an 
open standard available to any manufacturers meeting its technical specifications. 
Such a dec ision by KCOM would not preclude any other provider from doing the 
same. The merger does not appear to alter KCOM ’s ability to ‘bundle ’ nor that of its 
competitors to do the same were it to go down this route .”102 Sky, another Freeview 
shareholder , confirms that any KCOM competitor would have t he ability to replicate 
                                                 
98  Form CO, paragraphs 251 -252. 
99  Form CO, paragraph 217.  
100  Ofcom, "Communications Market Report" (published 2 August 2018), Figure 1.4.  
101  Form CO, paragraph 216.  
102  ITV’s reply to questionnaire Q1 to TV and telecommunication operators, question 12.1.  
 
 
20 a bundled offer .103 Accordingly, there is no scope for the merged entity to  implement 
a foreclosure strategy with regard to a product which is already available free of 
charge in the market.  
(96) One ma rket participant mentioned the possibility that the merged entity could offer 
subsidise d set-top boxes . However , such conduct would not enable t he merged entity  
to foreclose rivals . First, KCOM’s competitors would be able to replicate any 
(hypothetical) bundling strategy.  Second , such strategy would concern  only about 
5% of UK households without Freeview -compatible TV. Third , for other customers, 
a potential bundling strategy would require the inclusion of additional channels 
and/or content to make the bundle commercially attractive.  This is illustrated by  
existing bundled TV and telecommunications offerings of a number of KCOM ’s 
competitors (e.g. BT, TalkTalk, Plusnet) . These competitors , while also including 
the basic Freeview TV offer in their package, offer differentiated  pay-TV services 
with additional channels and/or content not otherwise available on Freeview .104 
However, KCOM will not gain any competitive advantage  through the Transaction 
with respect to the additional TV content , which is the decisive factor in developing 
a bundled TV and telecommunications product . 
(97) Furthermore, the merged entity would  not have the ability to change the current 
nature of Freeview’s FTA TV offering (e.g. , by making KCOM Freeview ’s 
exclusive distributor in t he Hull area) for the following reasons.  
(98) Firstly, a foreclosure strategy would not be in line with Freeview’s role in the UK as 
replacement of the prior  FTA TV analogue offering that it was designed to 
replace.105 As the Notifying Party explains, Ofcom has specific responsibilities for 
the regulation of DTT under the Communications Act 2003 that go beyond  its 
responsibilities for other television platforms, including a requirement to promote 
competition in the relevant markets.106 
(99) This is also reflected in Fre eview’s shareholder agreement which states, among other 
things, that Freeview will [Extract of Freeview shareholder agreement] .107 
(100)  Secondly , Arqiva only exercises negative joint control over Freeview  and does not 
have the ability to positively steer the company ’s strategic direction. Arqiva could 
not, therefore, cause Freeview to marginalise any competitor of KCOM without first 
                                                 
103  Sky’s reply to questionnaire Q1 to TV and telecommunication operators, question 14.1.  
104  Notifying Party's reply of 4 October 2019 to RFI 6, question 10.  
105  Form CO, paragraph 230-233. 
106  Ofcom, “The Future of Free to View TV: A discussion  document ” (published 28 May 2014) , pages 8 -9. In 
full, the Ofcom report states: “ FTV [free to view]  television can be delivered by a variety of TV 
transmission technologies, but the cornerstone of free to view television in the UK is currently DTT. 
Under the Communications Act 2003, Ofcom has specific responsibilities for the regulation of DTT that 
go further than our responsibilities for other television platforms, reflecting the role that DTT has in 
making PSB [public service broadcasting]  available to all. Specifically, our duties under the Act require 
us to secure both the optimal use of the electrom agnetic spectrum, and the availability throughout the UK 
of a wide range of TV and radio services which (taken as a whole) are both of high quality and calculated 
to appeal to a variety of tastes and interests. We are also required to have due regard to th e desirability of 
promoting the fulfilment of the purposes of PSB in the UK and promoting competition in relevant markets. 
And in performing our duties we are required to have regard to, in particular, the interests of consumers 
in respect of choice, price , quality of service and value for money .” 
107  Form CO, paragraph 236.  
 
 
21 obtaining unan imous consent of all of its public (FTA  TV) broadcaster  shareholders  
(i.e. Channel 4, ITV, BBC)  as well as Sky .108  
(101)  The public broadcaster shareholders are not likely to agree to any kind of foreclosure 
strategy . As pointed out by the Notifying Party, FTA TV broadcasters are generally 
incentivised to ensure the widest possible distribution of their channels as they are 
financed by advertising revenues , public funds and licence fees.109 Furthermore , 
Freeview's other shareholders would not  benefit  from a foreclosure strategy aimed at 
favouring KCOM  as they have no structural relationship with the latter . Finally , the 
public broadcasters would breach their statutory and regulatory obligations  (see 
paragraph (102)  below).  
(102)  Thirdly , Freeview’s public broadcas ter shareholders are subject to a “must -offer” 
obligation, which require s them to allow their digital channels “to be broadcast or 
distributed by means of every appropriate network ” and to ensure that they are  
“available for reception, by means of appropriate networks, by as many members of 
its intended audience as practicable ”.110 Applicable rules also prohibit imposing any 
charge to receive the relevant channels.  
(103)  In addition , UK telecommunications network operators are under a “must -carry” 
obligation to carry the public broadcasters on the ir network. It would  therefore  be 
unlawful to prevent them from doing so.111 
(104)  Therefore, in light of (i) Freeview ’s FTA TV offering , (ii) the negative nature of 
Arqiva 's joint  control over Freeview and (iii) the specific obligation s applying to 
Freeview as we ll as its  public broadcaster  shareholders , the merged entity would not 
have the ability to engage in a n exclusi onary bundling strategy . 
(105)  The Commission also notes that the merged entity would  not have a sufficient 
degree of market power to leverage its posi tion in the supply of fixed telephony and 
fixed internet access services to foreclose competitors active in the supply of retail 
TV services . KCOM is only active in the Hull area with regard to the provision of 
retail fixed telephony and fixed internet acc ess services to end customers. T herefo re, 
any potential bundling strategy would be confined to a territory  of about [100 000 -
200 000]  customers.  However, a ll of the  Parties’ competitors active in the supply of 
retail TV  services , notably Freesat112, the main alternative provider of FTA TV 
services , are active nationwide.113 Irrespective of whether the Hull area is a distinct 
market, these competitors have revenue streams from their activities in the rest of the 
UK and are hence not dependent on their revenues from the Hull area.  
                                                 
108  Form CO, paragraph 218.  
109  Form CO, paragraph 235.  
110  Form CO, paragraph 251.  
111  Form CO, paragraphs 253 -261. 
112  To be noted also that Freesat is a joint venture between two of Freevi ew’s public service broadcasters 
shareholders, BBC and ITV. Notifying Party’s reply of 4 October 2019, question 9.  
113  Notifying Party’s reply of 4 October 2019 to RFI 6, question 9; Notifying Party’s reply of 14 October 
2019 to RFI 7, question 5. 
 
 
22 5.3.2.2.  Lack  of incentive  to foreclose  
(106)  Irrespective of the merged entity ’s ability to foreclose competitors, the Commission 
concludes that the merged entity would  not have the incentive to bundle Freeview’s 
TV offering with KCOM’s fixe d telephony and fixed internet access services . 
(107)  Given that Freeview is already available free of charge, there would be no 
commercial incentive to pursue a foreclosure strategy by includ ing Freeview in a 
bundled offer as it would not provide  customer s anything more than services  already 
freely available via their TV aerial.  From the demand -side, there would  therefore  be 
very little (if any) premium attached to any theoretical bundle whose  TV element is 
based solely on Freeview (or, for the same reasons , Freeview Play). Accordingly, no 
competing standalone provider of telecommunications services could be 
disadvantaged  by such a bundle . 
(108)  More over, the merged entity would  not have an incentive to pursue any foreclosure 
strategy by changing the nature of the  Freeview ’s FTA TV offer ing as this would be 
in breach of Freeview’s shareholder agreement and public broadcasters’ statutory 
and regulatory obligations  (see paragraphs  (97) to (104)  above ). 
5.3.2.3.  Lack of effects  on competition  
(109)  Even if the merged entity attempted to pursue a foreclosure strategy , the 
Commission considers that such strategy would be unlikely to result in a significant 
increase of sales of the merged entity or a significant reduction of sales prospects by 
the merged entity’s rivals . 
(110)  As explained above, Freeview is available free  of charge  across the entire UK. Th e 
merged entity ’s competitors  would be able to replicate any (hypothetical) bundling 
strategy. In addition, t he merged entity would not be able to change the current 
nature of Freeview’s FTA TV offering. Therefore , any potential foreclosure strategy  
would not be likely to have any negative effects on compet ition.  
(111)  Moreover, as noted in paragraph (105) , KCOM is only active  in the Hull area  
Therefore, even if a potential bundling strategy had negative effects on the sales 
prospects of competitors, these effects would be confined to a territory of about [100 
000-200 000]  customers and would  not significantly affect competit ors’ overall 
revenue streams.   
5.3.3.  Conclusion  
(112)  In light of the above considerations and based on the results of the market 
investigation, the Commission considers that the Transaction does not raise serious 
doubts as to its compatibility with the internal marke t or the functioning of the EEA 
Agreement  with respect to the relationship between the market s for the retail supply 
of TV services, the retail supply of fixed telephony services and the retail supply of 
fixed internet access services.   
 
 
 
 
23 6. CONCLUSION  
(113)  For th e above reasons, the European Commission has decided not to oppose the 
notified operation and to declare it compatible 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  
Member of the Commission