(58)

To be acceptable, the proposed commitments must be capable of rendering a concentration compatible with the internal market as they prevent a significant impediment to effective competition in all relevant markets in which competition concerns were identified. In the case assessed in the Decision, the commitments needed to eliminate the competition concerns identified by the Commission with respect to: (i) horizontal non-coordinated effects in the retail supply of fixed internet access services in Germany, (ii) horizontal non-coordinated effects in the retail supply of 2P bundles including fixed telephony services and fixed internet access service in Germany and (iii) horizontal non-coordinated effects in the market for wholesale TV signal transmission in Germany. VIII.1. Description of the Final Commitments (59) The Final Commitments comprise four elements: (a) Wholesale Cable Broadband Access: a fix-it-first commitment to provide a New Cable Provider with access to the merged entity’s cable network in order for the New Cable Provider to be able to offer retail fixed Internet access services (and, if desired, fixed voice services) and its own or third parties’ OTT TV services; (b) OTT Commitment: commitment not to contractually restrict, directly or indirectly, the possibility for broadcasters that are carried on the merged entity’s TV platform to distribute their content via an OTT service; and a commitment to maintain sufficient direct interconnection capacity between its Internet network covering Germany and third-party providers of Internet interconnectivity (transit) services. (c) Feed-in Fee Commitment: commitment not to increase feed-in fees paid by FTA broadcasters. (d) HbbTV Commitment: commitment to continue to carry the HbbTV signal of FTA broadcasters. (60) Vodafone and Telefónica entered into a definitive agreement for the Wholesale Cable Broadband Access on 17 April 2019. Subsequently, an amendment to the agreement was signed. VIII.1.1. Wholesale Cable Broadband Access (61) Vodafone would grant one New Cable Provider (Telefónica) wholesale access to the combined cable networks of Vodafone and Unitymedia. The technical access to the merged entity’s network would happen at number handover (or interconnection) points. (62) As regards the provision of Internet access services, the New Cable Provider will be able to choose among three different speed profiles, 50/4 (download/upload speed in Mbps), 100/6, and 300/25, with the possibility to increase the download speed to 500 Mbps after some time (provided that certain conditions are met). The Wholesale Cable Broadband Access also allows for the provision of fixed telephony and OTT TV. The Final Commitments have a minimum term duration, with the possibility of an extension. (63) The pricing structure of the Wholesale Cable Broadband Access closely follows the financial conditions for the regulated wholesale access to Deutsche Telekom’s xDSL network (so-called ‘Kontingentmodell’): according to this risk-sharing pricing structure, the New Cable Provider (or the access seeker, in the context of Deutsche Telekom’s regulated offer) makes an upfront payment and volume commitment, in return for monthly costs for ongoing access that is lower than Deutsche Telekom’s standard rate card. VIII.1.2. OTT Commitment (64) Pursuant to the OTT Commitment, Vodafone would commit not to restrict OTT distribution of content by broadcasters of linear TV channels and to maintain a minimum level of interconnection capacity into Vodafone’s IP network in Germany. In particular, Vodafone would commit: (a) not to enter into any agreement with a broadcaster that would directly or indirectly restrict the broadcaster’s ability to offer OTT TV services to third parties and/or end users. To the extent that any such restrictions exist in their current contracts with broadcasters in Germany, they will not be enforced or renewed; (b) to provide sufficient interconnection capacity to allow its broadband customers to access any OTT TV service in Germany. To ensure transparency in relation to interconnection capacity and traffic, Vodafone will publish relevant information on a monthly basis; (c) to appoint a monitoring trustee, to be approved by the Commission, to review new and existing agreements with broadcasters as well as to verify that sufficient interconnection capacity is provided. (65) The OTT Commitment would apply for a period of eight years. (66) The Wholesale Cable Broadband Access and the OTT Commitment would allow the New Cable Provider to offer high speed broadband over which owned or third-party OTT TV services could be distributed, throughout the combined Unitymedia and Vodafone cable footprint. VIII.1.3. Feed-in Fee Commitment (67) Under the Feed-in Fee Commitment, Vodafone seeks to ensure that it will not have the ability to increase the feed-in fees paid by broadcasters. For this purpose, Vodafone shall send no later than four weeks from the date of the adoption of the Decision an irrevocable offer (annexed to Final Commitments) to all FTA broadcasters setting out Vodafone’s following obligations: (a) Vodafone and Unitymedia will not increase the fees per connected household; (b) Vodafone and/or Unitymedia may, with the broadcaster’s consent, amend the structure or other aspects of the feed-in fees, e.g. for purposes of network integration. Under any amended feed-in contract, the feed-in fees will not exceed the sum of the feed-in fees due under each of Vodafone’s and Unitymedia’s current rate cards for feed-in fees (annexed to the commitment). This obligation also applies if the feed-in contract has ended and Vodafone and/or Unitymedia enter into a new feed-in agreement or agree on the feed-in of additional TV programs. (c) Where the merged entity enters into a feed-in agreement with a FTA broadcaster that does not currently have a feed-in agreement with one of the Parties, the feed-in fees included in that feed-in agreement shall not exceed the rates set out in Vodafone’s and Unitymedia’s standard rates cards for FTA channels. (68) All other provisions of the feed-in agreements remain unaffected by the Feed-in Fee Commitment. VIII.1.4. HbbTV Commitment (69) Under the HbbTV Commitment, Vodafone seeks to ensure that it will have no ability to refuse to continue carrying the HbbTV signal of FTA broadcasters over its Cable Network. For this purpose, Vodafone shall send no later than four weeks from the date of the adoption of the Decision an irrevocable offer (annexed to the Final Commitments) to all FTA broadcasters setting out Vodafone’s following obligations: (70) Vodafone and Unitymedia will continue to transmit hybrid broadcast broadband TV (‘HbbTV’) signals together with any TV programs Vodafone transmits in DVB-C format. (71) Vodafone and/or Unitymedia may, with the broadcaster’s consent, amend any obligation to transmit HbbTV signals. Under any amended feed-in contract providing for the transmission of TV signal in the DVB-C standard, Vodafone and Unitymedia will transmit the broadcaster’s HbbTV signals in their cable networks at least under the following minimum technical terms and without charging any fees for such transmission: HbbTV signal consists of AIT (application information tables) and stream events (in the transmission standard DSM-CC), which will be included in the HbbTV signal. The HbbTV signal may have a maximum data rate of 15 Kbit/s per TV program (SD or HD). The obligation also applies to any agreement to transmit HbbTV signal together with TV programs in the DVB-C standard that is not currently covered by an agreement to transmit HbbTV or upon expiry of such agreement and/or feed-in contract. (72) The obligation to transmit HbbTV signals in the cable network does not include any obligation of Vodafone or Unitymedia in connection with the functionality of their or any third parties’ customer premises equipment, in particular, no obligation to design or change customer premises equipment in such a way that they react to HbbTV signals. (73) In terms of duration, the Feed-in Fee and HbbTV Commitment are offered for a period of eight years from the date of the adoption of the Decision. VIII.2. Assessment of the Final Commitments (74) In the Decision the Commission concluded that the Final Commitments address the competition issues raised by the Transaction in their entirety. The Commission also concluded that the Final Commitments are capable of being implemented effectively within a short period of time. (75) The Commission noted that the Wholesale Cable Broadband Access Commitment creates a significantly strengthened national retail competitor in the provision of fixed internet access and fixed telephony services in Germany. By accelerating the uptake of high-speed internet connections, it would also benefit the distribution of OTT TV services by providers such as broadcasters, third party OTT platforms or the New Cable Providers’ own OTT platform. Overall, the Commission, therefore, considered that the scope of the Wholesale Cable Broadband Access Commitment is sufficiently comprehensive to eliminate competition concerns in the retail supply of fixed internet access services (and 2P bundles) in Germany and contributes to the elimination of competition concerns in the market for wholesale TV signal transmission in Germany. (76) With the OTT Commitment, Vodafone commits to terminate any agreement between the Parties and TV broadcasters that restricts the TV broadcasters’ ability to offer their channels and content via an OTT service in Germany. Vodafone also commits that the Parties will not enter into such agreements in the future. Overall, the Commission, therefore, considered that the scope of the OTT Commitment is sufficiently comprehensive as (i) to address the competition concern related to the merged entity’s ability to hinder the provision of OTT services by TV broadcasters, and (ii) to mitigate the increased market power of the merged entity vis-à-vis Pay TV broadcasters, so that the breadth and the quality of the TV offer would not be significantly reduced to the detriment of the retail customers. (77) With the Feed-in Fee Commitment, Vodafone commits not to increase the feed-in fees paid by FTA broadcasters for the transmission of linear TV channels via Vodafone’s cable network in Germany for the next eight years. The Commission considered that the Feed-in Fee Commitment appears able to address the competition concern related to the merged entity’s ability to reduce the breadth and the quality of the TV offer to retail customers, through the imposition of unreasonable conditions on FTA TV broadcasters. (78) The Commission further noted that the HbbTV Commitment will allow the continued transmission of FTA broadcasters’ hybrid broadcast broadband TV signal via the merged entity’s cable network in Germany. The Commission therefore considered that the HbbTV commitment is adequate to eliminate the concern that the merged entity could hinder the broadcasters’ ability to provide additional and innovative services through HbbTV signal. VIII.3. Assessment of Telefónica as New Cable Provider (79) The Commission considered that Telefónica complies with the standard purchaser requirements detailed in the Remedies Notice in terms of independence, financial resources and the absence of prima facie competition concerns. (80) In particular, the Commission considered that, based on the Wholesale Cable Broadband Access Commitment, Telefónica will have the ability and the incentive to operate as a viable and active competitive force in competition with the merged entity and other competitors in the markets for the replay supply of fixed internet access service, 2P bundles including fixed internet access service and fixed telephony services and retail TV services. (81) Moreover, in light of Telefónica’s limited current market position, the Commission considered that the strengthening of Telefónica as a result of the Wholesale Cable Broadband Access Commitment would not raise any competition concerns. Moreover, while the commercial terms under Wholesale Cable Broadband Access Commitment are more attractive than under Deutsche Telekom’s Kontingentmodell improving Telefónica’s business case, the increase in Telefónica’s competitiveness is not of the sort that it would create competition problems in itself. In particular, the Commission considered that the Wholesale Cable Broadband Access Commitment would not have a negative impact on third parties’ fibre roll out or give rise to an acceleration of fixed-mobile convergence in Germany. (82) The Commission also reviewed the agreement between Vodafone and Telefónica and concluded that the terms comply with the requirements of the Final Commitments.