CELEX: 31995M0579
Language: en
Date: 1995-04-27 00:00:00
Title: COMMISSION DECISION of 27/04/1995 declaring a concentration to be compatible with the common market (Case No IV/M.579 - Burda / Blockbuster ) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

Avis juridique important

|

31995M0579

COMMISSION DECISION of 27/04/1995 declaring a concentration to be compatible with the common market (Case No IV/M.579 - Burda / Blockbuster ) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 129 , 25/05/1995 P. 0005

 COMMISSION  DECISION of 27/04/1995 declaring a concentration to be compatible with the common market (Case No IV/M.579  - Burda  / Blockbuster ) according to Council Regulation (EEC) No 4064/89  (Only the English text is authentic).  The  paper version of the decision is available through  the sales offices of the Office of Official Publications of  the European Communities PUBLIC VERSION MERGER PROCEDURE ARTICLE 6(1)(b) DECISION To the notifying parties Dear Sirs, Subject: Case No. IV/M.579   BURDA/BLOCKBUSTER <ind> Notification of 23rd March 1995 pursuant to Article  4 of Council Regulation No 4064/89. 1.<ind>  On  23rd March 1995 Blockbuster Video International Co.  notified the creation of a Joint Venture between  Burda and itself by way of purchase of shares in Blockbuster Video Deutschland GmbH. 2.<ind>   After   examination  of  the   notification,   the Commission  has concluded that the notified operation  falls within the scope of Council Regulation 4064/89 and does  not raise serious doubts as to its compatibility with the common market. I. <ind> THE PARTIES  3.<ind>  Blockbuster  Video  International  Co.  is  a  U.S. Company with businesses in home videos, music retailing  and filmed and interactive entertainments.  Blockbuster's parent is  Viacom  Inc.,  which is in turn controlled  by  National Amusements Inc. (NAI). 4.<ind>  Burda   is  a German company active  in  new  media activities  such as multimedia, online services,  electronic TV   guides,  interactive  TV  and  software,  voice   mail, faxondemand  and  computer games. Burda is a  subsidiary  of Burda  Holding  GmbH  & Co. Kommanditgesellschaft  which  is owned  by Dr. Hubert Burda.  5.<ind> Blockbuster Video Deutschland GmbH is a Germanybased newly  established  company entirely  owned  by  Blockbuster Video International Co.  II. <ind> THE OPERATION 6.<ind>  The  case  was  notified on 23rd  March  1995.  The proposed operation consists in the acquisition by Burda of a 49%  shareholding  of  Blockbuster Video  Deutschland  GmbH. Hitherto   this  company  has  been  solely  controlled   by Blockbuster Video International Co. 7.<ind>  Under  the  proposed  operation  Blockbuster  Video Deutschland  GmbH will be jointly controlled by  Blockbuster and  Burda, with 51%and 49% shareholdings respectively.  The company's main activity will be to develop Blockbuster Video Superstores  in  Germany, concentrating on  the  Berlin  and Munich   areas.  Furthermore  it  will  provide  operational support  for  third  party franchisees of Blockbuster  Video Superstores throughout the Federal Republic of Germany. III. <ind> CONCENTRATION <tab> Joint Control 8.<ind>   The   Joint  Venture  Agreement  has   established procedures  of  appointment, voting rights  and  ability  to block  certain  decisions of major importance which  provide the   parties   with  equal  influence  over   the   company Blockbuster  Video  Deutschland, which  consequently  passes from  being solely controlled to  becoming a joint  venture. The  company will have an Advisory Board composed  of  seven members;   Blockbuster will appoint four  members  including the  Chairman, Burda three members. The Advisory Board  will have  an  Executive Committee composed of two  members,  one appointed  by  Blockbuster and one by Burda.  The  following decisions require the approval of at least 60% of the  votes cast  at a shareholders' meeting or 80% of the total  number of  votes  existing  in the Advisory   Board  :  the  annual business plan, real estate leases, acquisition of stores and sites, closures of sites, appointement of senior management, entry   into  credit  relationships,  incurrence  of   debt, agreements  with  third parties. In the Executive  Commitee, these matters require the approval of both members. <tab> Autonomous full function joint venture 9.<ind> The joint venture's business will be the rental  and the  sale  of  video  films, video games,  video  equipment, accessories  and  other retail goods. In order  to  give  an economic autonomy to the joint venture the shareholders will contribute a share premium of DM 3.5 million. The downstream activities  of  the  joint venture (commercial  relationship with   its  customers)  are  independent  from  its   parent companies.  The Joint Venture Agreement will only  terminate at  the  end  of  the term of the final franchise  agreement which is entered into for an extendible term of 20 years. <ind>  Consequently the Commission considers that the  joint venture  will  operate on a lasting basis as  an  autonomous full function. <tab> Absence of risk of coordination 10.<ind> Burda is not active and will not be active  in  the joint  venture's  market. Burda's  decision  to  enter  this market  only  through the joint venture is  reflected  in  a noncompetition   clause.  Both  Blockbuster   (through   its subsidiary, Paramount, which is a film producer)  and  Burda (producer  of  CDROM  and  videos) are  active  in  upstream businesses in Germany but their market shares are de minimis (less  than  8% and 1% respectively). Moreover,   the  joint venture   will  not  be  an  exclusive  customer  of   these businesses. <ind>  For  the above reasons the Commission considers  that there is no risk of coordination of  competitive behaviour. 11.<ind>   In   conclusion,  the  operation  constitutes   a concentration within the meaning of article 3(1) (b) of  the merger regulation. IV. <tab> COMMUNITY DIMENSION 12.<ind>  The  combined worldwide turnover  of  the  parties exceeds 5.000 million Ecu (8.187 Blockbuster and 711 Burda). The  aggregate Community wide turnover of each party exceeds 250  million ECU (348 Blockbuster and almost all of  Burda's total  turnover is achieved within the Community).  They  do not  achieve more than two-thirds of their turnover  in  one and  the  same Member State. The operation has  therefore  a Community dimension. V.<tab> THE RELEVANT MARKETS <tab> A.<tab> Relevant Product Market 13.<ind>  In  the  notification,  Blockbuster  defines   the relevant  product  market as the rental and  sale  of  video films,  games  and equipment, accessories  and  other  video stores related retail goods. In any case it is not necessary to  further define the relevant product market because  even in  the narrowest defnition the proposed operation will  not lead   to  the  creation  or  strengthening  of  a  dominant position. <ind> B.   Geographical Reference Market 14.<ind>  The  notifying  party considers  the  Geographical Market as being local from the consumers' point of view,  as they  will  only cover a limited distance to go to  a  video store.  Some previous Commission's decisions [Case  IV/M.242 Promodes/BRMC;       Case      IV/M.320       Ahold/Jerónimo Martins/Inovacao;  Case  IV/M.471 Delhaize/PG.]  stress  the fact  that  the  Geographic Market for  retail  products  is local.  However, certain factors can alter this  definition, such   as  the  store's  size,  commercial  infrastructures, existence and state of roads, among others. <ind>  In view of these circumstances and given the  absence of  competition concerns, the geographical reference  market definition  can  be  left  open for  the  purposes  of  this assessment. VI. <ind> ASSESSMENT 15.<ind>  There  is  no  affected  market,  since  currently neither  Blockbuster  nor Burda have  any  market  share  in Germany.  16.<ind> The proposed operation represents an entry by  both Blockbuster and Burda in the German distribution market  for rental and sale of video films. <ind>  After  the proposed operation the joint venture  will first  concentrate on the Berlin and Munich areas,  although it  may later open stores in other areas.  There seems to be a  considerable number of strong competitors in both  areas. In  Berlin the main firms are Video World (15 stores), Video Inn  (10 stores) and Baerlinvideo (9 stores) while in  Munich the  main  firms are Montevideo (7 stores),  Video  Star  (4 stores)  and Deutscher Videoring (3 stores).  The  situation is likely to be similar at national level, since there is  a number  of  strong  video store chains operating  throughout Germany. VII.  ANCILLARY RESTRAINTS 17.<ind>  Burda is bound by a noncompetition clause  for  as long  as it is a shareholder in the company and for a period of  one year thereafter.  In principle this falls within the provisions   generally   admitted   as   ancillary   to    a concentration, since it is directly related and necessary to the implementation of the concentration. VIII. CONCLUSION 18.<ind>  For the above reasons, the Commission has  decided not  to  oppose  the notified operation and  to  declare  it compatible  with the common market and with the  functioning of   the   EEA  agreement.  This  decision  is  adopted   in application  of  Article 6(1)(b) of  Council  Regulation  No 4064/89. For the Commission,