CELEX: 32000J0046
Language: en
Date: 2000-06-19 00:00:00
Title: COMMISSION DECISION of 19/06/2000 declaring a concentration to be compatible with the common market (Case No IV/M.0046 - BLACKSTONE/CDPQ/KABEL NORDRHEIN - WESTFALEN) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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32000J0046

COMMISSION DECISION of 19/06/2000 declaring a concentration to be compatible with the common market (Case No IV/M.0046 - BLACKSTONE/CDPQ/KABEL NORDRHEIN - WESTFALEN) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 262 , 13/09/2000 P. 0005 - 0005

COMMISSION DECISION of 19/06/2000 declaring a concentration to be compatible with the common market (Case No IV/M.0046 - BLACKSTONE/CDPQ/KABEL NORDRHEIN - WESTFALEN) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)Brussels, 19 June 2000In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EEC) No 4064/89 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 Where possible the information omitted has been replaced by ranges of figures or a general description.   To the Notifying PartiesDear Sir/Madam:Subject : Case COMP/JV.46  (Callahan Invest/Kabel Nordrhein-Westfalen)Notification of 12 May 2000 pursuant to Article 4 of Council Regulation No. 4064/891. On 12 May 2000, Blackstone Group ("Blackstone") and Capital Communications CDPQ Inc ("CDPQ") notified the Commission, pursuant to Article 4 of Council Regulation (EEC) No. 4064/89 [1] (the "Merger Regulation"), of the acquisition of joint control over Kabel Nordrhein-Westfalen ("KNW") through an investment vehicle, a company called Callahan InvestCo Germany 1 S.a.r.l. ("CAI Lux").  KNW will provide a range of telecommunications and pay-TV services in the Nordrhein-Westfalen region of Germany.  Deutsche Telekom AG ("DT") will retain a minority interest in KNW through a 45% shareholding, and CAI Lux will have majority control of KNW with 55%.[1]   OJ L 395 of 30.12.1989, p. 1, corrigendum in OJ L 257 of 21.9.1990, p. 13; as last amended by Regulation (EC) No. 1310/97, OJ L 180 of 9.7.1997, p. 1, corrigendum in OJ L 40 of 13.2.1998, p. 17.2. On 14 April 2000, Blackstone and Capital notified the Commission, pursuant to Article 4 of Council Regulation (EEC) No. 4064/89 [2] (the "Merger Regulation") of the transaction.  The Commission declared the notification incomplete on 3 May 2000, as the notifying parties did not provide sufficient information regarding joint control of the entity to be acquired.  After receiving sufficient additional information, the parties completed the notification on 12 May 2000.[2]   OJ L 395 of 30.12.1989, p. 1, corrigendum in OJ L 257 of 21.9.1990, p. 13; as last amended by Regulation (EC) No. 1310/97, OJ L 180 of 9.7.1997, p. 1, corrigendum in OJ L 40 of 13.2.1998, p. 17.3. After examination of the proposed concentration, the Commission has concluded that the operation falls within the scope of the Merger Regulation and does not raise serious doubts as to its compatibility with the common market and the EEA agreement.I.  PARTIES4. The Blackstone Group is a private merchant banking firm based in the US.  It is active mainly in financial advisory services, private equity investing and property investment.  5. Caisse de Dépôt et Placement du Québec is a private investment group that invests the funds entrusted to it by Quebec public pension and insurance plans as well as various public bodies.  Capital Communications CDPQ is a wholly owned subsidiary and a member of the investment group of Caisse de Dépôt.  Its activities are to invest in companies operating in all areas relating to communications, including audio-visual production, wireless technology, multimedia, publishing and media.6. CAI Lux is a limited liability company organised under the laws of Luxembourg which has recently been formed by Callahan Associates International LLC ("CAI") and a group of European and North American investors, including Blackstone and Capital.  CAI is a global development and operations company focusing on the information, communications and entertainment markets. In Europe, CAI, in partnership with a group of investors, has acquired interests in cable network ventures in France and Spain.  CAI has been mandated by its partners to provide strategic and managerial services to these ventures, including to the notified transaction Callahan Invest/Kabel Nordrhein-Westfalen.7. KNW is an indirect subsidiary of DT.  Currently it is a shell company, a German limited partnership whose sole limited partner is Kabel Deutschland GmbH ("KDG"), a wholly-owned subsidiary of DT holding all of DT's cable assets in Germany.  KNW's sole general partner, Kabel Nordrhein-Westfalen Verwaltungs GmbH ("KNW GmbH") is also a wholly owned subsidiary of KDG.  DT's existing cable television business in Nordrhein Westfalen, currently part of KDG, will be transferred to KNW prior to closing ("The Operation").  DT is the main telecommunications operator in Germany.  It is active, either directly or through its subsidiaries, in all areas of telecommunications services, including pay-television services.  Currently it is also the principal network operator in Germany.  The German state holds, directly and indirectly, 65% of its shares, and DT has announced its plans to float an additional block of shares on capital markets at some point in 2000. II. THE OPERATION8. The acquisition of joint control over KNW will be achieved through a series of steps whereby KDG will transfer the interests in KNW and KNW GmbH to a newly created acquisition vehicle, Pecunia 2 Vermögensverwaltungs GmbH ("BidCo"), in turn a wholly-owned subsidiary of Pecunia 1 Vermögensverwaltungs GmbH ("HoldCo"), to be known as KNW, which ultimately will be owned 55% by CAI Lux and 45% by KDG.  9. Following the transaction, KNW will own the regional cable television network assets formerly owned by DT/KDG in Nordrhein-Westfalen. [3]  It will operate and be active in the provision and distribution of pay-television services.  In addition, CAI and CAI Lux intend to build out the existing cable network further and/or acquire other cable companies to increase penetration levels.  They will also upgrade the network in order to provide various telecommunications services, including fixed telephony and Internet access services.[3]  These assets constitute the part of the network infrastructure commonly referred to in Germany as "Level 3", or the connection from national-level distribution from the satellite feed to the premises of the subscriber. Commission Decision 99/154/EC, Deutsche Telekom/Beta Research (OJ L 053, 27.02.1999).10. KNW will also enter into a number of service agreements with DT and its subsidiary Media Services GmbH ("MSG") to obtain content, technical services, and certain marketing and sales services associated with the offering of pay-television services by KNW to subscribers in Nordrhein-Westfalen. [4]  [4]  MSG is a wholly-owned subsidiary of DT, and is currently the only provider in Germany of technical and administrative services related to cable pay-TV platforms, as well as content packaging and distribution for pay-TV via cable.11. The notified transaction, therefore, essentially represents the transfer of majority control of a single regional part of DT's existing cable network business from DT to buyers Blackstone Group and Capital via the investment vehicle CAI Lux.  DT retains a minority stake, through its wholly-owned subsidiary KDG, in the regional business, and remains a key supplier of the business, both by itself as a provider of certain technical services and, through its subsidiary MSG, of content and technical services related to provision of pay-television.III. CONCENTRATIONJoint control of CAI Lux12. CAI Lux is composed of the following investors:  Angelo Gordon L.P.; BankAmerica; Banco Santander Central Hispano; Edward P. Bass Group; The Blackstone Group; CDPQ; Multitel Cable; Affiliates of Merrill Lynch & Co.; Investcorp Investment Holdings Ltd.; CIBC; and CAI.  All decisions affecting the  strategic commercial behaviour of CAI Lux, such as decisions on business policy, financial planning and investments, and sales and acquisitions, will be taken by a "Required Vote", which is the affirmative vote of 1) shareholders that hold the greater of [...]; and 2) the affirmative vote of [...]. [5]  Other than CAI, the investors are primarily financial institutions or private investors.[5]  There is only one exception to this, namely, that the approval of [...] is required for the approval of acquisitions requiring additional equity (CAI Lux Shareholders Agreement, Article 2.4).13. The Blackstone Group [...] and CDPQ [...] are the two largest shareholders in CAI Lux.  Given the current shareholding in CAI Lux, both Blackstone Group and CDPQ have the ability to block decisions made by the governing board of CAI Lux.  CAI Lux is, therefore, jointly controlled by Blackstone and CDPQ under the Merger Regulation. [6][6]  OJ L 395 of 30.12.1989, p. 1, corrigendum in OJ L 257 of 21.9.1990, p. 13; as last amended by Regulation (EC) No. 1310/97, OJ L 180 of 9.7.1997, p. 1, corrigendum in OJ L 40 of 13.2.1998, p. 17; and Commission Notice on the concept of a concentration under Council Regulation (EEC) No 4064/89 on the control of concentrations between undertakings (OJ C 66, 2.3.1998).Joint control of KNW14. HoldCo, or KNW as it will be known, will have an Advisory Board composed of members of CAI Lux and KDG.  For the first four years of the business CAI Lux will appoint a majority of the advisory board as long as CAI Lux owns more than 25% of the company.  After this initial period, any shareholder owning more than 50% of the total shares of KNW will have the right to nominate a majority of the advisory board.  15. Most decisions that determine the strategic commercial behaviour of KNW must be approved by simple majority vote of the advisory board.  However, DT, through KDG, exercises certain veto rights over the following activities of KNW:* The sale or disposal of any assets or rights that have a fair market value in excess of [...] of the fair market value of KNW;* The acquisition of assets or rights to a business engaged primarily in the communications industry that have a fair market value in excess of [...] of the fair market value of KNW, or any other business that has a fair market value in excess of [...] of the fair market value of KNW;* Any action to liquidate KNW or commence bankruptcy or insolvency proceedings; and* Any merger, recapitalisation, or similar transaction with respect to KNW.16. These particular veto rights, in their exact form between the notifying parties, do not confer joint control of KNW to DT under the Merger Regulation, as they do not include veto rights over the business plan, appointment of management, or budget control. [7]  With regard to the veto right over the specified levels of sales, acquisitions or other investments, in this particular case this right does not confer joint control because the notifying parties are not restricted from pursuing investments and acquisitions in other regions via a separate investment vehicle.  Moreover, the CAI Lux shareholders agree that those directors of KNW nominated by CAI Lux shall be directed to vote together at meetings of the Board of Directors of KNW as instructed by the Board of Directors or Shareholders of CAI Lux, as the case may be.  [7]  OJ L 395 of 30.12.1989, p. 1, corrigendum in OJ L 257 of 21.9.1990, p. 13; as last amended by Regulation (EC) No. 1310/97, OJ L 180 of 9.7.1997, p. 1, corrigendum in OJ L 40 of 13.2.1998, p. 17; and Commission Notice on the concept of a concentration under Council Regulation (EEC) No 4064/89 on the control of concentrations between undertakings (OJ C 66, 2.3.1998).17. Due to the particular contractual arrangements of this case, therefore, only Blackstone and CDPQ through CAI Lux acquire a position of joint control over KNW.Full-function joint venture18. KNW, though currently a shell company, will hold the assets to the currently existing cable network business of KDG in the Nordrhein-Westfalen region.  In this particular transaction, KNW will merely continue the existing pay-television business of KDG/DT in the near term (approximately 2-3 years), while expanding its range of services to include telephony and Internet access as soon as the network is upgraded for full two-way operation.  The notifying parties assert that telecommunications services other than pay-television services will constitute [...] of its revenue within approximately [...] years.19. With the significant investments to be made by the notifying parties, both for purchase of the assets themselves and for upgrades upon transfer of control of KNW, KNW will have the necessary financial resources and personnel, independent of the notifying parties, to provide pay-TV via cable in the German market.  It will therefore perform on a lasting basis all the functions of an autonomous economic entity within the meaning of Article 3(2) of the Merger Regulation.IV. COMMUNITY DIMENSION20. The combined aggregate world-wide turnover of Blackstone [...]* and CDPQ [...]* exceeds ECU 5 billion. The aggregate Community-wide turnover of each of these companies is more than ECU 250 million.  KNW did not achieve any turnover in 1999 as it is a newly created company.  The undertakings concerned do not achieve more than two-thirds of their aggregate Community-wide turnover within one and the same Member State. The concentration therefore has a Community dimension within the meaning of Article 1 of the Merger Regulation.* Business secrets between the parties.V.  RELEVANT PRODUCT MARKETSPay television 21. As the Commission has found in numerous decisions, pay television constitutes a relevant product market separate from that for free-to-air or free-access television (free TV), i.e. advertising-financed private television and public television financed through fees and partly through advertising. [8][8]  See Commission Decision 94/922/EC, MSG Media Service (OJ L 364, 31.12.1994); Commission Decision 1999/153/EC, Bertelsmann/Kirch/Premiere (OJ L 53, 27.2.1999); Commission Decision 1999/242/EC, TPS (OJ L 90, 2.4.1999); Commission Decision 1999/781/EC, British Interactive Broadcasting/Open (OJ L 312, 6.12.1999).Transmission capacity for television22. The Commission held in its decision in Deutsche Telekom/Beta Research [9] that the distribution of pay television via cable, as opposed to other transmission methods (e.g. satellite and free-to-air), may constitute a separate relevant product market in Germany.  While the competitive environment is changing rapidly, in Germany the product characteristics and functionality of satellite distribution of pay-television remain significantly different from the point of view of the consumer.  However, regardless of how the market for pay-television transmission capacity may be constructed, there is no difference with regard to evaluation of the competitive impact of this transaction, and thus the relevant market definition is left open.[9]  Commission Decision 99/154/EC, Deutsche Telekom/Beta Research (OJ L 053, 27.02.1999).Technical and administrative services for pay television23. In order to provide pay television, a conditional access system is required.  The system inter alia scrambles programs for distribution and unscrambles them for viewing at the subscriber premises, requiring the use of a set-top box in addition to a television set. [10]  Technical services for pay television may also include software provision and configuration for both subscriber premises and operator premises equipment.  In addition to technical services, there is a wide range of administrative services that are necessary to providing pay television.  Subscriber management systems, including customer service functions, must be provided in order to process orders, track billing, and ensure quality of service.[10]  Commission Decision 99/154/EC, Deutsche Telekom/Beta Research (OJ L 053, 27.02.1999).Telecommunications services24. It is the Commission's established practice to consider the relevant product markets as being the markets for domestic and international voice and data telecommunications services, with a segmentation between the voice market (in which both residential and business customers participate) and the data market (primarily used by business), and further segmentation into domestic and international markets. [11][11]  Commission Decision in case JV.2 ENEL/FT/DT (WIND) of 27.5.1998 25. Even if the markets were to be defined more narrowly than those listed above, the definition of the relevant product market can be left open since, on the basis of the assessment set out below, the concentration would not create or strengthen a dominant position as a result of which effective competition would be significantly impeded in the common market or a substantial part thereof.Internet access service26. Access to the Internet involves connecting a customer to a network running the Internet Protocol (IP).  Access may be provided at a variety of bandwidths, with low-bandwidth service (e.g. dial-up service) offered generally to residential customers and high-bandwidth service (e.g. dedicated, high-speed connections) to business customers. [12]  For the assessment of this concentration, the market may be defined as Internet access service without distinguishing between classes of users.[12]  Commission Decision in case M.1439 Telia/Telenor of 13.10.1999.VI. RELEVANT GEOGRAPHIC MARKETPay-television service27. Television broadcasting is still organised in the Member States on a national basis.  Broadcast licenses are issued either nationally or regionally, in the case of Germany.  In addition to the regulatory conditions, which differ for individual Member States, language and cultural differences as well as other conditions of competition (such as systematic differences in product offerings across Member States), taken together, define the market for broadcast television as national.  The competitive conditions of pay-television differ systematically across Member States in analogous ways, and the market has thus been recognised by the Commission in past decisions to be organised nationally. [13] [13]  Commission Decision in case JV.37 BskyB/KirchPayTV of 21.03.2000; Commission Decision 99/153/EC, Bertelsmann/Kirch/Premiere (OJ L 053, 27.2.1999).Transmission capacity for television28. The relevant geographic market for television transmission capacity would, therefore, presumably be national in scope. [14]  However, the distinction between national and possible regional markets for transmission capacity may be left open since there is no difference with regard to the competitive assessment of the transaction.[14]  Commission Decision 99/154/EC, Deutsche Telekom/Beta Research (OJ L 053, 27.02.1999).Technical and administrative services for pay television29. Technical and administrative services for pay-TV are closely linked to the supply of pay-TV in Germany.  In past decisions the Commission has assumed that the relevant geographic market was confined to Germany; however, to the extent that technical and administrative services will be provided by other, non-German-based businesses, the geographic market would probably expand to encompass such areas.  In the present case, the market for technical and administrative services for pay-TV may be deemed to encompass either the German-speaking area or Germany only.  In either context, the assessment of the concentration would be the same, so the relevant geographic market may be left open. [15][15]  Commission Decision 99/153/EC, Bertelsmann/Kirch/Premiere (OJ L 053, 27.2.1999); Commission Decision 99/154/EC, Deutsche Telekom/Beta Research (OJ L 053, 27.02.1999).Telecommunications service30. Telecommunications infrastructure, whether used for local or long distance services, is provided nationally, as historically the incumbent monopoly operator offered them within a specific national territory. Furthermore, the licensing and regulatory framework for the provision of domestic and international telecommunications (voice and data) are national. Therefore, the geographic market for these services must be regarded as being national in scope. [16][16]  Commission Decision in case M.1439 Telia/Telenor of 13.10.1999.Internet access service31. To the extent that Internet access is provided via telecommunications infrastructure, it is dependent upon the location where such infrastructure is deployed. [17] Local telecommunications networks as well as cable TV networks can offer this possibility, insofar as both of them reach the consumers' homes. Therefore, as with telecommunications services, the geographic market for such service is national. [17]  Commission Decision in case M.1838 BT/ESAT of 27.03.2000.VII. COMPETITIVE ASSESSMENTA  DominancePay-television32. KNW is not currently active on the market for pay television in Germany.  While immediately after the transaction, KNW will have a de facto monopoly in its territory, the transaction itself does not create or strengthen a dominant position on the market for pay-television as KNW is simply taking over the monopoly previously held by DT.Transmission capacity for pay-television33. KNW will continue and expand on the currently existing cable network business of KDG/DT in the Nordrhein-Westfalen region, and as a result, immediately after the transaction KNW will have a de facto monopoly in its territory.  However, the transaction itself does not create or strengthen a dominant position on the market for pay-television transmission capacity as KNW is simply taking over the monopoly previously held by DT. KNW as a corporate entity does not yet operate in the market for pay television transmission capacity in Germany. 34. Blackstone Group, CDPQ and CAI are currently active on the market for pay television in two other Member States, France (through Exante/NC Numéricable) and Spain (through Spaincom/Cableuropa S.A.). However, on the basis of the above mentioned definition of the geographic market, i.e. the German market, the transaction does not create or strengthen a dominant position in this case. Technical and administrative services for pay television35. KNW does not currently operate in the market for technical and administrative services for pay television.  Blackstone Group, CDPQ and CAI are not currently active on the market for technical and administrative services in Germany.  Therefore, in this case, the transaction does not create or strengthen a dominant position in the German market.Telecommunications service36. The cable network being acquired by the parties is not configured to provide telecommunications services at present, as it does not have the necessary return channel and consequently does not support two-way communications capability.  CAI Lux will in the future upgrade the network to provide telecommunications services.  Neither of the parties to the transaction, Blackstone Group and CDPQ, are presently active on the market for the provision of telecommunications services in Germany.  37. Accordingly, KNW is not presently active on the market for the provision of telecommunications services in Germany, and therefore, in this case, the notified transaction does not create or strengthen a dominant position.Internet access service38. The cable network being acquired by the parties is not configured to provide Internet access services at present, as it does not have the necessary return channel and consequently does not support two-way communications capability.  CAI Lux will in the future upgrade the network to provide Internet access.  Neither of the parties to the transaction, Blackstone Group and CDPQ, are presently active on the market for the provision of Internet access service in Germany.39. Accordingly, KNW is not presently active on the market for the provision of Internet access in Germany, and in this case the transaction does not create or strengthen a dominant position.40. In conclusion, the concentration notified in this transaction will not result in the creation or strengthening of a dominant position on any of the markets referred to above as a result of which effective competition would be significantly impeded in the common market or a substantial part thereof.VIII. ANCILLARY RESTRAINTS41. The parties have notified a number of Master Service Agreements as ancillary restrictions.  These agreements are with DT for technical services relating to the operation of the broadband cable network and with MSG for technical services for pay-TV and the lease of capacity for broadcasting, and take the form of supply and purchase agreements.Service agreements between DT and KNW42. The agreements with DT are set out in the Master Service Agreement which is comprised of a number of Term Sheets. [18] This decision does not cover term sheet 7.[18]  Service Agreement between Deutsche Telekom and Kabel Nordrhein-Westfalen GmbH & Co KG with Term Sheets 1-12 (Rahmen-Liefer-und-Leistungsvertrag).  43. KNW and DT have agreed that DT will provide a number of services related to the operation of the cable network, network infrastructure, distribution and broadcasting.  These services, some of which can only be provided by DT, encompass notably the joint use of cable ducts, the use of cable capacities, the use of optical fibre transmission systems, leased areas and power supply for broadband cable equipment.44. Under most of the service agreements, whose duration is unlimited in time, KNW has been given a make/buy option, so that KNW is free to decide whether to purchase a service from DT or to either purchase the service from a third party or build out its own infrastructure for operating the cable.  This option can be exercised by KNW terminating the agreement with [...] months notice in the [...] year of the agreement.45. DT has no right to the above mentioned termination clauses of the agreements for those services where a make/buy option is not commercially feasible. In such cases, DT is however entitled to terminate the agreements in exceptional circumstances, such as breach of contract by KNW through failure to make the agreed payments.46. The notifying parties claim that the agreements do not contain any restrictive provisions. However, this question does not need to be fully investigated in the present decision, because even if the agreements were restrictions of competition, these could be regarded as ancillary to the concentration, being directly related to and necessary for the implementation of the concentration. Service agreements between MSG and KNW47. The other Master Service Agreement relates to services for broadcasting. It was concluded with MSG and comprises [between 5 and 10] Term Sheets. [19][19]  Service Agreement between MSG Media Services GmbH and Kabel Nordrhein-Westfalen GmbH & Co KG with Term Sheets [...] (Rahmen-Liefer-und-Leistungsvertrag).48. The first term sheet concerns both the access to cable capacity for the supply of feed-in of digital signals and programmes, and the operation of a digital platform for those programmes.  KNW is obliged to grant access to [...] of its [...] digital hyperband 8 MHz-channels to MSG. [20] [...] channels must be provided for [...] until [...]. [21]  The remaining [...] are required for commercial broadcasters such as [...] until the end of [...]. [22]  Regional regulatory requirements necessitate that [...] channels in the hyperband must carry the public broadcasters, ARD and ZDF.  In both cases, the lengths are determined by the duration of the contracts that MSG has signed with third parties. [20]   Section 2.2.1[21]  Section 9.3[22]  Section 9.149. MSG will provide the digital platform for all the channels, including those it is not leasing.  KNW must contribute to [...]. [23]  This agreement to provide the platform for the existing channels may be terminated by KNW with [...] months notice, and for additional channels to be built out by KNW, it can be terminated for the first time after [...] years. [24][23]  Section 2.1.5[24]  Sections 9.4 and 9.550. MSG will also develop the digital platform for new digital programmes and new services, which the parties agree to [...]. [25]  KNW will consider with goodwill an offer from MSG to provide the platform and the content for [...] new digital channels expected to come on-line by the end of [...].  If KNW uses MSG for these [...] new channels it cannot terminate the agreement until the [...] year at the earliest.[25]  Section 2.1.151. The remaining term sheets establish that MSG will supply KNW with a number of  administrative and technical services: *  Contract management and digitisation for foreign language public service broadcasters carried by KNW.  This agreement may be terminated with [...] months notice to the end of a year;*  Administration, contract management and training relating to the analogue television services.  These two agreements may be terminated with [...] months notice to the end of a year; and*  Monitoring of signals, operation of the playout centre and optional development of new services.  These two agreements run until the end of [...].52. The parties request that the supply arrangements between MSG and KNW be declared ancillary to the concentration, because the agreements do not encompass any restriction and in any case such restrictions were to be regarded as directly related and necessary to the implementation of the transaction.  The parties notably claim that while virtually all of the services can be obtained from other supplies or from internally developed capabilities, it will not be possible to have arrangements in place for all of these services at the time of the closing of the acquisition, and that a transitional period is therefore required for KNW to develop its own assets or find an alternative, especially as the majority of German television channels have signed with MSG for distribution via cable.53. However, the Commission Notice on restrictions ancillary to concentrations [26] covers mainly restrictions between the notifying parties.  Restrictions to the detriment of third parties are only covered if they are the inevitable consequence of the concentration itself and are not separable from it.  In this case, the agreements concluded with MSG could be seen to be to the detriment of third parties, namely content providers who are not in a position to have access to the KNW cable, as long as upgrading has not taken place.  These agreements can also not be regarded as the inevitable consequence of the concentration, because some of the long term agreements between MSG and content providers, which would bind KNW, were already entered into well before the notified transaction. [26] 54. Furthermore, the parties themselves admit that the services and the content provided for by the agreements can either be obtained from other suppliers or developed by KNW itself.  Indeed, according to the Notice on ancillary restrictions, if alternatives are available for the attainment of the legitimate aim pursued, the parties must choose the one which is objectively the least restrictive of competition.  However, the parties have not provided evidence that such alternatives were explored prior to the conclusion of these agreements.55. Moreover, in the context of the technical capacity of the German cable network, where capacity for programming content is severely constrained until substantial network upgrades are completed, commitments to reserve substantial programming capacity of this network would result in de facto exclusivity for MSG for content provision.56. The Parties offer no objective justification for the terms and scope of these agreements, in particular they are not required to establish the viability of KNW's cable network business, as the business already exists and can not be considered as a new entrant without resources to run its business. 57. Finally, the Parties' argument that these agreements are required to enable MSG to fulfil its obligations vis-à-vis broadcasters can not be accepted, as the concentration does not relate to the relationship between MSG and its customers and the agreements are therefore not ancillary to the concentration.58. Accordingly the notified agreements between KNW and MSG are not the inevitable consequence of the concentration, nor are they directly related to or necessary for the implementation of the concentration.  They are therefore not covered by the present decision.IX. CONCLUSION59. In the light of the above, the proposed transaction does not raise serious doubts as to its compatibility with the common market and with the functioning of the EEA Agreement.60. The Commission therefore 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 (EEC) No. 4064/89.   For the Commission,