CELEX: 32021M10343
Language: en
Date: 2021-12-22 00:00:00
Title: Commission Decision of 22/12/2021 declaring a concentration to be compatible with the common market (Case No COMP/M.10343 - DISCOVERY / WARNER MEDIA) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                      Brussels, 22.12.2021
                                                                      C(2021) 9968 final
                                                                                         PUBLIC VERSION
                                                                        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                                                                        information omitted has been replaced by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.
                                                                      Discovery, Inc.
                                                                      230 Park Avenue South
                                                                      New York, NY 10003
                                                                      USA
Subject:             Case M.10343 – Discovery/WarnerMedia
                     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 17 November 2021, the European Commission received notification of a
          proposed concentration pursuant to Article 4 of the Merger Regulation by which
          Discovery, Inc. (“Discovery”, United States of America) acquires within the
          meaning of Article 3(1)(b) of the Merger Regulation sole control over AT&T Inc.’s
          (“AT&T”, United States of America) WarnerMedia business segment
          (“WarnerMedia”, United States of America)3 (“Transaction”).4 Discovery and
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 (“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         For the purpose of this Decision, WarnerMedia includes WarnerMedia, LLC, Home Box Office, Inc., Turner
          Broadcasting System, Inc., Warner Bros. Entertainment Inc., Historic TW Inc., Warner Media Content Holdings,
          L.P., WarnerMedia Direct, LLC and Warner Communications LLC. All these companies are incorporated in the
          United States of America.
4         Publication in the Official Journal of the European Union No C 484, 2.12.2021, p. 7.
Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE
Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË
Tel: +32 229-91111. Fax: +32 229-64301. E-mail: COMP-MERGER-REGISTRY@ec.europa.eu.
 ---pagebreak---     WarnerMedia are designated hereinafter as the “Parties” and Discovery is referred to
    as the “Notifying Party”.
1.  THE PARTIES
(2) Discovery is a global media company, and parent company of its global media
    group, that provides original and purchased content, largely non-fiction, to viewers
    worldwide through multiple distribution platforms, including linear platforms such
    as pay-TV, FTA, and broadcast TV, authenticated GO applications, digital
    distribution arrangements, content licensing arrangements and over-the-top (“OTT”)
    subscription products. Discovery distributes customized content in the U.S. and over
    220 other countries and territories in nearly 50 languages, including a variety of
    genres such as natural history, sports, general entertainment, food, travel, health and
    kids. Discovery’s global portfolio of networks includes non-fiction TV brands such
    as Discovery Channel, its most widely distributed global brand, TLC, Animal Planet,
    Investigation Discovery, and Science Channel. Discovery’s international portfolio
    includes Eurosport, a sports entertainment provider across Europe and broadcaster of
    the Olympic Games across Europe, TVN, a Polish media company, as well as
    Discovery Kids, a children’s entertainment brand in Latin America. Discovery is
    listed on the New York Stock Exchange. Discovery is not controlled by any other
    company and its shares are spread among a number of stockholders.
(3) WarnerMedia,5 formerly known as Time Warner, is a global media and
    entertainment business currently wholly owned by ultimate parent company AT&T.
    WarnerMedia’s global activities include the development, production, licensing and
    distribution of feature films, television, gaming and other content over various
    physical and digital formats. It also produces, licenses and operates various linear
    and non-linear video programming services, including premium pay-TV services,
    which are made available both through third party and affiliated distributors on a
    wholesale basis, as well as on an OTT retail basis. WarnerMedia’s business consists
    primarily of seven core-operating units: (i) Studios & Networks; (ii) News & Sports;
    (iii) Direct-to-Consumer; (iv) International; (v) Sales & Distribution;
    (vi) Technology & Operations; and (vii) Corporate Functions. WarnerMedia is
    owned and controlled by AT&T, a public company listed on the New York Stock
    Exchange. AT&T is not controlled by any other company or stockholder.
2.  THE OPERATION
(4) Pursuant to a Separation and Distribution Agreement and an Agreement and Plan of
    Merger entered into on 17 May 2021 between Discovery and AT&T, WarnerMedia
    will be acquired by Discovery and combined with its existing businesses. The
    Transaction will take place according to the following steps. Following the
    Transaction, AT&T will not hold any ownership interest or governance right in the
    merged entity.
(5) Therefore, the Transaction consists of the acquisition of sole control by Discovery
    over WarnerMedia within the meaning of Article 3(1)(b) of the Merger Regulation.
5   Form CO, sections 1-5, Annex 4.C contains a full list of business, operations, assets and liabilities that will fall
    within the scope of this Transaction.
                                                          2
 ---pagebreak--- 3.     UNION DIMENSION
(6)    The undertakings concerned have a combined aggregate world-wide turnover of
       more than EUR 5 000 million (Discovery: EUR […]; WarnerMedia: EUR […]).6
       Each of them has a Union-wide turnover in excess of EUR 250 million (Discovery:
       EUR […]; WarnerMedia: EUR […]), but each does not achieve more than two-
       thirds of its aggregate Union-wide turnover within one and the same Member State.
       The notified operation therefore has a Union dimension pursuant to Article 1(2) of
       the Merger Regulation.
4.     RELEVANT MARKETS
4.1.   Introduction
(7)    The Transaction concerns all three main levels of the audio-visual (“AV”) value
       chain (from upstream to downstream):7 (i) the production and supply of AV content
       (including the supply of pre-produced AV content and commissioned AV content),
       where the Parties both produce, supply, and distribute non-film, audio-visual
       content, including for TV broadcasting; (ii) the wholesale supply of TV channels,
       where the Parties are both active in the wholesale aggregation of content rights into
       TV channels, including for supply to providers of retail TV services, and; (iii) the
       retail supply of AV services to end customers, where both Parties offer, throughout
       the EEA, pay TV services.8
(8)    In addition, the Transaction concerns the sale of advertising on TV channels, where
       both Parties are active in the supply of advertising space.
4.2.   Production and supply of AV content
4.2.1. The Parties’ activities
(9)    Each of WarnerMedia and Discovery is active in the supply and production, as well
       as the acquisition, of commissioned TV content for exploitation on media platforms.
(10)   With regard to the supply-side of the market, WarnerMedia produces, in the EEA,
       non-captive, commissioned, content for third parties through a wide variety of
6      Turnover calculated in accordance with Article 5(1) of the Merger Regulation and the Commission Consolidated
       Jurisdictional Notice (OJ C95, 16.4.2008, p. 1).
7      The Transaction also concerns the market for the licensing of non-broadcasting rights. This market was assessed
       in a number of previous decisions, including (i) with regards to the market for merchandise licensing,
       Commission decision of 20 December 2012 in case M.6791 – The Walt Disney Company/Lucasfilm; and, (ii)
       with regards to the market for publishing of gaming software, Commission decision of 12 February 2014 in Case
       M.7866 – Activision Blizzard/King and Commission decision M.10001 – Microsoft/Zenimax. Considering all
       plausible segments and relevant geographic markets, the Parties confirmed that: (i) the combined market shares
       of the Parties are below 20%; (ii) the individual market share of either Discovery or WarnerMedia remain below
       30%; and, (iii) the individual market share of either Discovery or WarnerMedia in any market which would be
       upstream, downstream or neighbouring the market for the licensing of non-broadcasting rights remain below
       30%. Therefore, the Commission concludes that this market is not affected by the Transaction, whether
       horizontally, vertically or as a result of a conglomerate relation. Accordingly, the Commission will not assess this
       market further.
8      WarnerMedia, through HBO (including on demand via HBO GO), and Discovery through Joyn+, TVN (i.e.,
       TVN Player and TVN24), Eurosport Player, and GolfTV. Discovery has also recently started rolling out
       Discovery+ (Discovery’s OTT streaming platform) in the EEA, while WarnerMedia’s OTT streaming platform
       HBO Max is not yet available in the EEA (to be launched in 2022).
                                                                 3
 ---pagebreak---         production companies. Discovery produces original TV programming via its own
        production studios, Discovery Studios in the U.S. Discovery Studios produces
        predominantly captive content along with some non-captive content for other
        channels in the U.S. and outside the EEA. Discovery Studios does not produce
        content for third parties in the EEA.
(11)    As regards the demand-side of the market, WarnerMedia acquired some
        commissioned TV content from third parties in the EEA to include in its own
        wholesale channels or retail platforms, but only from content producers located in
        Czech Republic, Denmark, Finland, France, Germany, Hungary, Italy, Norway,
        Poland, Portugal, Romania, Slovakia, Spain, and Sweden. Discovery acquired some
        limited commissioned TV content from third parties in the EEA to include in its own
        wholesale channels or retail platforms, but only from content providers located in
        Denmark, Finland, Germany, Ireland, Italy, the Netherlands, Norway, Poland, Spain,
        and Sweden.
(12)    WarnerMedia and Discovery are also active in the licensing and acquisition of pre-
        produced TV content.
(13)    From the supply side, Discovery distributes broadcasting rights to TV content across
        the EEA, including sports content via the TV channel Eurosport (sub-licensing some
        of its sports rights for live access, delayed access, or news-only access by channel,
        country, or region). Discovery is also active in the licensing of pre-produced TV
        content through the TV channel TVN, which distributes a limited amount of rights to
        TV content to third parties located in a limited number of EEA Member States. In
        addition, Discovery has an interest in All3Media, a joint venture with Liberty
        Global, which distributes rights to a range of content to broadcasters and TV services
        providers across the EEA, including individual TV content it has produced itself and
        content produced and obtained from third parties. WarnerMedia generates licensing
        revenue in all EEA Member States.
(14)    From the demand side, Discovery acquires licensing rights from third parties in
        order to populate its portfolio of TV channels in the EEA. WarnerMedia acquires
        licensing content with third Parties in the Czech Republic, Denmark, Estonia,
        Finland, France, Germany, Hungary, Latvia, Lithuania, Norway, Poland, Portugal,
        Romania, Slovakia, Spain, and Sweden.
4.2.2. Product market definition
4.2.2.1. Past Commission decisions
(15)    In previous decisions, the Commission has concluded that there are separate markets
        for: (i) the production and supply of commissioned AV content (also referred to as
        ad hoc or new content); and (ii) the licensing of broadcasting rights for pre-produced
        AV content (available off-the-shelf).9
(16)    With regard to the market for the production of commissioned AV content, the
        Commission has found the product market to be limited to non-captive AV
9       Commission decision of 7 April 2017 in Case M.8354 – Fox / Sky, para. 54; Commission decision of
        24 February 2015 in Case M.7194 – Liberty Global / Corelio / W&W / De Vijver Media, para. 69; Commission
        decision of 6 November 2018 in Case M.8785 –The Walt Disney Company / Twenty-First Century Fox, para. 67;
        Commission decision of 26 August 2020 in Case M.9299 – Discovery / Polsat / JV, para. 50.
                                                           4
 ---pagebreak---         production, thereby excluding captive AV production (i.e. AV content produced by
        broadcasters for use on their own TV channels), as this AV content is not offered on
        the market.10
(17)    With regard to the market for the licensing of pre-produced AV content, the
        Commission has considered that it may be subdivided by content type, in particular:
        (i) films, (ii) sports, and (iii) other AV content (i.e. all non-sport, non-film content),
        but ultimately left the market definition open.11 In addition, the Commission had
        assessed whether AV content could be further sub-divided by distinguishing
        between: (i) US and non-US films; (ii) premium and non-premium content; or
        (iii) scripted and non-scripted content. This question has been left open in previous
        decisions.12
(18)    The Commission has also considered further sub-dividing the market for the
        licensing of pre-produced AV content by exhibition window:13 (i) subscription-based
        video on demand (“SVOD”); (ii) transactional video on demand (“TVOD”),14
        (iii) pay-per-view (“PPV”),15 (iv) first pay TV window, (v) second pay TV window,
        and (vi) free-to-air (“FTA”), but has ultimately left this question open.16
4.2.2.2. The Notifying Party’s view
(19)    The Notifying Party considers that the supply of commissioned TV content and the
        licensing of pre-produced TV content should be considered as a single market as in-
        house production, commissioned content and content licensing/acquisition all
        represent various options for sourcing content.
4.2.2.3. The Commission’s assessment
(20)    Overall, the market investigation indicated that that Commission can follow the
        approach taken in previous cases with regard to definition of the market for the
        production and supply of AV content.
(21)    The information gathered during the market investigation does not provide
        indication that the Commisison should depart from the distinction between the
        market for the production of commissioned AV content on the one hand, and the
10      Commission decision of 22 September 2006 in Case M.4353 – Permira/All3Media Group, paras. 11-12;
        Commission decision of 9 October 2014 in Case M.7360 – 21st Century Fox/Apollo/JV, para. 36; Commission
        decision of 20 June 2016 in Case M.7865 – Lov Group/De Agostini/JV, para. 18; Commission decision of
        26 August 2020 in Case M.9299 – Discovery / Polsat / JV, para. 50.
11      Commission decision of 21 December 2011 in case M.6369 HBO/Ziggo/HBO Nederland.
12      M.8354 – Fox / Sky, para. 55; M.6369 - HBO/Ziggo/HBO Nederland, para. 18; M.7194 – Liberty Global /
        Corelio / W&W / De Vijver Media, para. 52; M.8785 – The Walt Disney Company / Twenty-First Century Fox,
        para. 68.
13      The use of the term exhibition windows is not applicable to non-film AV content. Non-film AV content may be
        broadcast through different exploitation fields (e.g. pay TV, FTA) but the rights do not pass through each method
        in the same way a newly released film does.
14      TVOD designates a product where a consumer obtains the right to watch a single title within a designated time
        period (for example 48 hours) through a single payment.
15      PPV designates a product where a consumer obtains the right to watch a single title during a specific time period
        (for example Sunday between 2.00 pm and 3.45 pm) through a single payment.
16      M.8354 – Fox / Sky, para. 56; M.8785 – The Walt Disney Company / Twenty-First Century Fox, para. 68.
                                                                 5
 ---pagebreak---         market for the licensing of broadcasting rights for pre-produced AV content on the
        other hand.17
(22)    With regards to the market for licensing of broadcasting rights, the market
        investigation suggested that the segmentation by type of content including (i) films,
        (ii) sports, and (iii) other AV content (i.e. all non-sport, non-film content) remains
        appropriate. However, one market participant in Italy noted that “a segmentation
        between films, sports and other AV content is too broad”.18
(23)    Similarly, the market investigation confirmed that the segmentation between (i) US
        and non-US films; (ii) premium and non-premium content; or (iii) scripted and non-
        scripted content remains relevant..19 In particular, one market participant in Italy
        further argued that “from a marketing point of view, for our purposes, the distinction
        should be added not so much between US and non-US, but between Italian,
        European and non-European productions.”20
(24)    With regards to the market for licensing of broadcasting rights, the market
        investigation confirmed that the segmentation by exhibition window remained
        relevant.21 In particular with regards to non-linear AV content, market participants
        confirmed that there are differences in price in terms of content, pricing and contract
        terms.22
(25)    In light of the above and for the purpose of this Decision, the Commission considers
        that the production of commissioned AV content and the licensing of broadcasting
        rights for AV content constitute two separate product markets. The question whether
        the market for the licensing of broadcasting rights for AV content can be further
        segmented according to (i) the type of AV content; (ii) US and non-US films; (iii)
        premium and non-premium content (iv) scripted and non-scripted content; or, (v)
        exhibition window 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.
4.2.3. Geographic market definition
4.2.3.1. Past Commission decisions
(26)    In past decisions, the Commission has considered the market for the production and
        supply of AV content (and its relevant segments) to be either national or regional,
        based on linguistically homogeneous areas.23
17      Responses to questionnaire Q1 – Questionnaires to market participants in the AV sector (Italy), questions 6
        and 6.1.
18      Responses to questionnaire Q1 – Questionnaires to market participants in the AV sector (Italy), questions 7.1.
19      For exemple, see responses to questionnaire Q1 – Questionnaires to market participants in the AV sector (Italy),
        questions 7 and 7.1.
20      Responses to questionnaire Q1 – Questionnaires to market participants in the AV sector (Italy), question 7.1.
21      Notably, the Commission asked market participants whether the following exhibition windows were appropriate
        for the TV value chain: (i) subscription-based video on demand (“SVOD”); (ii) transactional vídeo on demand
        (“TVOD”); (iii) pay-per-view (“PPV”); (iv) first pay TV; (v) second pay TV; (vi) free-to-air (“FTA”).
22      Responses to questionnaire Q1 – Questionnaires to market participants in the AV sector (Italy), questions 9.
23      M.8354 – Fox / Sky, para. 69; M.9299 – Discovery / Polsat / JV, para. 54.
                                                              6
 ---pagebreak--- 4.2.3.2. The Notifying Party’s view
(27)    The Notifying Party considers that the exact scope of the geographic market can be
        left open even if it does not question the Commission’s past decisional practice
        based on regional, national or linguistic geographic markets.
4.2.3.3. The Commission’s assessment
(28)    The market investigation confirmed that the geographic scope of licensing
        agreements is normally national. Overall, market participants confirmed that the
        market for the production and supply of AV content to be national in scope, or
        encompassing linguistically homogenous areas.24
(29)    In light of the foregoing, the Commission does not have indication that it should
        depart from the approach taken in previosu casesassessment, and concludes, for the
        purpose of this Decision, that the geographic markets for the production of
        commissioned AV content and the licensing of broadcasting rights for AV content
        are either national or correspond with a linguistic areas. In any event, the precise
        definition of the geographic market can be left open, as the Transaction does not
        raise serious concerns as to its compatibility with the internal market under any
        plausible market definition.
4.3.    Wholesale supply of TV channels
4.3.1. The Parties’ activities
(30)    WarnerMedia and Discovery are active in the wholesale supply of TV channels to
        providers of retail TV services.
(31)    WarnerMedia offers a portfolio of wholesale TV channels across the EEA to both
        FTA and pay TV retailers. WarnerMedia’s core offering encompasses a bouquet of
        predominantly pay TV channels which broadcast scripted fiction programmes
        directed at children (e.g., for instance with the TV channels Cartoon Network, or
        Boomerang) and general entertainment (e.g., for instance with the TV channels TNT,
        TNT Film, or TNT Series).25 WarnerMedia also distributes Home Box Office
        (“HBO”) premium film channels predominantly in Eastern Europe. Finally,
        WarnerMedia provides CNN International in the EEA, offering FTA news-related
        content worldwide.
(32)    Discovery offers a portfolio of wholesale TV channels across the EEA to both FTA
        and pay TV retail broadcasters. Discovery’s channels mainly constitute pay TV
        channels, predominantly for unscripted, non-fiction programmes, such as
        documentaries. In addition to these channels, Discovery’s Eurosport is focused
        solely on sporting content. In Italy, Discovery offers some FTA general
        entertainment and children’s TV channels, including K2 and Frisbee, which it
        acquired as part of the Switchover Media acquisition in 2013.
24      Responses to questionnaire Q1 – Questionnaires to market participants in the AV sector (Italy), questions 24.
25      In Italy, WarnerMedia operates its FTA TV channels for children through a joint venture Boing S.p.A. (“Boing”)
        with Mediaset S.p.A. (“Mediaset”). WarnerMedia and Mediaset also operate some Boing channels in Spain.
                                                             7
 ---pagebreak--- 4.3.2. Product market definition
4.3.2.1. Past Commission decisions
(33)    In its previous decisions, the Commission has identified a wholesale market for the
        supply of TV channels. Within that market, in certain decisions, the Commission has
        further identified two separate product markets for: (i) FTA TV channels, and
        (ii) pay TV channels.26 The Commission has further stated that, within the pay TV
        channels market, there could be different segments for: (i) basic pay TV channels,
        which are included in the basic subscription fee, and (ii) premium pay TV
        channels,27 for which customers pay a premium in addition to their basic
        subscription fee.
(34)    In Liberty Global / Corelio / W&W / De Vijver Media, the Commission concluded
        that, at the level of the wholesale supply of TV channels, there were two separate
        product markets, one consisting of the wholesale supply of premium pay TV
        channels and one consisting of the wholesale supply of basic pay TV/FTA channels.
        In that decision, the Commission also considered that there was no need to draw a
        distinction between linear TV channels and their non-linear ancillary services.28
(35)    In its previous decisions, the Commission also examined a number of other potential
        segmentations of the market for the wholesale supply of TV channels but ultimately
        left the market definition open, as regards: (i) genre or thematic content (films,
        sports, news, children/youth, and others);29 and (ii) different means of infrastructure
        used for the delivery to the consumer (cable, satellite, terrestrial TV and IPTV).30 In
        the recent Telia Company/Bonnier Broadcasting Holding decision, the Commission
        considered that the market for the wholesale supply of TV channels should not be
        further segmented according to the type of infrastructure used for the delivery to the
        consumer (such as cable, direct to home (“DTH”), digital terrestrial television
        (“DTT”) and internet protocol television (“IPTV”)) since the competitive conditions
        in the market for the wholesale supply of TV channels, and any possible
        segmentation, would be similar irrespective of the distribution technology and type
        of infrastructure used for the distribution of the TV channels.31
26      M.7194 – Liberty Global/Corelio/W&W/De Vijver Media, paras. 90-91.
27      M.8785 – The Walt Disney Company / Twenty-First Century Fox, para. 77; Commission decision of 15 June
        2018 in Case M.8861 – Comcast/Sky, para. 50; Commission decision of 6 February 2018 in Case M.8665 –
        Discovery/Scripps, paras. 19- 20; M.8354 – Fox/Sky, paras. 80- 81.
28      M.7194 – Liberty Global/Corelio/W&W/De Vijver Media, paras. 93-94.
29      Commission decisions of of 7 April 2017 in case M.8354 – Fox/Sky, recitals 82-83; Commission decision of 24
        February 2015 in case M.7194 - Liberty Global/Corelio/W&W/De Vijver Media, recital 92; Commission decision
        of 2 April 2003 in case M.2876 - Newscorp/Telepiù, recital 76; Commission decision of 18 July 2007 in case
        M.4504 - SFR/Télé 2 France, recitals 41–42; Commission decision of 26 August 2008 in case M.5121 - News
        Corp/Premiere, recital 35; Commission decision of 21 December 2010 in case M.5932 – News Corp/BskyB,
        recital 81; Commission decision of 10 October 2014 in case M.7000 - Liberty Global/Ziggo, recital 89.
30      M.7194 – Liberty Global/Corelio/W&W/De Vijver Media, para. 98; Commission decision of 18 July 2007 in
        Case M.4504 – SFR/Télé 2 France, para. 44; Commission decision of 26 August 2008 in Case M.5121 – News
        Corp/Premiere, para. 22.
31      Commission decision of 12 November 2019 in Case M.9064 – Telia Company/ Bonnier Broadcasting Holding,
        para. 162.
                                                             8
 ---pagebreak--- 4.3.2.2. The Notifying Party’s view
(36)    The Notifying Party does not consider it appropriate to segment the market for the
        wholesale supply of TV channels between FTA and pay TV, whether basic or
        premium, between genres, or between means of transmission.
4.3.2.3. The Commission’s assessment
(37)    The market investigation has yielded mixed results on the definition of the product
        market for the wholesale supply of TV channels.
(38)    In relation to the possible segmentation between FTA and pay TV channels, the
        market investigation has confirmed that the segmentation is still relevant in a
        majority of Member States under investigation.32 In other Member States, the views
        were mixed or inconclusive.33
(39)    In relation to the possible segmentation between premium and basic pay TV
        channels, the market investigation has yielded inconclusive results.34 This seems to
        be linked to the absence of a consistent definition of which pay TV channels would
        qualify as basic and which as premium and to the fact that TV content are
        distributed to different channels that market themselves both as basic and premium
        TV channels.35
(40)    Similarly, the possible segmentation of the market for the wholesale supply of TV
        channels by genre or thematic content has yielded mixed results depending mainly
        on the country of operation of the market respondents. For instance, the respondents
32      Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 10 and
        10.1; questionnaire Q2 - Questionnaire to market participants in the AV sector (Belgium), questions 6 and 6.1;
        questionnaire Q3 – Questionnaire to market participants in the AV sector (Denmark) questions 6 and 6.1;
        questionnaire Q4 – Questionnaire to market participants in the AV sector (France) questions 6 and 6.1;
        questionnaire Q5 – Questionnaire to market participants in the AV sector (Germany) questions 6 and 6.1;
        questionnaire Q6 – Questionnaire to market participants in the AV sector (Romania) questions 6 and 6.1;
        questionnaire Q10 – Questionnaire to market participants in the AV sector (Poland) questions 6 and 6.1;
        questionnaire Q11 – Questionnaire to market participants in the AV sector (Spain) questions 6 and 6.1.
33      Response to questionnaire Q7 - Questionnaire to market participants in the AV sector (Bulgaria), questions 6 and
        6.1; questionnaire Q8 – Questionnaire to market participants in the AV sector (Finland) questions 6 and 6.1;
        questionnaire Q9 – Questionnaire to market participants in the AV sector (Norway) questions 6 and 6.1.
34      Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 11 and
        11.1; questionnaire Q2 - Questionnaire to market participants in the AV sector (Belgium), questions 7 and 7.1;
        questionnaire Q3 – Questionnaire to market participants in the AV sector (Denmark) questions 7 and 7.1;
        questionnaire Q4 – Questionnaire to market participants in the AV sector (France) questions 7 and 7.1;
        questionnaire Q5 – Questionnaire to market participants in the AV sector (Germany) questions 7 and 7.1;
        questionnaire Q6 – Questionnaire to market participants in the AV sector (Romania) questions 7 and 7.1;
        questionnaire Q7 - Questionnaire to market participants in the AV sector (Bulgaria), questions 7 and 7.1;
        questionnaire Q8 – Questionnaire to market participants in the AV sector (Finland) questions 7 and 7.1;
        questionnaire Q9 – Questionnaire to market participants in the AV sector (Norway) questions 7 and 7.1;
        questionnaire Q10 – Questionnaire to market participants in the AV sector (Poland) questions 7 and 7.1;
        questionnaire Q11 – Questionnaire to market participants in the AV sector (Spain) questions 7 and 7.1.
35      Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 12 and 13;
        questionnaire Q2 - Questionnaire to market participants in the AV sector (Belgium), questions 8 and 9;
        questionnaire Q3 – Questionnaire to market participants in the AV sector (Denmark) questions 8 and 9;
        questionnaire Q4 – Questionnaire to market participants in the AV sector (France) questions 8 and 9;
        questionnaire Q5 – Questionnaire to market participants in the AV sector (Germany) questions 8 and 9;
        questionnaire Q6 – Questionnaire to market participants in the AV sector (Romania) questions 8 and 9;
        questionnaire Q8 - Questionnaire to market participants in the AV sector (Bulgaria), questions 8 and 9;
        questionnaire Q8 – Questionnaire to market participants in the AV sector (Finland) questions 8 and 9;
        questionnaire Q9 – Questionnaire to market participants in the AV sector (Norway) questions 8 and 9
        questionnaire Q10 – Questionnaire to market participants in the AV sector (Poland) questions 8 and 9;
        questionnaire Q11 – Questionnaire to market participants in the AV sector (Spain) questions 8 and 9.
                                                              9
 ---pagebreak---      to the market investigation in Italy, Germany, Finland, Poland and Spain indicated
     that this segmentation is relevant while the market investigation in other Member
     States suggests otherwise.36 In particular in Italy, the market investigation has
     suggested that the segmentation by genre should be made in addition to the
     segmentation between wholesale supply of FTA and pay TV channels.37 For
     instance, one market participant stressed that “Broadcasting operators, both pay and
     FTA, already segmented their cannels also by genre, presumably to segment their
     audiences and to sell more targeted adv.”38
(41) Furthermore, specifically for Italy, the market investigation has confirmed that it is
     easy to categorise channels on the basis of their genre and in line with previous
     Commission decisions which defined the following genre categories: films, sports,
     news, children/youth, and others.39 As stated by one market participant: “it is easy to
     categorise channels by genre or theme in Italy, as long as we define a residual
     category that encompasses mainstream programming, meaning a channel which
     covers multiple genres such as movies, TV series, sports, events, and news.”40 In
     support of this position, the market investigation has indicated that the choice of a
     retailer of AV services to purchase a channel is based on the channel’s genre.41
(42) In relation to the possible segmentation according to the distribution technology, the
     market investigation has indicated that this is no longer a relevant segmentation in
     the Member States under investigation except Spain.42
     In all the countries covered by the market investigation,43 market participants have
     confirmed that there should be no segmentation between linear TV channels and the
     ancillary services44 linked thereto.45
36   Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 15.1;
     questionnaire Q5 – Questionnaire to market participants in the AV sector (Germany) questions 11; questionnaire
     Q11 – Questionnaire to market participants in the AV sector (Finland) questions 11; questionnaire Q10 –
     Questionnaire to market participants in the AV sector (Poland) questions 11; questionnaire Q11 – Questionnaire
     to market participants in the AV sector (Spain) questions 11.
37   Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 15.1.2.
38   Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 15.1.2.
39   For relevant past decisions of the Commission, see above in paragraph (34).
40   Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 15.1.3 and
     15.1.3.1.
41   Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 15.1.4.
42   Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 15.2 and
     15.2.1; questionnaire Q2 – Questionnaire to market participants in the AV sector (Belgium), questions 11.2 and
     11.2.1; questionnaire Q3 – Questionnaire to market participants in the AV sector (Denmark) questions 11.2 and
     11.2.1; questionnaire Q4 – Questionnaire to market participants in the AV sector (France) questions 11.2 and
     11.2.1; questionnaire Q5 – Questionnaire to market participants in the AV sector (Germany) questions 11.2 and
     11.2.1; questionnaire Q6 – Questionnaire to market participants in the AV sector (Romania) questions 11.2 and
     11.2.1; questionnaire Q7 – Questionnaire to market participants in the AV sector (Bulgaria), questions 11.2 and
     11.2.1; questionnaire Q8 – Questionnaire to market participants in the AV sector (Finland) questions 11.2 and
     11.2.1; questionnaire Q9 – Questionnaire to market participants in the AV sector (Norway) questions 11.2 and
     11.2.1; questionnaire Q10 – Questionnaire to market participants in the AV sector (Poland) questions 11.2 and
     11.2.1; questionnaire Q11 – Questionnaire to market participants in the AV sector (Spain) questions 11.2
     and 11.2.1.
43   The market investigation covers Bulgaria, Belgium, Denmark, Finland, France, Germany, Italy, Norway, Poland,
     Romania, and Spain.
44   Ancillary services are services or functionalities offered to consumers simultaneously with the linear
     transmission, such as catch up services, personal video recorder, accessibility of the TV channel’s content
     through the internet and on mobile devices, etc.
                                                            10
 ---pagebreak--- (43)    In light of the above, the Commission considers that, for the purpose of this
        Decision, the relevant product market is the market for the wholesale supply of TV
        channels, including their ancillary services and covering all types of infrastructure.
        The question whether this product market should be further segmented between FTA
        and pay TV channels, and in turn whether pay TV channels should be further
        segmented between basic pay and premium pay TV channels 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. The question whether this product market should be further segmented by
        genre (i.e., sports, films, children/youth and other) can also 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.
4.3.3. Geographic market definition
4.3.3.1. Past Commission decisions
(44)    In its previous decisions, the Commission found the market for the wholesale supply
        of TV channels to be either national in scope,46 regional,47 or delineated by
        linguistically homogeneous areas encompassing more than one EU Member State.48
4.3.3.2. The Notifying Party’s arguments
(45)    The Notifying Party considers that the exact scope of the geographic market can be
        left open even if it does not question the Commission’s past decisional practice
        based on regional, national or linguistic geographic markets.
4.3.3.3. The Commission’s assessment
(46)    Except for Belgium, the market investigation has confirmed that agreements between
        wholesale suppliers of TV channels and retail suppliers of AV services are
        negotiated on a national basis.49 In Belgium, market participants considered that TV
45      Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 15.3 and
        15.3.1; questionnaire Q2 - Questionnaire to market participants in the AV sector (Belgium), questions 11.3 and
        11.3.1; questionnaire Q3 – Questionnaire to market participants in the AV sector (Denmark) questions 11.3 and
        11.3.1; questionnaire Q4 – Questionnaire to market participants in the AV sector (France) questions 11.3 and
        11.3.1; questionnaire Q5 – Questionnaire to market participants in the AV sector (Germany) questions 11.3 and
        11.3.1; questionnaire Q6 – Questionnaire to market participants in the AV sector (Romania) questions 11.3 and
        11.3.1; questionnaire Q7 - Questionnaire to market participants in the AV sector (Bulgaria), questions 11.3 and
        11.3.1; questionnaire Q8 – Questionnaire to market participants in the AV sector (Finland) questions 11.3 and
        11.3.1; questionnaire Q9 – Questionnaire to market participants in the AV sector (Norway) questions 11.3 and
        11.3.1; questionnaire Q10 – Questionnaire to market participants in the AV sector (Poland) questions 11.3 and
        11.3.1; questionnaire Q11 – Questionnaire to market participants in the AV sector (Spain) questions 11.3 and
        11.3.1.
46      M.6369 – HBO/Ziggo/HBO Nederland, para. 39; Commission decision of 15 April 2013 in Case M.6880 –
        Liberty Global/Virgin Media, para. 41; Commission decision of 10 October 2014 in Case M.7000 – Liberty
        Global/Ziggo, para. 98; M.9299 – Discovery / Polsat / JV, para. 70.
47      M.7197 – Liberty Global/Corelio/W&W/De Vijver Media, para. 106 onwards.
48      M.8354 – Fox / Sky, para. 90 onwards.
49      Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 25 and
        25.1; questionnaire Q3 – Questionnaire to market participants in the AV sector (Denmark) questions 12 and 12.1;
        questionnaire Q4 – Questionnaire to market participants in the AV sector (France) questions 12 and 12.1;
        questionnaire Q5 – Questionnaire to market participants in the AV sector (Germany) questions 12 and 12.1;
        questionnaire Q6 – Questionnaire to market participants in the AV sector (Romania) questions 12 and 12.1;
                                                              11
 ---pagebreak---        channels are usually targeted at specific audiences on the basis of the language of the
       channel. As such, agreements tend to be negotiated on the basis the footprint of
       network retailers.50
(47)   Similarly, except for Belgium, the market investigation has confirmed that the
       wholesale suppliers of TV channels are the same across a Member State.51
(48)   Finally, the market investigation confirmed that the geographic scope of negotiations
       is not dependent on the genre of the channel being supplied.52
(49)   In light of the above, for the purpose of this Decision, the Commission concludes
       that the relevant geographic market for the wholesale supply of TV channels, and all
       its possible sub-segments is national for all of the countries considered in this
       decision, and/or regional in scope for Belgium.
4.4.   Retail supply of AV services to end customers
4.4.1. The Parties’ activities
(50)   WarnerMedia and Discovery are active in the retail provision of audio-visual
       services to end users.
(51)   Discovery offers FTA TV services in Austria, Finland, Germany, Ireland, Italy,
       Poland and Spain. Discovery also offers pay TV services such as Joyn+ (in
       Germany), TVN (available in Austria, Belgium, Cyprus, Denmark, Estonia, Finland,
       France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Netherlands, Norway,
       Poland, Portugal, Spain and Sweden), Eurosport Player (available in all EEA
       Member States), GolfTV (available in all EEA Member States), Discovery+
       questionnaire Q7 - Questionnaire to market participants in the AV sector (Bulgaria), questions 16 and 16.1;
       questionnaire Q8 – Questionnaire to market participants in the AV sector (Finland) questions 16 and 16.1;
       questionnaire Q9 – Questionnaire to market participants in the AV sector (Norway) questions 16 and 16.1;
       questionnaire Q10 – Questionnaire to market participants in the AV sector (Poland) questions 16 and 16.1;
       questionnaire Q11 – Questionnaire to market participants in the AV sector (Spain) questions 16 and 16.1.
50     Response to questionnaire Q2 – Questionnaire to market participants in the AV sector (Belgium) questions 12
       and 12.1.
51     Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 26 and
       26.1; questionnaire Q3 – Questionnaire to market participants in the AV sector (Denmark) questions 13 and 13.1;
       questionnaire Q4 – Questionnaire to market participants in the AV sector (France) questions 13 and 13.1;
       questionnaire Q5 – Questionnaire to market participants in the AV sector (Germany) questions 13 and 13.1;
       questionnaire Q6 – Questionnaire to market participants in the AV sector (Romania) questions 13 and 13.1;
       questionnaire Q7 - Questionnaire to market participants in the AV sector (Bulgaria), questions 17 and 17.1;
       questionnaire Q8 – Questionnaire to market participants in the AV sector (Finland) questions 17 and 17.1;
       questionnaire Q9 – Questionnaire to market participants in the AV sector (Norway) questions 17 and 17.1;
       questionnaire Q10 – Questionnaire to market participants in the AV sector (Poland) questions 17 and 17.1;
       questionnaire Q11 – Questionnaire to market participants in the AV sector (Spain) questions 17 and 17.1.
52     Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 27 and
       27.1; questionnaire Q2 – Questionnaire to market participants in the AV sector (Belgium) questions 14 and 14.1;
       questionnaire Q3 – Questionnaire to market participants in the AV sector (Denmark) questions 14 and 14.1;
       questionnaire Q4 – Questionnaire to market participants in the AV sector (France) questions 14 and 14.1;
       questionnaire Q5 – Questionnaire to market participants in the AV sector (Germany) questions 14 and 14.1;
       questionnaire Q6 – Questionnaire to market participants in the AV sector (Romania) questions 14 and 14.1;
       questionnaire Q7 - Questionnaire to market participants in the AV sector (Bulgaria), questions 18 and 18.1;
       questionnaire Q8 – Questionnaire to market participants in the AV sector (Finland) questions 18 and 18.1;
       questionnaire Q9 – Questionnaire to market participants in the AV sector (Norway) questions 18 and 18.1;
       questionnaire Q10 – Questionnaire to market participants in the AV sector (Poland) questions 18 and 18.1;
       questionnaire Q11 – Questionnaire to market participants in the AV sector (Spain) questions 18 and 18.1.
                                                             12
 ---pagebreak---         (Discovery’s recent SVOD platform, currently available in the Denmark, Finland,
        Ireland, Italy, Netherlands, Norway, Spain and Sweden).53
(52)    WarnerMedia offers retail FTA TV services only in Italy and Spain. WarnerMedia
        also offers HBO channels as a pay TV service (including on-demand via HBO GO),
        which is available in Bulgaria, Croatia, Czech Republic, Denmark, Finland,
        Hungary, Norway, Poland, Romania, Slovakia, Slovenia, Spain, and Sweden.
        WarnerMedia has also just launched its SVOD platform HBO Max in a handful of
        countries in the EEA - namely Sweden, Denmark, Norway, Finland and Spain,
        where HBO Max was launched on 26 October 2021. HBO Max will then be rolled
        out in 2022 across Central and Eastern Europe, Portugal, as well as the Netherlands,
        Greece and Iceland.54
4.4.2. Product market definition
4.4.2.1. Past Commission decisions
(53)    The Commission has in previous cases split the retail supply of AV services in two
        separate markets: FTA and pay TV,55 but in other more recent cases has ultimately
        left open the product market definition.56 The Commission has also considered
        whether the market for retail pay AV services should be segmented further according
        to: (i) premium pay AV vs. basic pay AV services;57 (ii) distribution technologies
        (e.g. cable, satellite, or terrestrial);58 and (iii) linear vs non-linear AV services;59 but
        ultimately left the market definition open.60
(54)    Distribution technologies: In Liberty Global / Corelio / W&W / De Vijver Media,
        the Commission recognised that at least retail AV services offered over cable and
        IPTV form part of the same relevant product market.61 In the recent Telia
        Company/Bonnier Broadcasting Holding case,62 the Commission concluded that all
        the different distribution technologies are part of the same product market.
(55)    Linear and non-linear services: In the past, the Commission noted that non-linear
        services have gradually been integrated to complement TV broadcasters’ and retail
        AV service providers’ offerings and enhance the consumer's experience of linear TV
53      Form CO, Chapter 4, paragraphs 33-35.
54      Form CO, Chapter 4, paragraphs 17-32.
55      M.4504 – SFR/Télé 2 France, para. 45.
56      M.8785 –The Walt Disney Company / Twenty-First Century Fox, para. 98; Commission decision of
        8 October 2018 in Case M.8842 – Tele2/ComHem, para. 37; M.7000 – Liberty Global/Ziggo, para. 137; M.8665
        – Discovery/Scripps, para. 33; M.8354 – Fox/Sky, para. 101; Commission decision of 3 August 2016 in Case
        M.7978 – Vodafone/Liberty Global/Dutch JV, para. 56; M.7194 – Liberty Global/Corelio/W&W/De Vijver
        Media, para. 152.
57      M.7194 – Liberty Global/Corelio/W&W/De Vijver Media, para. 119.
58      M.7194 – Liberty Global/Corelio/W&W/De Vijver Media, para. 127; M.5121 – News Corp/Premiere, para. 22;
        Commission decision of 21 December 2010 in Case M.5932 - News Corp/BskyB, para. 105; M.7000 – Liberty
        Global/Ziggo, para. 113.
59      M.7194 – Liberty Global/Corelio/W&W/De Vijver Media, para. 124; M.5121 – News Corp/Premiere, para. 21;
        M.7000 - Liberty Global/Ziggo, paras. 109–110.
60      M.8785 – The Walt Disney Company / Twenty-First Century Fox, para. 93 and case law cited; M.9299 –
        Discovery / Polsat / JV, para. 82.
61      M.7194 – Liberty Global / Corelio / W&W / De Vijver Media, para. 126.
62      M.9064 – Telia Company/ Bonnier Broadcasting Holding, para. 195.
                                                           13
 ---pagebreak---         channels. Most recently, in NENT/Telenor, the Commission indicated that linear and
        non-linear AV services are increasingly regarded as substitutable.63
(56)    Premium and basic pay TV services: The question whether premium and basic pay
        TV services constitute separate product markets has been left open in recent cases.64
4.4.2.2. The Notifying Party’s view
(57)    The Notifying Party considers that the Transaction should be assessed on the basis of
        a single market for the retail supply of AV services, which encompasses all AV
        services (including linear and non-linear, FTA and pay TV, basic and premium),
        delivered through all distribution technologies, including OTT to singled welling or
        multiple dwelling units.
4.4.2.3. The Commission’s assessment
(58)    The market investigation has yielded mixed results in relation to the market for the
        retail supply of AV services.
(59)    Except for Finland, the market investigation suggested that a segmentation between
        the retail supply of FTA AV services and pay AV services may no longer be
        relevant.65 For instance, one market participant explained that: “this is not an
        appropriate driver of segmentation for retail markets, with suppliers characterized
        by different business models competing to attract viewers’ attention.”66
(60)    In relation to a possible segmentation of the market for the retail supply of pay AV
        services, a majority of market respondents considered that it is no longer appropriate
        to segment the retail market for the supply of pay AV services between basic and
        premium services.67 Market participants also indicated that non-linear pay AV
        services constitute a good alternative to linear pay AV services.68
(61)    In relation to a possible segmentation of the market for the retail supply of AV
        services that are advertising funded between linear TV channels (i.e., FTA TV
        channels) and non-linear FTA AV services (i.e., advertising-based video on demand
63      Commission decision of 30 April 2020 in Case M.9604 – NENT / Telenor / JV, para. 184.
64      See e.g. M.9799 – Discovery / Polsat / JV, para. 82.
65      Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 17 and
        17.1; questionnaire Q7 – Questionnaire to market participants in the AV sector (Bulgaria), questions 12 and 12.1;
        questionnaire Q8 – Questionnaire to market participants in the AV sector (Finland) questions 12 and 12.1;
        questionnaire Q9 – Questionnaire to market participants in the AV sector (Norway) questions 12 and 12.1;
        questionnaire Q10 – Questionnaire to market participants in the AV sector (Poland) questions 12 and 12.1;
        questionnaire Q11 – Questionnaire to market participants in the AV sector (Spain) questions 12 and 12.1.
66      Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 17.1.
67      Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 18 and
        18.1; questionnaire Q7 - Questionnaire to market participants in the AV sector (Bulgaria), questions 13 and 13.1;
        questionnaire Q8 – Questionnaire to market participants in the AV sector (Finland) questions 13 and 13.1;
        questionnaire Q9 – Questionnaire to market participants in the AV sector (Norway) questions 13 and 13.1;
        questionnaire Q10 – Questionnaire to market participants in the AV sector (Poland) questions 13 and 13.1;
        questionnaire Q11 – Questionnaire to market participants in the AV sector (Spain) questions 13 and 13.1.
68      Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 19 and
        19.1; questionnaire Q7 - Questionnaire to market participants in the AV sector (Bulgaria), questions 14 and 14.1;
        questionnaire Q8 – Questionnaire to market participants in the AV sector (Finland) questions 14 and 14.1;
        questionnaire Q9 – Questionnaire to market participants in the AV sector (Norway) questions 14 and 14.1;
        questionnaire Q10 – Questionnaire to market participants in the AV sector (Poland) questions 14 and 14.1;
        questionnaire Q11 – Questionnaire to market participants in the AV sector (Spain) questions 14 and 14.1.
                                                              14
 ---pagebreak---         (“AVOD”)), the market participants considered that such segmentation may not be
        appropriate.69
(62)    The market investigation has not yielded any evidence on the segmentation by
        distribution technology.
(63)    In light of the above, the Commission considers that, for the purpose of this
        Decision, the relevant product market at retail level is the market for the retail supply
        of AV services encompassing all distribution technologies. The question whether the
        retail supply of AV services should be further segmented between (i) FTA and pay
        AV services, as well as the question whether the retail supply of pay AV services
        should be segmented according to (ii) linear and non-linear pay AV services, and,
        (iii) premium and basic pay AV 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. The question
        of whether the market for the retail supply of FTA AV services should be segmented
        according to linear and non-linear FTA AV services can also 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.
4.4.3. Geographic market definition
4.4.3.1. Past Commission decisions
(64)    The Commission has in the past considered that the geographic scope of the market
        for the retail provision of AV services could be either (i) national, since providers of
        retail AV services compete on a nation-wide basis; or (ii) limited to the coverage
        area of each cable operator.70
4.4.3.2. The Notifying Party’s view
(65)    The Notifying Party considers that the Transaction will not raise competition
        concerns at the retail level regardless of the precise geographic market definition and
        has provided market data on the basis of national markets, which it considers to fit
        the narrowest plausible geographic scope in the Commission’s precedents.
4.4.3.3. The Commission’s assessment
(66)    The market investigation has confirmed that the market for the retail supply of AV
        services is national in scope, due to the fact that these services are offered on a
        national basis.71
69      Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 20 and
        20.1; questionnaire Q7 - Questionnaire to market participants in the AV sector (Bulgaria), questions 15 and 15.1;
        questionnaire Q8 – Questionnaire to market participants in the AV sector (Finland) questions 15 and 15.1;
        questionnaire Q9 – Questionnaire to market participants in the AV sector (Norway) questions 15 and 15.1;
        questionnaire Q10 – Questionnaire to market participants in the AV sector (Poland) questions 15 and 15.1;
        questionnaire Q11 – Questionnaire to market participants in the AV sector (Spain) questions 15 and 15.1.
70      M.8785 – The Walt Disney Company / Twenty-First Century Fox, para. 100; M.9799 – Discovery / Polsat / JV,
        para. 86.
71      Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 28 and
        28.1; questionnaire Q7 - Questionnaire to market participants in the AV sector (Bulgaria), questions 19 and 19.1;
                                                              15
 ---pagebreak--- (67)    In light of the above, for the purpose of this Decision, the Commission concludes
        that the relevant geographic market for the retail supply of AV services, and all its
        possible sub-segments, is national in scope.
4.5.    Sale of advertising space
4.5.1. The Parties’ activities
(68)    Discovery and WarnerMedia are both suppliers of advertising space on audiovisuals’
        supports. Discovery and WarnerMedia both sell advertising space on TV and online.
        From an advertising perspective, the Parties’ retail service offerings include limited
        AVOD options in the EEA.
(69)    With regard to the demand-side of the advertising market, i.e., the downstream
        acquisition of ad space on TV channels and/or national websites, the Parties buy
        advertising space mostly through media buyers or media agencies, and to a lesser
        extent directly and/or within the framework of barter agreements.
(70)    In the vast majority of EEA Member States, the Parties sell TV advertising space
        mainly through third-party advertising sales houses, which represent a multitude of
        competing channels or platforms and negotiate directly with media buyers or
        advertisers.
(71)    In particular, Discovery sells advertising space in the majority of the EEA Member
        States, but has no (offline or online advertising) sales in Cyprus, Greece, Iceland,
        Lithuania, Liechtenstein, Luxembourg, Malta, and Slovakia. WarnerMedia sells
        advertising space in the majority of the EEA Member States. WarnerMedia does no
        longer have any advertising revenues from its TV channels in Norway, Denmark and
        Sweden, since in September 2020 it decided to discontinue its in-house ad sale
        business in the Nordics with effect from the end of 2020.
4.5.2. Product market definition
4.5.2.1. Past Commission decisions
(72)    The Commission has in previous cases established a distinction between (i) online
        and (ii) offline advertising, on the basis of specificity (i.e. the ability to reach a more
        targeted audience) and pricing model.72 Within offline advertising, the Commission
        has distinguished separate markets for (i) the sale of advertising on TV channels and
        (ii) for the sale of advertising in newspapers. 73
        questionnaire Q8 – Questionnaire to market participants in the AV sector (Finland) questions 19 and 19.1;
        questionnaire Q9 – Questionnaire to market participants in the AV sector (Norway) questions 19 and 19.1;
        questionnaire Q10 – Questionnaire to market participants in the AV sector (Poland) questions 19 and 19.1;
        questionnaire Q11 – Questionnaire to market participants in the AV sector (Spain) questions 19 and 19.1.
72      Commission decision of 9 September 2014 in Case M.7288 – Viacom/Channel 5Broadcasting, para. 35.
73      Commission decision of 7 July 2005 in Case M.3817 – Wegener/PCM/JV, para. 27; Commission decision of 1
        February 1999 in Case M.1401 - Recoletos/Unedisa, paras. 26-28; Commission decision of 21 December 2010 in
        Case M.5932 – News Corp/ BSkyB, paras. 265 and 266; Commission decision of 6 February 2017 in Case
        M.8665 – Discovery / Scripps, para. 40.
                                                             16
 ---pagebreak--- (73)    The market investigation in Viacom/Channel 5 indicated that the distinction between
        online advertising and TV advertising is becoming increasingly blurred. 74 Moreover,
        the question whether advertising placed on FTA channels and on pay TV channels
        should constitute separate markets has, to date, been left open.
4.5.2.2. The Notifying Party’s view
(74)    The Notifying Party considers that there is only one market for all TV advertising,
        with no need to distinguish between advertising on FTA and pay TV channels or
        advertising on OTT and VOD.
4.5.2.3. The Commission’s assessment
(75)    Overall, the market investigation indicated that that Commission can follow the
        approach taken in previous cases with regard to definition of the market for the sale
        of advertising space.
(76)    The market investigation suggested that the segmentation between online and offline
        advertising, and within the offline advertising segment. A majority of market
        participants active across the AV value chain indicated that there is a distinct market
        for the sale of advertising space on TV channels.75 The market investigation
        provided mixed responses on whether the market for the sale of advertising space on
        TV channels should be further segmented between the sale of advertising space on
        FTA TV channels and pay TV channels.76
(77)    In light of the above and for the purpose of this Decision, the Commission considers
        that there is a distinct market for the sale of advertising space on TV channels. The
        question whether the market for sale of advertising space on TV channels can be
        further segmented between the the sale of advertising space on FTA TV channels
        and pay TV channels 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.
4.5.3. Geographic market definition
4.5.3.1. Past Commission decisions
(78)    In its previous decisions, the Commission has considered that the market for the
        supply of TV advertising, including the possible segmentations outlined above, is
        national in scope.77
4.5.3.2. The Notifying Party’s view
(79)    The Notifying Party does not disagree with the Commission’s previous decisions
        and considers that the market for the supply of TV advertising could be national in
        scope. In any case, the Notifying Party considers that, for the purpose of this case,
        the exact geographic market definition can be left open.
74      M.7288 – Viacom/Channel 5Broadcasting, paras. 38 and 40.
75      Responses to questionnaire Q1 – Questionnaires to market participants in the AV sector (Italy), questions 21
        and 21.1.
76      Responses to questionnaire Q1 – Questionnaires to market participants in the AV sector (Italy), questions 22
        and 22.1.
77      Among other cases, M.7288 – Viacom/Channel 5Broadcasting, para. 45.
                                                           17
 ---pagebreak--- 4.5.3.3. The Commission’s assessment
(80)    The market investigation confirmed that the geographic scope for the purchase or
        supply of advertising space on TV channels is national in scope.78
(81)    Therefore, for the purpose of this Decision, the Commission considers that the
        market for the sale of advertising space on TV is national in scope.
5.      COMPETITIVE ASSESSMENT
5.1.    Identification of affected markets
5.1.1. Horizontally affected markets
(82)    The Parties’ activities overlap in most Member States at the various levels of the AV
        value-chain as well as for the sale of advertising space. However, the market shares
        of the Parties are limited and the Transaction only gives rise to the following
        horizontally affected markets:
        (a)     Sale of advertising space on pay TV channels in Denmark;
        (b)     Retail supply of non-linear pay AV services in Finland;
        (c)     Wholesale supply of pay TV channels in Germany;
        (d)     Wholesale supply of pay TV channels for other content in Germany;
        (e)     Wholesale supply of TV channels for children content in Italy;
        (f)     Wholesale supply of FTA TV channels for children content in Italy;
        (g)     Wholesale supply of pay TV in Norway;
        (h)     Retail supply of non-linear pay AV services in Norway;
        (i)     Wholesale supply of TV channels in Poland;
        (j)     Wholesale supply of pay TV channels in Poland;
        (k)     Wholesale supply of TV channels for other content in Poland;
        (l)     Wholesale supply of pay TV channels for other content in Poland;
        (m)     Sale of advertising space on TV channels in Poland;
        (n)     Sale of advertising space on pay TV channels in Poland;
        (o)     Wholesale supply of pay TV in Sweden;
        (p)     Retail supply of non-linear pay AV services in Sweden; and,
        (q)     Sale of advertising space on pay TV channels in Sweden.
78      Responses to questionnaire Q1 – Questionnaires to market participants in the AV sector (Italy), questions 29.
                                                            18
 ---pagebreak--- 5.1.1.1. Denmark
(83)     Based on the market shares submitted by the Notifying Party, the Transaction gives
         rise to the following horizontally affected market:79
Table 1: Horizontally affected markets in Denmark (2020)
                                                    Value
                                                 Discovery                Warner Media                 Combined
Sale of advertising space on pay TV
                                                  [20-30]%                    [0-5]%                    [20-30]%
channels
Source: Annex 4 to Chapter 6 of the Form CO
(84)     As of September 2020, WarnerMedia has decided to discontinue all its activities for
         the sale of advertising space on TV channels in Denmark, Norway and Sweden, with
         effect from the end of 2020. As such, even though the Danish market for the sale of
         advertising space on pay TV channels market was affected in 2020, it is not relevant
         for the Commission to further assess this market due to the purely historical nature
         of the overlap.80 Therefore, the Commission excludes that the Transaction may give
         rise to serious doubts as to its compatibility with the internal market or the
         functioning of the EEA Agreement in relation to this market and will not assess it
         further.
5.1.1.2. Finland
(85)     Based on the market shares submitted by the Notifying Party, the Transaction gives
         rise to the following horizontally affected market:
Table 2: Horizontally affected markets in Finland (2020)
                                                Value                                         Volume
                                               Warner                                         Warner
                               Discovery                    Combined         Discovery                        Combined
                                               Media                                          Media
Retail supply of non-
                                 [0-5]%       [20-30]%       [20-30]%         [0-5]%         [20-30]%          [20-30]%
linear pay AV services
Source: Annex 1 to Chapter 4 of the Form CO
5.1.1.3. Germany
(86)     Based on the market shares submitted by the Notifying Party, the Transaction gives
         rise to the following horizontally affected markets:
79       For completeness, the Notifying Party has submitted that the market for the retail supply of non-linear pay TV
         services may be affected since the combined market shares of the Parties in 2018 was [20-30]% . However, the
         combined market share of the Parties has not exceeded the 20% threshold in 2019 and 2020. Therefore, the
         Commission excludes that the Transaction may give rise to serious doubts as to its compatibility with the internal
         market or the functioning of the EEA Agreement in relation to this market and will not assess it further.
80       Form CO, Chapter 6, paragraphs 35 and 41.
                                                              19
 ---pagebreak--- Table 3: Horizontally affected markets in Germany (2020)
                                                                                  Value
                                                     Discovery               WarnerMedia                Combined
Wholesale supply of pay TV
                                                       [0-5]%                  [10-20]%                  [20-30]%
channels
Wholesale supply of pay TV
                                                       [0-5]%                  [10-20]%                  [20-30]%
channels for other content
Source: Annex 10 to Chapter 3 of the Form CO
5.1.1.4. Italy
(87)     Based on the market shares submitted by the Notifying Party, the Transaction gives
         rise to the following horizontally affected markets:
Table 4: Horizontally affected markets in Italy (2020)
                                                                                  Value
                                                     Discovery               WarnerMedia                Combined
Wholesale supply of TV channels
                                                     [20-30]%                  [20-30]%                  [50-60]%
for children content
Wholesale supply of FTA TV
                                                     [20-30]%                  [20-30]%                  [50-60]%
channels for children content
Source: Annex 10 to Chapter 3 of the Form CO
5.1.1.5. Norway
(88)     Based on the market shares submitted by the Notifying Party, the Transaction gives
         rise to the following horizontally affected markets:81
Table 5: Horizontally affected markets in Norway (2020)
                                                   Value                                       Volume
                                                 Warner                                        Warner
                                Discovery                      Combined        Discovery                      Combined
                                                  Media                                         Media
Wholesale supply of
                                 [20-30]%         [0-5]%         [20-30]%            /              /              /
pay TV
Retail supply of non-
linear pay AV                        /               /               /            [0-5]%      [10-20]%         [20-30]%
services82
Source: Annex 10 to Chapter 3 of the Form CO; Annex 1 to Chapter 4 of the Form CO
81       For completeness, the Notifying Party has submitted that the market for the wholesale supply of TV channels
         may be affected since the combined market shares of the Parties in 2018 was [20-30]%. However, the combined
         market share of the Parties has not exceeded the [20-30]% threshold in 2019 and 2020. Therefore, the
         Commission excludes that the Transaction may give rise to serious doubts as to its compatibility with the internal
         market or the functioning of the EEA Agreement in relation to this market and will not assess it further.
82       The Parties are only active in the market for the retail supply of non-linear pay AV services through their SVOD
         offering. The Parties are not active in the other segments of the non-linear pay AV services, namely TVOD and
         PPV offerings. The market shares included in the table correspond to the Parties’ market shares in a hypothetical
         market for the retail supply of SVOD services and are used as proxies for the market for the retail supply of non-
         linear pay AV services. As the Parties do not offer any TVOD or PPV services, this market may ultimately not be
         affected. For completeness, the Commission will consider this market as affected in this decision. This reasoning
         has been applied throughout this decision.
                                                                  20
 ---pagebreak--- (89)     As of September 2020, WarnerMedia has decided to discontinue all its activities for
         the sale of advertising space on TV channels in Denmark, Norway and Sweden, with
         effect from the end of 2020.83 Irrespective of that, the market share of WarnerMedia
         in any segment of the Norwegian market for the sale of advertising space on TV was
         [0-5]%.84 As such, even though the market was affected in 2018 (with an increment
         of less than [0-5]% brought by WarnerMedia), the Commission excludes that the
         Transaction may give rise to serious doubts as to its compatibility with the internal
         market or the functioning of the EEA Agreement in relation to this market and will
         not assess it further.
5.1.1.6. Poland
(90)     Based on the market shares submitted by the Notifying Party, the Transaction gives
         rise to the following horizontally affected markets:
Table 6: Horizontally affected markets in Poland (2020)
                                                                      Value
                                                Discovery          WarnerMedia         Combined
Wholesale supply of TV channels                  [20-30]%            [0-5]%             [20-30]%
Wholesale supply of pay TV                       [30-40]%            [0-5]%             [30-40]%
channels
Wholesale supply of TV channels                  [20-30]%            [0-5]%             [20-30]%
for other content
Wholesale supply of pay TV                       [20-30]%            [0-5]%             [20-30]%
channels for other content
Sale of advertising space on TV                  [30-40]%            [0-5]%             [30-40]%
channels
Sale of advertising space on pay TV              [20-30]%            [0-5]%             [30-40]%
channels
Source: Annex 10 to Chapter 3 of the Form CO; Annex 4 to Chapter 6 of the Form CO
5.1.1.7. Sweden
(91)     Based on the market shares submitted by the Notifying Party, the Transaction gives
         rise to the following horizontally affected markets:
Table 7: Horizontally affected markets in Sweden (2020)
                                               Value                             Volume
                                             Warner                              Warner
                             Discovery                   Combined   Discovery               Combined
                                              Media                              Media
Wholesale supply of
                              [20-30]%        [0-5]%      [20-30]%       /          /            /
pay TV
Retail supply of non-
                                  /              /            /       [0-5]%    [10-20]%     [20-30]%
linear pay AV services
Sale of advertising
space on pay TV               [20-30]%        [0-5]%      [20-30]%       /          /            /
channels
Source: Annex 10 to Chapter 3 of the Form CO; Annex 1 to Chapter 4 of the Form CO; Annex 4 to Chapter 6
of the Form CO
83       Form CO, Chapter 6, paragraphs 35 and 41.
84       Form CO, Chapter 6, Annex 4.
                                                           21
 ---pagebreak--- (92)    As of September 2020, WarnerMedia has decided to discontinue all its activities for
        the sale of advertising space on TV channels in Denmark, Norway and Sweden, with
        effect from the end of 2020. As such, even though the Swedish market for the sale of
        advertising space on pay TV channels market was affected in 2020, it is not relevant
        for the Commission to further assess this market due to the purely historical nature
        of the overlap.85 Therefore, the Commission excludes that the Transaction may give
        rise to serious doubts as to its compatibility with the internal market or the
        functioning of the EEA Agreement in relation to this market and will not assess it
        further.
5.1.2. Non-horizontally affected markets
5.1.2.1. Vertical relationships
        (A)        Vertically affected markets arising from the relationships between the
                   markets for the production of AV content (upstream), and the markets for
                   the wholesale supply of TV channels (downstream)
(93)    The Transaction gives rise to a number of vertically affected markets due to the
        relationships between the markets for the production of AV content (upstream), and
        the markets for the wholesale supply of TV channels (downstream), in Finland,
        Germany, Italy, Poland, and Spain. These vertically affected markets are presented
        below.
        (A.i)      Finland
(94)    Based on the market shares submitted by the Notifying Party, the Transaction gives
        rise to the following vertically affected markets in Finland:
Table 8: Vertically affected markets in Finland (2020; 2019 where indicated)
                  Upstream market                                        Downstream market
Production of commissioned AV content (2019)            Wholesale supply of pay TV channels
Revenue: WarnerMedia: [5-10]% (only); Combined:         TV audience: Discovery (only): [40-50]%; Combined:
[5-10]%                                                 [40-50]%
                                                        Wholesale supply of pay TV channels for other
                                                        content
                                                        TV audience: Discovery (only): [70-80]%; Combined:
                                                        [70-80]%
Source: Annex 3 to Chapter 2 of the Form CO; and Annex 10 to Chapter 3 of the Form CO
        (A.ii)     Germany
(95)    Based on the market shares submitted by the Notifying Party, the Transaction gives
        rise to the following vertically affected markets in Germany:
85      Form CO, Chapter 6, paragraphs 35 and 41.
                                                      22
 ---pagebreak--- Table 9: Vertically affected markets in Germany (2020; 2019 where indicated)
                  Upstream market                                        Downstream market
Production of commissioned AV content (2019)            Wholesale supply of pay TV channels for children
Revenue: Discovery: [0-5]%; WarnerMedia: [0-5]%;        content
Combined: [0-5]%                                        TV audience: WarnerMedia (only): [90-100]%;
                                                        Combined: [90-100]%
Production of non-captive commissioned AV content Wholesale supply of pay TV channels for children
(2019)                                                  content
Revenue: Discovery: [0-5]%; WarnerMedia: [0-5]%;        TV audience: WarnerMedia (only): [90-100]%;
Combined: [5-10]%                                       Combined: [90-100]%
Source: Annex 3 to Chapter 2 of the Form CO; and Annex 10 to Chapter 3 of the Form CO
        (A.iii)    Italy
(96)    Based on the market shares submitted by the Notifying Party, the Transaction gives
        rise to the following vertically affected markets in Italy:
Table 10: Vertically affected markets in Italy (2020; 2019 where indicated)
                  Upstream market                                        Downstream market
Production of commissioned AV content (2019)            Wholesale supply of TV channels for children
Revenue: Discovery: [0-5]% (only); Combined: [0-        content
5]%                                                     TV audience: Discovery: [20-30]%; WarnerMedia: [20-
                                                        30]%; Combined: [50-60]%
                                                        Wholesale supply of FTA TV channels for children
                                                        content
                                                        TV audience: Discovery: [20-30]%; WarnerMedia: [20-
                                                        30]%; Combined: [50-60]%
Source: Annex 3 to Chapter 2 of the Form CO; and Annex 10 to Chapter 3 of the Form CO
        (A.iv)     Poland
(97)    Based on the market shares submitted by the Notifying Party, the Transaction gives
        rise to the following vertically affected markets in Poland:
Table 11: Vertically affected markets in Poland (2020; 2019 where indicated)
                  Upstream market                                        Downstream market
Production of commissioned AV content (2019)            Wholesale supply of pay TV channels
Revenue: Discovery (only): [0-5]%; Combined: [0-        TV audience: Discovery: [30-40]%; WarnerMedia: [0-
5]%                                                     5]%; Combined: [30-40]%
Production of non-captive commissioned AV content       Wholesale supply of pay TV channels
(2019)                                                  TV audience: Discovery: [30-40]%; WarnerMedia: [0-
Revenue: Discovery (only): [0-5]%; Combined: [0-        5]%; Combined: [30-40]%
5]%
Source: Annex 3 to Chapter 2 of the Form CO; Annex    10 to Chapter 3 of the Form CO; and Annex 1 to
Chapter 7 of the Form CO
        (A.v)      Spain
(98)    Based on the market shares submitted by the Notifying Party, the Transaction gives
        rise to the following vertically affected markets in Spain:
                                                      23
 ---pagebreak--- Table 12: Vertically affected markets in Spain (2020; 2019 where indicated)
                    Upstream market                                        Downstream market
Production of commissioned AV content (2019)             Wholesale supply of FTA TV channels for children
Revenue: Discovery: [0-5]%; WarnerMedia: [0-5]%          content
Combined: [0-5]%                                         TV audience: WarnerMedia (only): [30-40]%;
                                                         Combined: [30-40]%
Production of non-captive commissioned AV content Wholesale supply of FTA TV channels for children
(2019)                                                   content
Revenue: Discovery: [0-5]%; WarnerMedia: [0-5]%;         TV audience: WarnerMedia (only): [30-40]%;
Combined: [0-5]%                                         Combined: [30-40]%
Source: Annex 3 to Chapter 2 of the Form CO; and Annex 10 to Chapter 3 of the Form CO
          (B)       Vertically affected markets arising from the relationships between the
                    markets for the licensing of AV content (upstream), and the markets for the
                    wholesale supply of TV channels (downstream)
(99)      The Transaction gives rise to a number of vertically affected markets due to the
          relationships between the markets for the licensing of AV content (upstream), and
          the markets for the wholesale supply of TV channels (downstream), in Bulgaria,
          Finland, Germany, Italy, Poland, Romania, and Spain. These vertically affected
          markets are presented below.
          (B.i)     Bulgaria
(100) Based on the market shares submitted by the Notifying Party, the Transaction gives
          rise to the following vertically affected markets in Bulgaria:
Table 13: Vertically affected markets in Bulgaria (2020)
                    Upstream market                                        Downstream market
Licensing of broadcasting rights for Other AV            Wholesale supply of pay TV channels for children
content (i.e. non-Films, non-Sports)                     content*
Combined: <20%                                           TV audience: WarnerMedia (only): [30-40]%;
                                                         Combined: [30-40]%
Licensing of broadcasting rights for Sports AV           Wholesale supply of pay TV channels for children
content                                                  content*
Discovery (only): <30%; Combined: <30%                   TV audience: WarnerMedia (only): [30-40]%;
                                                         Combined: [30-40]%
Licensing of broadcasting rights for Children AV         Wholesale supply of pay TV channels for children
content                                                  content*
Combined: <20%                                           TV audience: WarnerMedia (only): [30-40]%;
                                                         Combined: [30-40]%
Licensing of broadcasting rights for AV content in       Wholesale supply of pay TV channels for children
the first pay exhibition window                          content*
Combined: <20%                                           TV audience: WarnerMedia (only): [30-40]%;
                                                         Combined: [30-40]%
Licensing of broadcasting rights for AV content in       Wholesale supply of pay TV channels for children
the second pay exhibition window                         content*
Combined: <20%                                           TV audience: WarnerMedia (only): [30-40]%;
                                                         Combined: [30-40]%
* The market shares for the wholesale supply of pay TV channels for children content are exactly equal to the
market shares for the wholesale supply of TV channels for children content. We keep the narrowest possible
market.
Source: Annex 10 to Chapter 3 of the Form CO; and Notifying Party’s reply to RFI 8
                                                       24
 ---pagebreak---           (B.ii)    Finland
(101) Based on the market shares submitted by the Notifying Party, the Transaction gives
          rise to the following vertically affected markets in Finland:
Table 14: Vertically affected markets in Finland (2020; 2019 where indicated)
                    Upstream market                                   Downstream market
Licensing of broadcasting rights for AV content -      Wholesale supply of pay TV channels
excluding sports and news content (2019)               TV audience: Discovery (only): [40-50]%; Combined:
Revenue: Discovery: [0-5]%; WarnerMedia: [0-5]%;       [40-50]%
Combined: [0-5]%                                       Wholesale supply of pay TV channels for other
                                                       content
                                                       TV audience: Discovery (only): [70-80]%; Combined:
                                                       [70-80]%
Licensing of broadcasting rights for Films AV          Wholesale supply of pay TV channels
content                                                TV audience: Discovery (only): [40-50]%; Combined:
WarnerMedia (only): <30%; Combined: <30%               [40-50]%
                                                       Wholesale supply of pay TV channels for other
                                                       content
                                                       TV audience: Discovery (only): [70-80]%; Combined:
                                                       [70-80]%
Licensing of broadcasting rights for US Films AV       Wholesale supply of pay TV channels
content                                                TV audience: Discovery (only): [40-50]%; Combined:
WarnerMedia (only): <30%; Combined: <30%               [40-50]%
                                                       Wholesale supply of pay TV channels for other
                                                       content
                                                       TV audience: Discovery (only): [70-80]%; Combined:
                                                       [70-80]%
Licensing of broadcasting rights for non-US Films      Wholesale supply of pay TV channels
AV content                                             TV audience: Discovery (only): [40-50]%; Combined:
WarnerMedia (only): <30%; Combined: <30%               [40-50]%
                                                       Wholesale supply of pay TV channels for other
                                                       content
                                                       TV audience: Discovery (only): [70-80]%; Combined:
                                                       [70-80]%
Licensing of broadcasting rights for Other AV          Wholesale supply of pay TV channels
content (i.e. non Films, non Sports)                   TV audience: Discovery (only): [40-50]%; Combined:
Combined: <20%                                         [40-50]%
                                                       Wholesale supply of pay TV channels for other
                                                       content
                                                       TV audience: Discovery (only): [70-80]%; Combined:
                                                       [70-80]%
Licensing of broadcasting rights for Children AV       Wholesale supply of pay TV channels
content                                                TV audience: Discovery (only): [40-50]%; Combined:
Combined: <20%                                         [40-50]%
                                                       Wholesale supply of pay TV channels for other
                                                       content
                                                       TV audience: Discovery (only): [70-80]%; Combined:
                                                       [70-80]%
Licensing of broadcasting rights for AV content in     Wholesale supply of pay TV channels
the first pay exhibition window                        TV audience: Discovery (only): [40-50]%; Combined:
Combined: <20%                                         [40-50]%
                                                       Wholesale supply of pay TV channels for other
                                                       content
                                                       TV audience: Discovery (only): [70-80]%; Combined:
                                                       [70-80]%
                                                     25
 ---pagebreak---                     Upstream market                                      Downstream market
Licensing of broadcasting rights for AV content in      Wholesale supply of pay TV channels
the second pay exhibition window                        TV audience: Discovery (only): [40-50]%; Combined:
Combined: <20%                                          [40-50]%
                                                        Wholesale supply of pay TV channels for other
                                                        content
                                                        TV audience: Discovery (only): [70-80]%; Combined:
                                                        [70-80]%
Source: Annex 3 to Chapter 2 of the Form CO; Annex 10 to Chapter 3 of the Form CO; and Notifying Party’s
reply to RFI 8
          (B.iii)   Germany
(102) Based on the market shares submitted by the Notifying Party, the Transaction gives
          rise to the following vertically affected markets in Germany:
Table 15: Vertically affected markets in Germany (2020; 2019 where indicated)
                    Upstream market                                      Downstream market
Licensing of broadcasting rights for AV content -       Wholesale supply of pay TV channels for children
excluding sports and news content (2019)                content
Revenue: Discovery: [0-5]%; WarnerMedia: [10-20]%;      TV audience: WarnerMedia (only): [90-100]%;
Combined: [10-20]%                                      Combined: [90-100]%
Licensing of broadcasting rights for Other AV           Wholesale supply of pay TV channels for children
content (i.e. non-Films, non-Sports)                    content
Combined: <20%                                          TV audience: WarnerMedia (only): [90-100]%;
                                                        Combined: [90-100]%
Licensing of broadcasting rights for Sports AV          Wholesale supply of pay TV channels for children
content                                                 content
Discovery (only): <30%; Combined: <30%                  TV audience: WarnerMedia (only): [90-100]%;
                                                        Combined: [90-100]%
Licensing of broadcasting rights for Children AV        Wholesale supply of pay TV channels for children
content                                                 content
Combined: <20%                                          TV audience: WarnerMedia (only): [90-100]%;
                                                        Combined: [90-100]%
Licensing of broadcasting rights for AV content in      Wholesale supply of pay TV channels for children
the first pay exhibition window                         content
Combined: <20%                                          TV audience: WarnerMedia (only): [90-100]%;
                                                        Combined: [90-100]%
Licensing of broadcasting rights for AV content in      Wholesale supply of pay TV channels for children
the second pay exhibition window                        content
Combined: <20%                                          TV audience: WarnerMedia (only): [90-100]%;
                                                        Combined: [90-100]%
Licensing of broadcasting rights for AV content in      Wholesale supply of FTA TV channels for sports
the FTA exhibition window                               content
Combined: <20%                                          TV audience: Discovery (only): [40-50]%; Combined:
                                                        [40-50]%
Source: Annex 3 to Chapter 2 of the Form CO; Annex 10 to Chapter 3 of the Form CO; and Notifying Party’s
reply to RFI 8
                                                     26
 ---pagebreak---         (B.iv)     Italy
(103) Based on the market shares submitted by the Notifying Party, the Transaction gives
        rise to the following vertically affected markets in Italy:
Table 16: Vertically affected markets in Italy (2020; 2019 where indicated)
                   Upstream market                                  Downstream market
Licensing of broadcasting rights for AV content -    Wholesale supply of TV channels for children
excluding sports and news content (2019)             content
Revenue: Discovery: [0-5]%; WarnerMedia: [10-20]%;   TV audience: Discovery: [20-30]%; WarnerMedia: [20-
Combined: [10-20]%                                   30]%; Combined: [50-60]%
                                                     Wholesale supply of FTA TV channels for children
                                                     content
                                                     TV audience: Discovery: [20-30]%; WarnerMedia: [20-
                                                     30]%; Combined: [50-60]%
Licensing of broadcasting rights for Films AV        Wholesale supply of TV channels for children
content                                              content
WarnerMedia (only): <30%; Combined: <30%             TV audience: Discovery: [20-30]%; WarnerMedia: [20-
                                                     30]%; Combined: [50-60]%
                                                     Wholesale supply of FTA TV channels for children
                                                     content
                                                     TV audience: Discovery: [20-30]%; WarnerMedia: [20-
                                                     30]%; Combined: [50-60]%
Licensing of broadcasting rights for US Films AV     Wholesale supply of TV channels for children
content                                              content
WarnerMedia (only): <30%; Combined: <30%             TV audience: Discovery: [20-30]%; WarnerMedia: [20-
                                                     30]%; Combined: [50-60]%
                                                     Wholesale supply of FTA TV channels for children
                                                     content
                                                     TV audience: Discovery: [20-30]%; WarnerMedia: [20-
                                                     30]%; Combined: [50-60]%
Licensing of broadcasting rights for non-US Films    Wholesale supply of TV channels for children
AV content                                           content
WarnerMedia (only): <30%; Combined: <30%             TV audience: Discovery: [20-30]%; WarnerMedia: [20-
                                                     30]%; Combined: [50-60]%
                                                     Wholesale supply of FTA TV channels for children
                                                     content
                                                     TV audience: Discovery: [20-30]%; WarnerMedia: [20-
                                                     30]%; Combined: [50-60]%
Licensing of broadcasting rights for Other AV        Wholesale supply of TV channels for children
content (i.e. non-Films, non-Sports)                 content
Combined: <20%                                       TV audience: Discovery: [20-30]%; WarnerMedia: [20-
                                                     30]%; Combined: [50-60]%
                                                     Wholesale supply of FTA TV channels for children
                                                     content
                                                     TV audience: Discovery: [20-30]%; WarnerMedia: [20-
                                                     30]%; Combined: [50-60]%
Licensing of broadcasting rights for Sports AV       Wholesale supply of TV channels for children
content                                              content
Discovery (only): <30%; Combined: <30%               TV audience: Discovery: [20-30]%; WarnerMedia: [20-
                                                     30]%; Combined: [50-60]%
                                                     Wholesale supply of FTA TV channels for children
                                                     content
                                                     TV audience: Discovery: [20-30]%; WarnerMedia: [20-
                                                     30]%; Combined: [50-60]%
                                                   27
 ---pagebreak---                     Upstream market                                      Downstream market
Licensing of broadcasting rights for Children AV        Wholesale supply of TV channels for children
content                                                 content
Combined: <20%                                          TV audience: Discovery: [20-30]%; WarnerMedia: [20-
                                                        30]%; Combined: [50-60]%
                                                        Wholesale supply of FTA TV channels for children
                                                        content
                                                        TV audience: Discovery: [20-30]%; WarnerMedia: [20-
                                                        30]%; Combined: [50-60]%
Licensing of broadcasting rights for AV content in      Wholesale supply of TV channels for children
the FTA exhibition window                               content
Combined: <20%                                          TV audience: Discovery: [20-30]%; WarnerMedia: [20-
                                                        30]%; Combined: [50-60]%
                                                        Wholesale supply of FTA TV channels for children
                                                        content
                                                        TV audience: Discovery: [20-30]%; WarnerMedia: [20-
                                                        30]%; Combined: [50-60]%
Source: Annex 3 to Chapter 2 of the Form CO; Annex 10 to Chapter 3 of the Form CO; and Notifying Party’s
reply to RFI 8
          (B.v)     Poland
(104) Based on the market shares submitted by the Notifying Party, the Transaction gives
          rise to the following vertically affected markets in Poland:
Table 17: Vertically affected markets in Poland (2020; 2019 where indicated)
                    Upstream market                                      Downstream market
Licensing of broadcasting rights for AV content -       Wholesale supply of pay TV channels
excluding sports and news content (2019)                TV audience: Discovery: [30-40]%; WarnerMedia: [0-
Revenue: Discovery: [0-5]%; WarnerMedia: [0-5]%;        5]%; Combined: [30-40]%
Combined: [0-5]%
Licensing of broadcasting rights for Films AV           Wholesale supply of pay TV channels
content                                                 TV audience: Discovery: [30-40]%; WarnerMedia: [0-
WarnerMedia (only): <30%; Combined: <30%                5]%; Combined: [30-40]%
Licensing of broadcasting rights for US Films AV        Wholesale supply of pay TV channels
content                                                 TV audience: Discovery: [30-40]%; WarnerMedia: [0-
WarnerMedia (only): <30%; Combined: <30%                5]%Combined: [30-40]%
Licensing of broadcasting rights for non-US Films       Wholesale supply of pay TV channels
AV content                                              TV audience: Discovery: [30-40]%; WarnerMedia: [0-
WarnerMedia (only): <30%; Combined: <30%                5]%; Combined: [30-40]%
Licensing of broadcasting rights for Other AV           Wholesale supply of pay TV channels
content (i.e. non-Films, non-Sports)                    TV audience: Discovery: [30-40]%; WarnerMedia: [0-
Combined: <20%                                          5]%; Combined: [30-40]%
Licensing of broadcasting rights for Sports AV          Wholesale supply of pay TV channels
content                                                 TV audience: Discovery: [30-40]%; WarnerMedia: [0-
Discovery (only): <30%; Combined: <30%                  5]%; Combined: [30-40]%
Licensing of broadcasting rights for Children AV        Wholesale supply of pay TV channels
content                                                 TV audience: Discovery: [30-40]%; WarnerMedia: [0-
Combined: <20%                                          5]%; Combined: [30-40]%
Licensing of broadcasting rights for AV content in      Wholesale supply of pay TV channels
the first pay exhibition window                         TV audience: Discovery: [30-40]%; WarnerMedia: [0-
Combined: <20%                                          5]%; Combined: [30-40]%
                                                     28
 ---pagebreak---                     Upstream market                                        Downstream market
Licensing of broadcasting rights for AV content in       Wholesale supply of pay TV channels
the second pay exhibition window                         TV audience: Discovery: [30-40]%; WarnerMedia: [0-
Combined: <20%                                           5]%; Combined: [30-40]%
Source: Annex 3 to Chapter 2 of the Form CO; Annex 10 to Chapter 3 of the Form CO; and Notifying Party’s
reply to RFI 8
          (B.vi)    Romania
(105) Based on the market shares submitted by the Notifying Party, the Transaction gives
          rise to the following vertically affected markets in Romania:
Table 18: Vertically affected markets in Romania (2020; 2019 where indicated)
                    Upstream market                                        Downstream market
Licensing of broadcasting rights for AV content -        Wholesale supply of pay TV channels for children
excluding sports and news content (2019)                 content*
Revenue: Discovery: [0-5]%; WarnerMedia: [0-5]%;         TV audience: WarnerMedia (only): [30-40]%;
Combined: [0-5]%                                         Combined: [30-40]%
Licensing of broadcasting rights for Other AV            Wholesale supply of pay TV channels for children
content (i.e. non-Films, non-Sports)                     content*
Combined: <20%                                           TV audience: WarnerMedia (only): [30-40]%;
                                                         Combined: [30-40]%
Licensing of broadcasting rights for Sports AV           Wholesale supply of pay TV channels for children
content                                                  content*
Discovery (only): <30%; Combined: <30%                   TV audience: WarnerMedia (only): [30-40]%;
                                                         Combined: [30-40]%
Licensing of broadcasting rights for Children AV         Wholesale supply of pay TV channels for children
content                                                  content*
Combined: <20%                                           TV audience: WarnerMedia (only): [30-40]%;
                                                         Combined: [30-40]%
Licensing of broadcasting rights for AV content in       Wholesale supply of pay TV channels for children
the first pay exhibition window                          content*
Combined: <20%                                           TV audience: WarnerMedia (only): [30-40]%;
                                                         Combined: [30-40]%
Licensing of broadcasting rights for AV content in       Wholesale supply of pay TV channels for children
the second pay exhibition window                         content*
Combined: <20%                                           TV audience: WarnerMedia (only): [30-40]%;
                                                         Combined: [30-40]%
* The market shares for the wholesale supply of pay TV channels for children content are exactly equal to the
market shares for the wholesale supply of TV channels for children content. We keep the narrowest possible
market.
Source: Annex 3 to Chapter 2 of the Form CO; Annex 10 to Chapter 3 of the Form CO; and Notifying Party’s
reply to RFI 8
          (B.vii)   Spain
(106) Based on the market shares submitted by the Notifying Party, the Transaction gives
          rise to the following vertically affected markets in Spain:
Table 19: Vertically affected markets in Spain (2020; 2019 where indicated)
                    Upstream market                                        Downstream market
Licensing of broadcasting rights for AV content -        Wholesale supply of FTA TV channels for children
excluding sports and news content (2019)                 content
Revenue: Discovery: [0-5]%; WarnerMedia: [5-10]%;        TV audience: WarnerMedia (only): [30-40]%;
Combined: [5-10]%                                        Combined: [30-40]%
                                                       29
 ---pagebreak---                    Upstream market                                         Downstream market
Licensing of broadcasting rights for Other AV            Wholesale supply of FTA TV channels for children
content (i.e. non-Films, non-Sports)                     content
Combined: <20%                                           TV audience: WarnerMedia (only): [30-40]%;
                                                         Combined: [30-40]%
Licensing of broadcasting rights for Sports AV           Wholesale supply of FTA TV channels for children
content                                                  content
Discovery (only): <30%; Combined: <30%                   TV audience: WarnerMedia (only): [30-40]%;
                                                         Combined: [30-40]%
Licensing of broadcasting rights for Children AV         Wholesale supply of FTA TV channels for children
content                                                  content
Combined: <20%                                           TV audience: WarnerMedia (only): [30-40]%;
                                                         Combined: [30-40]%
Licensing of broadcasting rights for AV content in       Wholesale supply of FTA TV channels for children
the FTA exhibition window                                content
Combined: <20%                                           TV audience: WarnerMedia (only): [30-40]%;
                                                         Combined: [30-40]%
Source: Annex 3 to Chapter 2 of the Form CO; Annex 10 to Chapter 3 of the Form CO; and Notifying Party’s
reply to RFI 8
         (C)       Vertically affected markets arising from the relationships between the
                   markets for the wholesale supply of TV channels (upstream), and the
                   markets for the retail supply of AV services (downstream)
(107) The Transaction gives rise to a number of vertically affected markets due to the
         relationships between the markets for the wholesale supply of TV channels
         (upstream), and the markets for the retail supply of AV services (downstream), in
         Bulgaria, Finland, Italy, Norway, Poland, Romania, Spain, and Sweden. These
         vertically affected markets are presented below.
         (C.i)     Bulgaria
(108) Based on the market shares submitted by the Notifying Party, the Transaction gives
         rise to the following vertically affected markets in Bulgaria:
Table 20: Vertically affected markets in Bulgaria (2020)
                   Upstream market                                         Downstream market
Wholesale supply of pay TV channels for children         Retail supply of pay AV services
content*                                                 Revenue: Discovery: [0-5]%; WarnerMedia: [0-5]%;
TV audience: WarnerMedia (only): [30-40]%;               Combined: [0-5]%
Combined: [30-40]%                                       Retail supply of non-linear pay AV services (SVOD)
                                                         Subscription: Discovery: [0-5]%; WarnerMedia: [0-
                                                         5]%; Combined: [5-10]%
* The market shares for the wholesale supply of pay TV channels for children content are exactly equal to the
market shares for the wholesale supply of TV channels for children content. We keep the narrowest possible
market.
Source: Annex 10 to Chapter 3 of the Form CO; and Annex 1 to Chapter 4 of the Form CO
                                                       30
 ---pagebreak---         (C.ii)      Finland
(109) Based on the market shares submitted by the Notifying Party, the Transaction gives
        rise to the following vertically affected markets in Finland:
Table 21: Vertically affected markets in Finland (2020)
                  Upstream market                                        Downstream market
Wholesale supply of pay TV channels                     Retail supply of pay AV services
TV audience: Discovery (only): [40-50]%; Combined:      Revenue: Discovery: [0-5]%; WarnerMedia: [5-10]%;
[40-50]%                                                Combined: [5-10]%
                                                        Retail supply of non-linear pay AV services (SVOD)
                                                        Subscription: Discovery: [0-5]%; WarnerMedia: [20-
                                                        30]%; Combined: [20-30]%
Wholesale supply of pay TV channels for sports          Retail supply of pay AV services
content*                                                Revenue: Discovery: [0-5]%; WarnerMedia: [5-10]%;
TV audience: Discovery (only): [40-50]%; Combined: Combined: [5-10]%
[40-50]%                                                Retail supply of non-linear pay AV services (SVOD)
                                                        Subscription: Discovery: [0-5]%; WarnerMedia: [20-
                                                        30]%; Combined: [20-30]%
Wholesale supply of pay TV channels for other           Retail supply of pay AV services
content                                                 Revenue: Discovery: [0-5]%; WarnerMedia: [5-10]%;
TV audience: Discovery (only): [70-80]%; Combined       Combined: [5-10]%
[70-80]%                                                Retail supply of non-linear pay AV services (SVOD)
                                                        Subscription: Discovery: [0-5]%; WarnerMedia: [20-
                                                        30]%; Combined: [20-30]%
* The market shares for the wholesale supply of pay TV channels for sports content are exactly equal to the
market shares for the wholesale supply of TV channels for sports content. We keep the narrowest possible
market.
Source: Annex 10 to Chapter 3 of the Form CO; and Annex 1 to Chapter 4 of the Form CO
        (C.iii)    Italy
(110) Based on the market shares submitted by the Notifying Party, the Transaction gives
        rise to the following vertically affected markets in Italy:
Table 22: Vertically affected markets in Italy (2020)
                  Upstream market                                        Downstream market
Wholesale supply of TV channels for children            Retail supply of pay AV services
content                                                 Revenue: Discovery (only): [0-5]%; Combined: [0-
TV audience: Discovery: [20-30]%; WarnerMedia: [20-     5]%
30]%; Combined: [50-60]%                                Retail supply of non-linear pay AV services (SVOD)
                                                        Subscription: Discovery (only): [0-5]%; Combined:
                                                        [0-5]%
                                                        Retail supply of non-linear FTA AV services (AVOD)
                                                        Revenue: Discovery (only): [0-5]%; Combined: [0-
                                                        5]%
Wholesale supply of FTA TV channels for children        Retail supply of pay AV services
content                                                 Revenue: Discovery (only): [0-5]%; Combined: [0-
TV audience: Discovery: [20-30]%; WarnerMedia: [20- 5]%
30]%; Combined: [50-60]%                                Retail supply of non-linear pay AV services (SVOD)
                                                        Subscription: Discovery (only): [0-5]%; Combined:
                                                        [0-5]%
                                                        Retail supply of non-linear FTA AV services (AVOD)
                                                        Revenue: Discovery (only): [0-5]%; Combined: [0-
                                                        5]%
Source: Annex 10 to Chapter 3 of the Form CO; and Annex 1 to Chapter 4 of the Form CO
                                                      31
 ---pagebreak---         (C.iv)     Norway
(111) Based on the market shares submitted by the Notifying Party, the Transaction gives
        rise to the following vertically affected markets in Norway:
Table 23: Vertically affected markets in Norway (2020)
                  Upstream market                                        Downstream market
Wholesale supply of pay TV channels for sports          Retail supply of pay AV services
content*                                                Revenue: Discovery: [0-5]%; WarnerMedia: [0-5]%;
TV audience: Discovery (only): [40-50]%; Combined:      Combined: [5-10]%
[40-50]%                                                Retail supply of non-linear pay AV services (SVOD)
                                                        Subscription: Discovery: [0-5]%; WarnerMedia: [10-
                                                        20]%; Combined: [20-30]%
* The market shares for the wholesale supply of pay TV channels for sports content are exactly equal to the
market shares for the wholesale supply of TV channels for sports content. We keep the narrowest possible
market.
Source: Annex 10 to Chapter 3 of the Form CO; and Annex 1 to Chapter 4 of the Form CO
        (C.v)      Poland
(112) Based on the market shares submitted by the Notifying Party, the Transaction gives
        rise to the following vertically affected markets in Poland:
Table 24: Vertically affected markets in Poland (2020)
                  Upstream market                                        Downstream market
Wholesale supply of TV channels for news content        Retail supply of pay AV services
TV audience: Discovery (only): [40-50]%; Combined:      Revenue: Discovery: [0-5]%; WarnerMedia: [0-5]%;
[40-50]%                                                Combined: [0-5]%
                                                        Retail supply of non-linear pay AV services (SVOD)
                                                        Subscription: Discovery: [0-5]%; WarnerMedia: [0-
                                                        5]%; Combined: [5-10]%
Wholesale supply of pay TV channels                     Retail supply of pay AV services
TV audience: Discovery: [30-40]%; WarnerMedia: [0-      Revenue: Discovery: [0-5]%; WarnerMedia: [0-5]%;
5]%; Combined: [30-40]%                                 Combined: [0-5]%
                                                        Retail supply of non-linear pay AV services (SVOD)
                                                        Subscription: Discovery: [0-5]%; WarnerMedia: [0-
                                                        5]%; Combined: [5-10]%
Wholesale supply of pay TV channels for sports          Retail supply of pay AV services
content                                                 Revenue: Discovery: [0-5]%; WarnerMedia: [0-5]%;
TV audience: Discovery (only): [30-40]%; Combined: Combined: [0-5]%
[30-40]%                                                Retail supply of non-linear pay AV services (SVOD)
                                                        Subscription: Discovery: [0-5]%; WarnerMedia: [0-
                                                        5]%; Combined: [5-10]%
Wholesale supply of pay TV channels for news            Retail supply of pay AV services
content                                                 Revenue: Discovery: [0-5]%; WarnerMedia: [0-5]%;
TV audience: Discovery (only): [70-80]%; Combined: Combined: [0-5]%
[70-80]%                                                Retail supply of non-linear pay AV services (SVOD)
                                                        Subscription: Discovery: [0-5]%; WarnerMedia: [0-
                                                        5]%; Combined: [5-10]%
Source: Annex 10 to Chapter 3 of the Form CO; and Annex 1 to Chapter 4 of the Form CO
                                                      32
 ---pagebreak---         (C.vi)     Romania
(113) Based on the market shares submitted by the Notifying Party, the Transaction gives
        rise to the following vertically affected markets Romania:
Table 25: Vertically affected markets in Romania (2020)
                   Upstream market                                         Downstream market
Wholesale supply of pay TV channels for children         Retail supply of pay AV services
content*                                                 Revenue: Discovery: [0-5]%; WarnerMedia: [0-5]%;
TV audience: WarnerMedia (only): [30-40]%;               Combined: [0-5]%
Combined: [30-40]%                                       Retail supply of non-linear pay AV services (SVOD)
                                                         Subscription: Discovery: [0-5]%; WarnerMedia: [0-
                                                         5]%; Combined: [5-10]%
* The market shares for the wholesale supply of pay TV channels for children content are exactly equal to the
market shares for the wholesale supply of TV channels for children content. We keep the narrowest possible
market.
Source: Annex 10 to Chapter 3 of the Form CO; and Annex 1 to Chapter 4 of the Form CO
        (C.vii) Spain
(114) Based on the market shares submitted by the Notifying Party, the Transaction gives
        rise to the following vertically affected markets in Spain:
Table 26: Vertically affected markets in Spain (2020)
                   Upstream market                                         Downstream market
Wholesale supply of FTA TV channels for children         Retail supply of pay AV services
content                                                  Revenue: Discovery: [0-5]%; WarnerMedia: [0-5]%;
TV audience: WarnerMedia (only): [30-40]%;               Combined: [0-5]%
Combined: [30-40]%                                       Retail supply of non-linear pay AV services (SVOD)
                                                         Revenue: Discovery: [0-5]%; WarnerMedia: [5-10]%;
                                                         Combined: [5-10]%
                                                         Retail supply of non-linear FTA AV services (AVOD)
                                                         Revenue: Discovery (only): [0-5]%; Combined: [0-
                                                         5]%
Wholesale supply of pay TV channels for sports           Retail supply of pay AV services
content                                                  Revenue: Discovery: [0-5]%; WarnerMedia: [0-5]%;
TV audience: Discovery (only): [40-50]%; Combined: Combined: [0-5]%
[40-50]%                                                 Retail supply of non-linear pay AV services (SVOD)
                                                         Revenue: Discovery: [0-5]%; WarnerMedia: [5-10]%;
                                                         Combined: [5-10]%
Source: Annex 10 to Chapter 3 of the Form CO; and Annex 1 to Chapter 4 of the Form CO
        (C.viii) Sweden
(115) Based on the market shares submitted by the Notifying Party, the Transaction gives
        rise to the following vertically affected markets in Sweden:
                                                       33
 ---pagebreak--- Table 27: Vertically affected markets in Sweden (2020)
                  Upstream market                                        Downstream market
Wholesale supply of TV channels for news content        Retail supply of pay AV services
TV audience: WarnerMedia (only): [40-50]%;              Revenue: Discovery: [0-5]%; WarnerMedia: [5-10]%;
Combined: [40-50]%                                      Combined: [5-10]%
                                                        Retail supply of non-linear pay AV services (SVOD)
                                                        Subscription: Discovery: [0-5]%; WarnerMedia: [10-
                                                        20]%; Combined: [20-30]%
                                                        Retail supply of non-linear FTA AV services (AVOD)
                                                        Revenue: Discovery (only): [0-5]%; Combined: [0-
                                                        5]%
Wholesale supply of pay TV channels for news            Retail supply of pay AV services
content                                                 Revenue: Discovery: [0-5]%; WarnerMedia: [5-10]%;
TV audience: WarnerMedia (only): [90-100]%;             Combined: [5-10]%
Combined: [90-100]%                                     Retail supply of non-linear pay AV services (SVOD)
                                                        Subscription: Discovery: [0-5]%; WarnerMedia: [10-
                                                        20]%; Combined: [20-30]%
Source: Annex 10 to Chapter 3 of the Form CO; and Annex 1 to Chapter 4 of the Form CO
5.1.2.2. Affected markets arising from conglomerate relationships between the possible
          markets for the wholesale supply of TV channles for news, sports, children and
          other content
(116) Based on the market shares provided by the Notifying Party, the Transaction gives
        rise to various conglomerate relationships between the Parties on a number of
        affected possible markets at the level of the wholesale supply of TV channels for
        news, sports, children and other content in several Member States.
        (A)       Belgium
(117) In Belgium, the conglomerate relationships are the ones included in the following
        table that indicates that the Parties have shares over 30% in the following possible
        markets: Discovery with [50-60]% in the possible market for the wholesale supply of
        pay TV channels for sports content.
Table 28: Conglomerate affected markets in Belgium (2020)
                                                              Audiences Shares
     Affected possible markets
                                            Discovery           Warner Media            Combined
Wholesale supply of pay TV
                                            [50-60]%                   /                 [50-60]%
channels for sports content
Wholesale supply of pay TV
                                                /                 [10-20]%               [10-20]%
channels for news content
Source: Annex 10 to Chapter 3 of the Form CO; and Annex 1 to Chapter 4 of the Form CO
        (B)       Bulgaria
(118) In Bulgaria, the conglomerate relationships are the ones included in the following
        table that indicates that the Parties have shares over 30% in the following possible
        market: WarnerMedia with [30-40]% in the possible market for the wholesale supply
        of pay TV channels for children content.
                                                      34
 ---pagebreak--- Table 29: Conglomerate affected markets in Bulgaria (2020)
                                                              Audiences Shares
     Affected possible markets
                                            Discovery          Warner Media           Combined
Wholesale supply of pay TV
                                                 /                [30-40]%             [30-40]%
channels for children content
Wholesale supply of pay TV
                                            [10-20]%                   /               [10-20]%
channels for other content
Wholesale supply of pay TV
                                            [20-30]%                   /               [20-30]%
channels for sports content
Source: Annex 10 to Chapter 3 of the Form CO; and Annex 1 to Chapter 4 of the Form CO
        (C)       France
(119) In France, the conglomerate relationships are the ones included in the following table
        that indicates that the Parties have shares over 30% in the following possible market:
        Discovery with [30-40]% in the possible market for the wholesale supply of pay TV
        channels for sports content.
Table 30: Conglomerate affected markets in France (2020)
                                                              Audiences Shares
     Affected possible markets
                                            Discovery          Warner Media           Combined
Wholesale supply of pay TV
                                            [30-40]%                   /               [30-40]%
channels for sports content
Wholesale supply of pay TV
                                                 /                [20-30]%             [20-30]%
channels for children content
Wholesale supply of pay TV
                                             [5-10]%               [0-5]%              [10-20]%
channels for other content
Source: Annex 10 to Chapter 3 of the Form CO; and Annex 1 to Chapter 4 of the Form CO
        (D)       Germany
(120) In Germany, the conglomerate relationships are the ones included in the following
        table that indicates that the Parties have shares over 30% in the following possible
        markets: (i) WarnerMedia with [90-100]% of the possible market for the wholesale
        supply of pay TV channels for children content, and (ii) Discovery with [40-50]% in
        the possible market for the wholesale supply of FTA TV channels for sports content.
Table 31: Conglomerate affected markets in Germany (2020)
                                                              Audiences Shares
     Affected possible markets
                                            Discovery          Warner Media           Combined
Wholesale supply of pay TV
                                                 /               [90-100]%            [90-100]%
channels for children content
Wholesale supply of FTA TV
                                            [40-50]%                   /               [40-50]%
channels for sports content
Wholesale supply of pay TV
                                              [0-5]%              [20-30]%             [20-30]%
channels for other content
Wholesale supply of pay TV
                                              [0-5]%                   /                [0-5]%
channels for other content
Source: Annex 10 to Chapter 3 of the Form CO; and Annex 1 to Chapter 4 of the Form CO
                                                      35
 ---pagebreak---         (E)       Italy
(121) In Italy, the conglomerate relationships are the ones included in the following table
        that indicates that the Parties have shares over 30% in the following possible market:
        the merged entity with [50-60]% in the possible market for the wholesale supply of
        linear FTA TV channels for children content.
Table 32: Conglomerate affected markets in Italy (2020)
                                                              Audiences Shares
     Affected possible markets
                                            Discovery          Warner Media           Combined
Wholesale supply of linear FTA TV
                                            [20-30]%              [20-30]%            [50-60]%
channels for children content
Wholesale supply of pay TV
                                                 /                [20-30]%            [20-30]%
channels for children content
Wholesale supply of FTA TV
                                             [5-10]%                   /               [5-10]%
channels for other content
Wholesale supply of pay TV
                                             [5-10]%                   /               [5-10]%
channels for sports content
Wholesale supply of pay TV
                                              [0-5]%                   /                [0-5]%
channels for other content
Source: Annex 10 to Chapter 3 of the Form CO; and Annex 1 to Chapter 4 of the Form CO
        (F)       Norway
(122) In Norway, the conglomerate relationships are the ones included in the following
        table that indicates that the Parties have shares over 30% in the following possible
        market: Discovery with [40-50]% in the possible market for the wholesale supply of
        pay TV channels for sports content.
Table 33: Conglomerate affected markets in Norway (2020)
                                                              Audiences Shares
     Affected possible markets
                                            Discovery          Warner Media           Combined
Wholesale supply of pay TV
                                            [40-50]%                   /              [40-50]%
channels for sports content
Wholesale supply of pay TV
                                                 /                [10-20]%            [10-20]%
channels for children content
Source: Annex 10 to Chapter 3 of the Form CO; and Annex 1 to Chapter 4 of the Form CO
        (G)       Poland
(123) In Poland, the conglomerate relationships are the ones included in the following
        table that indicates that the Parties have shares over 30% in the following possible
        markets: (i) Discovery with [70-80]% in the possible market for the wholesale
        supply of pay TV channels for news content, and (ii) Discovery with [30-40]% in the
        possible market for the wholesale supply of pay TV channels for sports content.
Table 34: Conglomerate affected markets in Poland (2020)
                                                              Audiences Shares
     Affected possible markets
                                            Discovery          Warner Media           Combined
Wholesale supply of pay TV
                                                 /                [70-80]%            [70-80]%
channels for news content
                                                      36
 ---pagebreak---                                                               Audiences Shares
     Affected possible markets
                                            Discovery          Warner Media           Combined
Wholesale supply of pay TV
                                            [30-40]%                   /              [30-40]%
channels for sports content
Wholesale supply of FTA TV
                                            [20-30]%                   /              [20-30]%
channels for other content
Wholesale supply of pay TV
                                            [20-30]%               [0-5]%             [20-30]%
channels for other content
Wholesale supply of pay TV
                                                /                 [10-20]%            [10-20]%
channels for children content
Source: Annex 10 to Chapter 3 of the Form CO; and Annex 1 to Chapter 4 of the Form CO
        (H)       Romania
(124) In Romania, the conglomerate relationships are the ones included in the following
        table that indicates that the Parties have shares over 30% in the following possible
        market: WarnerMedia with [30-40]% in the possible market for the wholesale supply
        of pay TV channels for children content.
Table 35: Conglomerate affected markets in Romania (2020)
                                                              Audiences Shares
     Affected possible markets
                                            Discovery          Warner Media           Combined
Wholesale supply of pay TV
                                                /                 [30-40]%            [30-40]%
channels for children content
Wholesale supply of pay TV
                                            [10-20]%                   /              [10-20]%
channels for sports content
Wholesale supply of pay TV
                                             [0-5]%                [0-5]%              [0-5]%
channels for other content
Source: Annex 10 to Chapter 3 of the Form CO; and Annex 1 to Chapter 4 of the Form CO
        (I)       Spain
(125) In Spain, the conglomerate relationships are the ones included in the following table
        that indicates that the Parties have shares over 30% in the following possible
        markets: (i) Discovery with [40-50]% in the possible market for the wholesale
        supply of pay TV channels for sports content, and (ii) WarnerMedia with [30-40]%
        in the possible market for the wholesale supply of FTA TV channels for children
        content.
(126)
Table 36: Conglomerate affected markets in Spain (2020)
                                                              Audiences Shares
     Affected possible markets
                                            Discovery          Warner Media           Combined
Wholesale supply of pay TV
                                            [40-50]%                   /              [40-50]%
channels for sports content
Wholesale supply of FTA TV
                                                /                 [30-40]%            [30-40]%
channels for children content
Wholesale supply of pay TV
                                             [0-5]%               [10-20]%            [10-20]%
channels for other content
Source: Annex 10 to Chapter 3 of the Form CO; and Annex 1 to Chapter 4 of the Form CO
                                                      37
 ---pagebreak--- 5.1.3. Conclusion
(127) Each of these potential effects is discussed in turn in the following sections. After
       setting out the analytical framework (section [5.2]) and the market shares in the
       relevant markets and possible sub-segments (section [5.3]), the Commission will
       first assess the potential horizontal non-coordinated effects stemming from the
       Transaction (section [5.4]). Then the Commission will assess the potential vertical
       effects of the Transaction (section [5.5]). Finally, the Commission will assess the
       potential conglomerate effects stemming from the Transaction (section [5.6]).
5.2.   Analytical Framework
(128) Under Article 2(2) and (3) of the Merger Regulation, the Commission must assess
       whether a proposed concentration would significantly impede effective competition
       in the internal market or in a substantial part of it, in particular through the creation
       or strengthening of a dominant position.
(129) In this respect, a merger may entail horizontal and/or non-horizontal (namely,
       vertical or conglomerate) effects. Horizontal effects are those deriving from a
       concentration where the undertakings concerned are actual or potential competitors
       of each other in one or more of the relevant markets concerned. Vertical effects are
       those deriving from a concentration where the undertakings concerned are active on
       different or multiple levels of the supply chain. Conglomerate effects are those
       deriving from a concentration where the undertakings concerned are in a relationship
       which is neither horizontal nor vertical. A concentration may involve all three types
       of effects. In such a case, the Commission will appraise horizontal and non-
       horizontal effects in accordance with the guidance set out in the relevant notices, that
       is to say the Horizontal Merger Guidelines86 and the Non-Horizontal Merger
       Guidelines.87
(130) In assessing the competitive effects of a merger, the Commission compares the
       competitive conditions that would result from the notified merger with the
       conditions that would have prevailed without the merger. In most cases the
       competitive conditions existing at the time of the merger constitute the relevant
       comparison for evaluating the effects of a merger. However, in some circumstances,
       the Commission may take into account future changes to the market that can
       reasonably be predicted.88
5.3.   Market shares89
(131) According to the Horizontal Merger Guidelines and the Non-Horizontal Merger
       Guidelines,90 in the assessment of the effects of a merger, market shares constitute a
86     Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of
       concentrations between undertakings ("Horizontal Merger Guidelines"), OJ C31, 5.2.2004, p. 5.
87     Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of
       concentrations between undertakings ("Non-Horizontal Merger Guidelines"), OJ C 265, 190.2008.
88     Horizontal Merger Guidelines, paragraph 9; Non-Horizontal Merger Guidelines, paragraph 20.
89     In this section, the calculation of market shares in the market for the wholesale supply of TV channels in all
       countries is made on the basis of an average of quarterly market shares provided by the Notifying Party.
       Therefore, due to the rounding, the sum of market shares presented in the “Combined” or “Total market” row
       may insignificantly differ from an arithmetic sum.
90     Horizontal Merger Guidelines, paragraph 14; Non-Horizontal Merger Guidelines, paragraph 24.
                                                              38
 ---pagebreak---         useful first indication of the structure of the markets at stake and of the competitive
        importance of the relevant market players.
(132) In the following recitals, the Commission presents the market shares of the Parties to
        the Transaction and their competitors, in all horizontally affected markets where the
        Parties have combined market shares above 20%, and all non-horizontally affected
        markets where the Parties have an individual or combined market share above 30%.
5.3.1. Belgium
5.3.1.1. Wholesale supply of pay TV channels for sports content
(133) The following table presents the market shares (by volume) on the market for the
        wholesale supply of pay TV channels for sports content in Belgium.
Table 37: Market shares on the market for the wholesale supply of pay TV channels
for sports content in Belgium (2018-2020)
                                          2018                  2019               2020
                              Market shares in volume (share of audience)
           Discovery                    [40-50]%              [40-50]%           [50-60]%
          Combined                     [40-50]%              [40-50]%           [50-60]%
            Telenet                     [40-50]%              [50-60]%           [30-40]%
             Other                       [0-5]%                [0-5]%            [10-20]%
          Total market                    100%                  100%               100%
Source: Annex 10 to Chapter 3 of the Form CO
(134) The Belgian market for the wholesale supply of pay TV channels for sports content
        is split between Discovery and Telenet with one or the other leading depending on
        the events being shown. Eleven is the main other competitor. Since WarnerMedia is
        not active in the market, the Transaction will not affect the current market structure.
5.3.2. Bulgaria
(135) Wholesale supply of pay TV channels for children content
(136) The following table presents the market shares (by volume) on the market for the
        wholesale supply of pay TV channels for children content in Bulgaria.
Table 38: Market shares on the market for the wholesale supply of pay TV channels
for children content in Bulgaria (2018-2020)
                                          2018                  2019               2020
                              Market shares in volume (share of audience)
         WarnerMedia                    [30-40]%              [30-40]%           [30-40]%
          Combined                     [30-40]%              [30-40]%           [30-40]%
          ViacomCBS                     [30-40]%              [40-50]%           [50-60]%
            Disney                      [20-30]%              [10-20]%           [10-20]%
             Other                       [0-5]%                [0-5]%                /
          Total market                    100%                  100%               100%
Source: Annex 10 to Chapter 3 of the Form CO
(137) ViacomCBS is the largest player on the Bulgarian market for the wholesale supply
        of pay TV channels for children content with market shares above 50% in 2020.
        WarnerMedia is the second largest competitor with around [30-40]% market share in
        the same year. Disney is the third largest competitor, however its market share has
        been decreasing and went from [20-30]% in 2018 to [10-20]% in 2020. Following
                                                     39
 ---pagebreak---         this decrease, ViacomCBS’s market share increased by almost [10-20] percentage
        points between 2018 and 2020, while WarnerMedia’s market shares increased by
        only [0-5] percentage points between 2018 and 2020. Since Discovery is not active
        in the market, the Transaction will not affect the current market structure.
5.3.3. Finland
5.3.3.1. Retail supply of non-linear pay AV services
(138) The following table presents the market shares (both by value and volume) on the
        market for the retail supply of non-linear pay AV services in Finland.
Table 39: Market shares on the market for the retail supply of non-linear pay AV
services in Finland (2018-2020)
                                           2018                    2019             2020
                                      Market shares in value (EUR)
           Discovery                      [0-5]%                  [0-5]%           [0-5]%
         WarnerMedia                    [20-30]%                [20-30]%         [20-30]%
          Combined                     [20-30]%                [20-30]%         [20-30]%
            Netflix                     [40-50]%                [30-40]%         [30-40]%
            Viaplay                     [10-20]%                [20-30]%         [20-30]%
            Ruutu+                       [5-10]%                 [5-10]%          [5-10]%
            C More                        [0-5]%                  [0-5]%          [5-10]%
     Amazon Prime Video                   [0-5]%                  [0-5]%           [0-5]%
            Disney+                           /                      /             [0-5]%
             Others                       [0-5]%                  [0-5]%           [0-5]%
         Total market                      100%                    100%             100%
                           Market shares in volume (number of subscribers)
           Discovery                      [0-5]%                  [0-5]%           [0-5]%
         WarnerMedia                    [20-30]%                [20-30]%         [20-30]%
          Combined                     [20-30]%                [20-30]%         [20-30]%
             Netflix                    [40-50]%                [40-50]%         [30-40]%
            Viaplay                      [5-10]%                [10-20]%         [10-20]%
            Ruutu+                      [10-20]%                [10-20]%          [5-10]%
            Disney+                          /                       /            [5-10]%
          Apple TV+                          /                    [0-5]%           [0-5]%
     Amazon Prime Video                   [0-5]%                  [0-5]%           [0-5]%
            C More                        [0-5]%                  [0-5]%           [0-5]%
         Canal Digital                    [0-5]%                  [0-5]%           [0-5]%
             DAZN                            /                       /             [0-5]%
             Others                       [0-5]%                  [0-5]%           [0-5]%
          Total market                     100%                    100%             100%
Source: Annex 1 to Chapter 4 of the Form CO
(139) Prior to the Transaction, WarnerMedia represents the second largest market player,
        with a market share of approximately [20-30]% by value and [20-30]% by volume.
        Discovery is a very small market participant, with market shares below [0-5]% both
        by value and by volume. The largest retail supply of non-linear pay TV services is
        Netflix, with market shares consistently above [30-40]%, both by value and volume.
        Other relevant market participants with market shares exceeding 5% include Viaplay
        and Ruutu+.
5.3.3.2. Wholesale supply of pay TV channels
(140) The following table presents the market shares (by volume) on the market for the
        wholesale supply of pay TV channels in Finland.
                                                       40
 ---pagebreak--- Table 40: Market shares on the market for the wholesale supply of pay TV channels in
Finland (2018-2020)
                                         2018                   2019               2020
                              Market shares in volume (share of audience)
           Discovery                   [90-100]%             [90-100]%          [40-50]%
          Combined                    [90-100]%             [90-100]%          [40-50]%
            Bonnier                         /                  [0-5]%             [0-5]%
             BBC                            /                  [0-5]%             [0-5]%
            Disney                          /                  [0-5]%            [5-10]%
       Government (DE)                      /                  [0-5]%             [0-5]%
             Other                          /                  [0-5]%           [40-50]%
          Total market                   100%                   100%               100%
Source: Annex 10 to Chapter 3 of the Form CO
(141) Discovery is the largest player on the Finnish market for the wholesale supply of pay
        TV channels, with pay TV channels such as Eurosport and Discovery Channel. The
        identified alternative suppliers in the market (listed as ‘Other’) do not have market
        shares exceeding 5%. Since WarnerMedia is not active in the market, the
        Transaction will not affect the current market structure.
5.3.3.3. Wholesale supply of pay TV channels for sports content
(142) The following table presents the market shares (by volume) on the market for the
        wholesale supply of pay TV channels for sports content in Finland.
Table 41: Market shares on the market for the wholesale supply of pay TV channels
for sports content in Finland (2018-2020)
                                         2018                   2019               2020
                              Market shares in volume (share of audience)
           Discovery                   [90-100]%             [90-100]%          [40-50]%
          Combined                    [90-100]%             [90-100]%          [40-50]%
            Bonnier                         /                  [0-5]%             [0-5]%
             Other                          /                  [0-5]%           [50-60]%
          Total market                   100%                   100%               100%
Source: Annex 10 to Chapter 3 of the Form CO
(143) In the Finnish market for the wholesale supply of pay TV channels for sports
        content, the number one player is Discovery, which is active through its pay TV
        channel Eurosport. The identified alternative supplier in the market (listed as
        ‘Other’) is Bonnier, which has a market share below [0-5]% in 2020. Since
        WarnerMedia is not active in the market, the Transaction will not affect the current
        market structure.
5.3.3.4. Wholesale supply of pay TV channels for other content
(144) The following table presents the market shares (by volume) on the market for the
        wholesale supply of pay TV channels for other content in Finland.
                                                     41
 ---pagebreak--- Table 42: Market shares on the market for the wholesale supply of pay TV channels
for other content in Finland (2018-2020)
                                          2018                  2019               2020
                              Market shares in volume (share of audience)
           Discovery                   [90-100]%             [90-100]%           [70-80]%
          Combined                    [90-100]%             [90-100]%           [70-80]%
             BBC                             /                 [0-5]%            [20-30]%
             Other                           /                 [0-5]%                /
          Total market                    100%                  100%               100%
Source: Annex 10 to Chapter 3 of the Form CO
(145) The number one player on the Finnish market for the wholesale supply of pay TV
        channels for other content is Discovery, which is active through its pay TV channel
        Discovery Channel. The identified alternative supplier in the market (not identified
        as ‘Other’) is BBC, which has a market share around [20-30]% in 2020. BBC
        reached [0-5]% market share when entering the market in 2019, and gained almost
        [20-30] percentage points between 2019 and 2020, at the expense of Discovery.
        Since WarnerMedia is not active in the market, the Transaction will not affect the
        current market structure.
5.3.4. France
5.3.4.1. Wholesale supply of pay TV channels for sports content
(146) The following table presents the market shares (by volume) on the market for the
        wholesale supply of pay TV channels for sports content in France.
Table 43: Market shares on the market for the wholesale supply of pay TV channels
for sports content in France (2018-2020)
                                          2018                  2019               2020
                              Market shares in volume (share of audience)
           Discovery                    [20-30]%              [20-30]%           [30-40]%
          Combined                     [20-30]%              [20-30]%           [30-40]%
             beIN                       [40-50]%              [20-30]%           [20-30]%
            Canal+                      [20-30]%              [20-30]%           [20-30]%
           NextRadio                     [5-10]%              [10-20]%           [10-20]%
             Other                       [5-10]%               [0-5]%             [0-5]%
          Total market                    100%                  100%               100%
Source: Annex 10 to Chapter 3 of the Form CO
(147) The French market for the wholesale supply of pay TV channels for sports content is
        split between four players with market shares that can fluctuate signigicantly over
        time depending on the content rights each one of them are holding from one season
        to the next. In that context, NextRadio is the up and coming player while beIN has
        been losing half of its market shares over the last three years. Since WarnerMedia is
        not active in the market, the Transaction will not affect the current market structure.
5.3.5. Germany
5.3.5.1. Wholeasle supply of pay TV channels
(148) The following table presents the market shares (by volume) on the market for the
        wholesale supply of pay TV channels in Germany.
                                                     42
 ---pagebreak--- Table 44: Market shares on the market for the wholesale supply of pay TV channels in
Germany (2018-2020)
                                           2018                  2019           2020
                              Market shares in volume (share of audience)
           Discovery                      [0-5]%                [0-5]%         [0-5]%
         WarnerMedia                    [10-20]%              [10-20]%       [10-20]%
          Combined                     [10-20]%              [10-20]%       [20-30]%
           Sky Group                    [20-30]%              [30-40]%       [20-30]%
            NBCU                        [10-20]%              [10-20]%       [10-20]%
            Disney                      [10-20]%              [10-20]%       [10-20]%
          RTL Group                      [5-10]%               [5-10]%        [5-10]%
             Hearst                       [0-5]%                [0-5]%         [0-5]%
             Sony                         [0-5]%                   /              /
             Other                       [5-10]%               [5-10]%        [5-10]%
          Total market                     100%                  100%           100%
Source: Annex 10 to Chapter 3 of the Form CO
(149) On the German market for the wholesale supply of pay TV channels the largest
        player is Sky Group, with around [30-40]% market shares. Depending on the year,
        the second largest market participant used to be NBCU but since 2020, it became
        WarnerMedia. Discovery has a very limited market shares and ranks sixth in the
        market for the wholesale supply of pay TV channels in Germany. As a result of the
        Transaction, the merged entity would be the second market player after Sky Group.
5.3.5.2. Wholesale supply of pay TV channels for sports content
(150) The following table presents the market shares (by volume) on the market for the
        wholesale supply of FTA TV channels for sports content in Germany.
Table 45: Market shares on the market for the wholesale supply of FTA TV channels
for sports content in Germany (2018-2020)
                                           2018                  2019           2020
                              Market shares in volume (share of audience)
           Discovery                    [40-50]%              [40-50]%       [40-50]%
          Combined                     [40-50]%              [40-50]%       [40-50]%
       Constantin Medien                [50-60]%              [50-60]%       [50-60]%
          Total market                     100%                  100%           100%
Source: Annex 10 to Chapter 3 of the Form CO
(151) The German market for the wholesale supply of FTA TV channels for sports content
        is split between Constantin Medien, the market leader, and Discovery. Since
        WarnerMedia is not active in the market, the Transaction will not affect the current
        market structure.
5.3.5.3. Wholesale supply of pay TV channels for children content
(152) The following table presents the market shares (by volume) on the market for the
        wholesale supply of pay TV channels for children content in Germany.
                                                     43
 ---pagebreak--- Table 46: Market shares on the market for the wholesale supply of pay TV channels
for children content in Germany (2018-2020)
                                           2018                  2019            2020
                              Market shares in volume (share of audience)
         WarnerMedia                   [90-100]%             [90-100]%       [90-100]%
          Combined                    [90-100]%             [90-100]%       [90-100]%
          Total market                     100%                  100%            100%
Source: Annex 10 to Chapter 3 of the Form CO
(153) WarnerMedia is the largest player on the German market for the wholesale supply of
        pay TV channels for children content, and is active on the market with the pay TV
        channels Boomerang and Cartoon Network, which hold [90-100]% of the market
        with no alternative supplier. Since Discovery is not active in the market, the
        Transaction will not affect the current market structure.
5.3.5.4. Wholeasle supply of pay TV channels for other content
(154) The following table presents the market shares (by volume) on the market for the
        wholesale supply of pay TV channels for other content in Germany.
Table 47: Market shares on the market for the wholesale supply of pay TV channels
for other content in Germany (2018-2020)
                                           2018                  2019            2020
                              Market shares in volume (share of audience)
           Discovery                      [0-5]%                [0-5]%          [0-5]%
         WarnerMedia                    [10-20]%              [10-20]%        [10-20]%
          Combined                     [10-20]%              [10-20]%        [20-30]%
            NBCU                        [30-40]%              [30-40]%        [30-40]%
            Disney                      [20-30]%              [20-30]%        [20-30]%
          RTL Group                     [10-20]%               [5-10]%         [5-10]%
            Hearst                       [5-10]%               [5-10]%         [5-10]%
             Sony                         [0-5]%                   /               /
             Other                       [5-10]%               [5-10]%          [0-5]%
          Total market                     100%                  100%            100%
Source: Annex 10 to Chapter 3 of the Form CO
(155) The largest player on the German market for the wholesale supply of pay TV
        channels for other content is NBCU, with more than 30% market shares. The second
        largest market participant is Disney. Discovery has a very limited market shares and
        ranks sixth in the market for the wholesale supply of pay TV channels for other
        content in Germany. As a result of the Transaction, the merged entity would be the
        third market player after NBCU and Disney.
5.3.6. Italy
5.3.6.1. Wholesale supply of TV channels for children content
(156) The following table presents the market shares (by volume) on the market for the
        wholesale supply of TV channels for children content in Italy.
                                                     44
 ---pagebreak--- Table 48: Market shares on the market for the wholesale supply of TV channels for
children content in Italy (2018-2020)
                                          2018                  2019           2020
                              Market shares in volume (share of audience)
           Discovery                    [20-30]%              [20-30]%       [20-30]%
         WarnerMedia                    [20-30]%              [20-30]%       [20-30]%
          Combined                     [40-50]%              [50-60]%       [50-60]%
              RAI                       [20-30]%              [20-30]%       [20-30]%
          ViacomCBS                     [10-20]%              [10-20]%       [10-20]%
          De Agostini                    [0-5]%                [0-5]%         [0-5]%
            Disney                       [0-5]%                [0-5]%            /
             Sony                        [0-5]%                [0-5]%            /
          Total market                    100%                  100%           100%
Source: Annex 10 to Chapter 3 of the Form CO
(157) In 2020, WarnerMedia was the market leader in the Italian market for the wholesale
        supply of TV channels for children content, closely followed by RAI and Discovery.
        The rest of the market is divided between ViacomCBS and De Agostini. The merged
        entity would become the market leader with a market share exceeding 50%.
5.3.6.2. Wholesale supply of FTA TV channels for children content
(158) The following table presents the market shares (by volume) on the market for the
        wholesale supply of FTA TV channels for children content in Italy.
Table 49: Market shares on the market for the wholesale supply of FTA TV channels
for children content in Italy (2018-2020)
                                          2018                  2019           2020
                              Market shares in volume (share of audience)
           Discovery                    [20-30]%              [20-30]%       [20-30]%
         WarnerMedia                    [20-30]%              [20-30]%       [20-30]%
          Combined                     [50-60]%              [50-60]%       [50-60]%
              RAI                       [30-40]%              [30-40]%       [20-30]%
          ViacomCBS                     [10-20]%              [10-20]%       [10-20]%
             Sony                        [0-5]%                [0-5]%            /
          Total market                    100%                  100%           100%
Source: Annex 10 to Chapter 3 of the Form CO
(159) In 2020, RAI was the market leader in the Italian market for the wholesale supply of
        FTA TV channels for children content, closely followed by WarnerMedia and
        Discovery. Since Sony is no longer active on the market for the wholesale supply of
        FTA TV channels for children content in Italy, the only remaining market participant
        is ViacomCBS with [10-20]% market shares. The merged entity would become the
        market leader with a market share exceeding 50%.
5.3.7. Norway
5.3.7.1. Wholesale supply of pay TV channels
(160) The following table presents the market shares (by volume) on the market for the
        wholesale supply of pay TV channels in Norway.
                                                     45
 ---pagebreak--- Table 50: Market shares on the market for the wholesale supply of pay TV channels in
Norway (2018-2020)
                                          2018                  2019               2020
                              Market shares in volume (share of audience)
           Discovery                    [20-30]%              [20-30]%           [20-30]%
         WarnerMedia                     [0-5]%                [0-5]%             [0-5]%
          Combined                     [20-30]%              [20-30]%           [20-30]%
            Egmont                      [50-60]%              [50-60]%           [40-50]%
             NENT                       [10-20]%              [10-20]%           [10-20]%
            Disney                       [0-5]%                [0-5]%             [0-5]%
             BBC                         [0-5]%                [0-5]%             [0-5]%
          ViacomCBS                      [0-5]%                [0-5]%             [0-5]%
             Hearst                      [0-5]%                [0-5]%             [0-5]%
            Bonnier                      [0-5]%                [0-5]%             [0-5]%
             Other                       [0-5]%                [0-5]%             [0-5]%
          Total market                    100%                  100%               100%
Source: Annex 10 to Chapter 3 of the Form CO
(161) The market leader in the Norwegian market for the wholesale supply of pay TV
        channels is Egmont with approximately [50-60]% market shares. Discovery is the
        second market player, significantly behind Egmont. WarnerMedia has a very limited
        market presence as the sixth player on the market. The merged entity would be the
        second market participant, significantly behind Egmont.
5.3.7.2. Wholesale supply of pay TV channels for sports content
(162) The following table presents the market shares (by volume) on the market for the
        wholesale supply of pay TV channels for sports content in Norway.
Table 51: Market shares on the market for the wholesale supply of pay TV channels
for sports content in Norway (2018-2020)
                                          2018                  2019               2020
                              Market shares in volume (share of audience)
           Discovery                    [40-50]%              [40-50]%           [40-50]%
          Combined                     [40-50]%              [40-50]%           [40-50]%
            Egmont                      [30-40]%              [30-40]%           [30-40]%
             NENT                       [10-20]%              [10-20]%           [10-20]%
             AMC                         [0-5]%                [0-5]%             [0-5]%
             Other                       [0-5]%                [0-5]%             [0-5]%
          Total market                    100%                  100%               100%
Source: Annex 10 to Chapter 3 of the Form CO
(163) Discovery is the largest player on the Norwegian market for the wholesale supply of
        pay TV channels for sports content with [40-50]% market share. The number two
        actor in the market is Egmont with around [30-40]% market shares, followed by
        NENT with around [10-20]% market share in 2020. Since WarnerMedia is not active
        in the market, the Transaction will not affect the current market structure.
5.3.7.3. Retail supply of non-linear pay AV services
(164) The following table presents the market shares (both by value and ) on the market for
        the retail supply of non-linear pay AV services in Norway.
                                                     46
 ---pagebreak--- Table 52: Market shares on the market for the retail supply of non-linear pay AV
services in Norway (2018-2020)
                                          2018                    2019           2020
                                      Market shares in value (EUR)
           Discovery                     [0-5]%                  [0-5]%         [0-5]%
         WarnerMedia                   [10-20]%                [10-20]%       [10-20]%
          Combined                     [10-20]%                [10-20]%      [10-20]%
           Viaplay                     [20-30]%                [30-40]%       [30-40]%
             TV2                       [30-40]%                [20-30]%       [20-30]%
            Netflix                    [20-30]%                [20-30]%       [20-30]%
     Amazon Prime Video                  [0-5]%                  [0-5]%         [0-5]%
           Disney+                          /                       /           [0-5]%
            DAZN                            /                       /           [0-5]%
            Others                       [0-5]%                  [0-5]%         [0-5]%
         Total market                     100%                    100%           100%
                           Market shares in volume (number of subscribers)
           Discovery                     [0-5]%                  [0-5]%         [0-5]%
         WarnerMedia                   [20-30]%                [20-30]%       [10-20]%
          Combined                     [20-30]%                [20-30]%      [20-30]%
            Netflix                    [30-40]%                [30-40]%       [20-30]%
           Viaplay                     [10-20]%                [10-20]%       [10-20]%
             TV2                       [10-20]%                [10-20]%       [10-20]%
           Disney+                           /                      /          [5-10]%
         Canal Digital                  [5-10]%                 [5-10]%         [0-5]%
          Apple TV+                          /                   [0-5]%         [0-5]%
     Amazon Prime Video                  [0-5]%                  [0-5]%         [0-5]%
            DAZN                             /                      /           [0-5]%
            Others                       [0-5]%                  [0-5]%         [0-5]%
         Total market                     100%                    100%           100%
Source: Annex 1 to Chapter 4 of the Form CO
(165) The largest player on the Norwegian market for the retail supply of non-linear pay
        TV services is Viaplay by value, with market shares consistently above 20% (and
        above 30% since 2019) and by Netflix by volume, with market shares consistently
        above [20-30]% by volume. By value, WarnerMedia represents the fourth largest
        market participants behind Viaplay, TV2 and Netflix. By volume, WarnerMedia is
        the second largest market participant. Discovery has limited market presence by
        being the fifth largest market participant by value, far behind WarnerMedia, and the
        sixth market participant by volume. The merged entity would be the fourth largest
        market participant by value and the second largest by volume.
5.3.8. Poland
5.3.8.1. Wholesale supply of TV channels
(166) The following table presents the market shares (by volume) on the market for the
        wholesale supply of TV channels in Poland.
Table 53: Market shares on the market for the wholesale supply of TV channels in
Poland (2018-2020)
                                          2018                    2019           2020
                              Market shares in volume (share of audience)
           Discovery                    [20-30]%                [20-30]%      [20-30]%
         WarnerMedia                     [0-5]%                  [0-5]%         [0-5]%
          Combined                     [20-30]%                [20-30]%      [20-30]%
                                                       47
 ---pagebreak---                                            2018                  2019           2020
                              Market shares in volume (share of audience)
             TVP                        [20-30]%              [30-40]%       [20-30]%
             Polsat                     [20-30]%              [20-30]%       [20-30]%
              Puls                       [5-10]%               [5-10]%        [5-10]%
          ViacomCBS                       [0-5]%                [0-5]%         [0-5]%
            Disney                        [0-5]%                [0-5]%         [0-5]%
            Vivendi                       [0-5]%                [0-5]%         [0-5]%
            Hearst                        [0-5]%                [0-5]%         [0-5]%
             Sony                         [0-5]%                [0-5]%         [0-5]%
             BBC                          [0-5]%                [0-5]%         [0-5]%
            NBCU                          [0-5]%                [0-5]%         [0-5]%
             AMC                          [0-5]%                [0-5]%         [0-5]%
          4Fun Media                      [0-5]%                [0-5]%         [0-5]%
           Euronews                       [0-5]%                [0-5]%         [0-5]%
             Other                        [0-5]%                [0-5]%        [5-10]%
          Total market                     100%                  100%           100%
Source: Annex 10 to Chapter 3 of the Form CO
(167) The market leader in the Polish market for the wholesale supply of TV channels is
        TVP, closely followed by Polsat and Discovery. The rest of the market is fragmented
        and WarnerMedia is the ninth market participant. Due to the very limited market
        shares increment, the merged entity will be the second market participant after TVP
        and closely followed by Polsat.
5.3.8.2. Wholesale supply of pay TV channels
(168) The following table presents the market shares (by volume) on the market for the
        wholesale supply of pay TV channels in Poland.
Table 54: Market shares on the market for the wholesale supply of pay TV channels in
Poland (2018-2020)
                                           2018                  2019           2020
                              Market shares in volume (share of audience)
           Discovery                    [30-40]%              [30-40]%       [30-40]%
         WarnerMedia                      [0-5]%                [0-5]%         [0-5]%
          Combined                     [30-40]%              [30-40]%       [30-40]%
             Polsat                     [20-30]%              [20-30]%       [20-30]%
          ViacomCBS                      [5-10]%               [5-10]%        [5-10]%
              TVP                        [5-10]%               [5-10]%        [5-10]%
            Disney                       [5-10]%               [5-10]%        [5-10]%
            Vivendi                      [5-10]%               [5-10]%         [0-5]%
            Hearst                        [0-5]%                [0-5]%         [0-5]%
             Sony                         [0-5]%                [0-5]%         [0-5]%
             BBC                          [0-5]%                [0-5]%         [0-5]%
            NBCU                          [0-5]%                [0-5]%         [0-5]%
             AMC                          [0-5]%                [0-5]%         [0-5]%
           Euronews                       [0-5]%                [0-5]%         [0-5]%
             Other                       [5-10]%               [5-10]%       [10-20]%
          Total market                     100%                  100%           100%
Source: Annex 10 to Chapter 3 of the Form CO
(169) The market leader in the Polish market for the wholesale supply of pay TV channels
        is Discovery with more than 30% market shares. The second market player is Polsat,
        with more than 20% market shares. The rest of the market is fragmented and
        WarnerMedia is the seventh market participant. The Transaction will only bring
        about a very limited market share increment and will therefore only strengthen the
        merged entity to a limited extent with regards to Polsat..
                                                     48
 ---pagebreak--- 5.3.8.3. Wholesale supply of TV channels for other content
(170) The following table presents the market shares (by volume) on the market for the
        wholesale supply of TV channels for other content in Poland.
Table 55: Market shares on the market for the wholesale supply of TV channels for
other content in Poland (2018-2020)
                                           2018                  2019            2020
                              Market shares in volume (share of audience)
           Discovery                    [20-30]%              [20-30]%        [20-30]%
         WarnerMedia                      [0-5]%                [0-5]%          [0-5]%
          Combined                     [20-30]%              [20-30]%        [20-30]%
              TVP                       [20-30]%              [20-30]%        [20-30]%
             Polsat                     [20-30]%              [20-30]%        [20-30]%
              Puls                       [5-10]%               [5-10]%         [5-10]%
            Disney                        [0-5]%                [0-5]%          [0-5]%
          ViacomCBS                       [0-5]%                [0-5]%          [0-5]%
            Hearst                        [0-5]%                [0-5]%          [0-5]%
            Vivendi                       [0-5]%                [0-5]%          [0-5]%
             Sony                         [0-5]%                [0-5]%          [0-5]%
            NBCU                          [0-5]%                [0-5]%          [0-5]%
             BBC                          [0-5]%                [0-5]%          [0-5]%
             AMC                          [0-5]%                [0-5]%          [0-5]%
          4Fun Media                      [0-5]%                [0-5]%          [0-5]%
             Other                       [5-10]%               [5-10]%         [5-10]%
          Total market                     100%                  100%            100%
Source: Annex 10 to Chapter 3 of the Form CO
(171) The market leader in the Polish market for the wholesale supply of TV channels for
        other content is TVP, closely followed by Polsat and Discovery. The rest of the
        market is fragmented and WarnerMedia is the eleventh market participant. Due to
        the very limited market shares increment, the merged entity will be the third market
        participant after TVP and Polsat.
5.3.8.4. Wholesale supply of pay TV channels for other content
(172) The following table presents the market shares (by volume) on the market for the
        wholesale supply of pay TV channels for other content in Poland.
Table 56: Market shares on the market for the wholesale supply of pay TV channels
for other content in Poland (2018-2020)
                                           2018                  2019            2020
                              Market shares in volume (share of audience)
           Discovery                    [20-30]%              [20-30]%        [20-30]%
         WarnerMedia                      [0-5]%                [0-5]%          [0-5]%
          Combined                     [20-30]%              [20-30]%        [20-30]%
             Polsat                     [10-20]%              [20-30]%        [10-20]%
              TVP                       [10-20]%              [10-20]%        [10-20]%
            Disney                       [5-10]%               [5-10]%         [5-10]%
          ViacomCBS                       [0-5]%               [5-10]%          [0-5]%
            Hearst                        [0-5]%                [0-5]%          [0-5]%
            Vivendi                      [5-10]%               [5-10]%         [5-10]%
             Sony                         [0-5]%                [0-5]%          [0-5]%
            NBCU                          [0-5]%                [0-5]%          [0-5]%
                                                     49
 ---pagebreak---                                           2018                  2019              2020
                              Market shares in volume (share of audience)
             BBC                         [0-5]%                [0-5]%            [0-5]%
             AMC                         [0-5]%                [0-5]%            [0-5]%
             Other                      [10-20]%              [10-20]%          [10-20]%
          Total market                    100%                  100%              100%
Source: Annex 10 to Chapter 3 of the Form CO
(173) The market leader on the Polish market for the wholesale supply of pay TV channels
        for other content is Discovery with more than 20% market shares. The second
        market player is Polsat, with approximately [10-20]% market shares. The third
        market participant is TVP with approximately [10-20]% market shares. The rest of
        the market is fragmented and WarnerMedia is the eleventh market participant. The
        Transaction will only bring about a very limited market share increment and will
        therefore only strengthen the merged entity to a limited extent with regards to Polsat.
5.3.8.5. Wholesale supply of TV channels for news content
(174) The following table presents the market shares (by volume) on the market for the
        wholesale supply of TV channels for news content in Poland.
Table 57: Market shares on the market for the wholesale supply of TV channels for
news content in Poland (2018-2020)
                                          2018                  2019              2020
                              Market shares in volume (share of audience)
           Discovery                    [40-50]%              [40-50]%          [40-50]%
          Combined                     [40-50]%              [40-50]%          [40-50]%
              TVP                       [40-50]%              [40-50]%          [40-50]%
             Polsat                     [10-20]%              [10-20]%          [10-20]%
             BBC                         [0-5]%                [0-5]%            [0-5]%
           Euronews                      [0-5]%                [0-5]%            [0-5]%
             Other                       [0-5]%                [0-5]%            [0-5]%
          Total market                    100%                  100%              100%
Source: Annex 10 to Chapter 3 of the Form CO
(175) The two largest players on the Polish market for the wholesale supply of TV
        channels for news content are Discovery and TVP, which both had market shares
        around [40-50]% in 2020. The number three actor in the market is Polsat which had
        market share of [10-20]% in 2020. All the other suppliers active in the market have
        market shares below [0-5]%. Since WarnerMedia is not active in the market, the
        Transaction will not affect the current market structure.
5.3.8.6. Wholesale supply of pay TV channels for sports content
(176) The following table presents the market shares (by volume) on the market for the
        wholesale supply of pay TV channels for sports content in Poland.
Table 58: Market shares on the market for the wholesale supply of pay TV channels
for sports content in Poland (2018-2020)
                                          2018                  2019              2020
                              Market shares in volume (share of audience)
           Discovery                    [30-40]%              [30-40]%          [30-40]%
          Combined                     [30-40]%              [30-40]%          [30-40]%
             Polsat                     [40-50]%              [50-60]%          [40-50]%
            Vivendi                     [10-20]%              [10-20]%          [10-20]%
             AMC                         [0-5]%                [0-5]%            [0-5]%
                                                     50
 ---pagebreak---                                                2018                          2019                        2020
                                   Market shares in volume (share of audience)
             NBCU                             [0-5]%                        [0-5]%                      [0-5]%
             Other                            [0-5]%                        [0-5]%                      [0-5]%
          Total market                         100%                          100%                        100%
Source: Annex 10 to Chapter 3 of the Form CO
(177) The largest player on the Polish market for the wholesale supply of pay TV channels
        for sports content is Polsat with market share around [40-50]% in 2020. Discovery
        holds the number two position with a market share of [30-40]% in 2020, followed by
        Vivendi with a market share of [10-20]% in 2020. The number five in the market is
        AMC, with a market share of [0-5]% in 2020, and all the other suppliers active in the
        market have less than [0-5]% market share. Since WarnerMedia is not active in the
        market, the Transaction will not affect the current market structure.
5.3.8.7. Wholesale supply of pay TV channels for news content
(178) The following table presents the market shares (by volume) on the market for the
        wholesale supply of pay TV channels for news content in Poland.
Table 59: Market shares on the market for the wholesale supply of pay TV channels
for news content in Poland (2018-2020)
                                               2018                          2019                        2020
                                   Market shares in volume (share of audience)
           Discovery                         [70-80]%                      [70-80]%                    [70-80]%
           Combined                         [70-80]%                      [70-80]%                    [70-80]%
             Polsat                          [20-30]%                      [20-30]%                    [20-30]%
              BBC                             [0-5]%                        [0-5]%                      [0-5]%
            Euronews                          [0-5]%                        [0-5]%                      [0-5]%
             Other                               /                              /                       [0-5]%
          Total market                         100%                          100%                        100%
Source: Annex 10 to Chapter 3 of the Form CO
(179) The largest player on the Polish market for the wholesale supply of pay TV channels
        for news content is Discovery, which had a market share around [70-80]% in 2020.
        The number two actor in the market is Polsat with a market share of [20-30]% in
        2020. All the other suppliers active in the market have market shares below [0-5]%.
        Since WarnerMedia is not active in the market, the Transaction will not affect the
        current market structure.
5.3.8.8. Sale of advertising space on TV channels
(180) The following table presents the market shares (by value) on the market for the sale
        of advertising space on TV channels in Poland. As the Parties were unable to
        provide market shares of competitors on the basis of revenue, the market shares
        indicated below are calculated as a share of spend. Therefore, the market shares
        indicated below are slightly different from those identified above in Table 6.91
91      The “Other” category also includes channels represented on the market by each of Discovery, Polsat and TVP
        through brokerage services. The Commission considers that this alternative market shares methodology correctly
        captures the effects of the Transaction on the market for the sale of advertising space on TV channels in Poland.
                                                                51
 ---pagebreak--- Table 60: Market shares on the market for the sale of advertising space on TV
channels in Poland (2018-2020)
                                              2018                       2019                        2020
                                    Market shares in value (share of spend)
           Discovery                       [30-40]%                    [30-40]%                    [30-40]%
              Polsat                       [30-40]%                    [30-40]%                    [20-30]%
               TVP                         [10-20]%                    [20-30]%                    [20-30]%
             Other92                       [10-20]%                    [10-20]%                    [10-20]%
          Total market                        100%                       100%                        100%
Source: Annex 10 to Chapter 3 of the Form CO
(181) The market leader in the Polish market for the sale of advertising space on TV
        channels in Poland is Discovery with more than 30% market shares, closely
        followed by Polsat. TVP is the third market participant with approximately [20-30]%
        market shares.
5.3.8.9. Sale of advertising space on pay TV channels
(182) The following table presents the market shares (by value) on the market for the sale
        of advertising space on pay TV channels in Poland. As the Parties were unable to
        provide market shares of competitors on the basis of revenue, the market shares
        indicated below are calculated as a share of spend. Therefore, the market shares
        indicated below are slightly different from those identified above in table Table 6.93
Table 61: Market shares on the market for the sale of advertising space on pay TV
channels in Poland (2018-2020)
                                              2018                       2019                        2020
                                    Market shares in value (share of spend)
           Discovery                       [20-30]%                    [20-30]%                    [20-30]%
              Polsat                       [10-20]%                    [10-20]%                    [10-20]%
               TVP                           [0-5]%                     [0-5]%                      [0-5]%
             Other94                       [50-60]%                    [50-60]%                    [50-60]%
          Total market                        100%                       100%                        100%
Source: Annex 10 to Chapter 3 of the Form CO
(183) The market leader in the Polish market for the sale of advertising space on TV
        channels in Poland is Discovery with approximately [20-30]% market shares,
        followed by Polsat. TVP is the third market participant with approximately [0-5]%
        market shares.
5.3.9. Romania
5.3.9.1. Wholesale supply of pay TV channels for children content
(184) The following table presents the market shares (by volume) on the market for the
        wholesale supply of pay TV channels for children content in Romania.
92      This includes WarnerMedia’s market shares which the Notifying Party was unable to single out on the basis of
        share of spend.
93      The “Other” category also includes channels represented on the market by each of Discovery, Polsat and TVP
        through brokerage services. The Commission considers that this alternative market shares methodology correctly
        captures the effects of the Transaction on the market for the sale of advertising space on pay TV channels in
        Poland.
94      This includes WarnerMedia’s market shares which the Notifying Party was unable to single out on the basis of
        share of spend.
                                                             52
 ---pagebreak--- Table 62: Market shares on the market for the wholesale supply of pay TV channels
for children content in Romania (2018-2020)
                                          2018                  2019             2020
                              Market shares in volume (share of audience)
         WarnerMedia                    [30-40]%              [30-40]%         [30-40]%
          Combined                     [30-40]%              [30-40]%         [30-40]%
          ViacomCBS                     [20-30]%              [20-30]%         [30-40]%
            Disney                      [30-40]%              [20-30]%         [20-30]%
             AMC                        [10-20]%              [10-20]%         [10-20]%
             Other                       [0-5]%                   /             [0-5]%
         Total market                     100%                  100%             100%
Source: Annex 10 to Chapter 3 of the Form CO
(185) The largest players on the Romanian market for the wholesale supply of pay TV
        channels for children content are WarnerMedia and ViacomCBS with market shares
        around [30-40]% and [30-40]% respectively in 2020. Disney is the third largest
        competitor, with a market share of [20-30]% in 2020, and is followed by AMC with
        a market share of [10-20]% in 2020. Since Discovery is not active in the market, the
        Transaction will not affect the current market structure
5.3.10. Spain
5.3.10.1. Wholesale supply of FTA TV channels for children content
(186) The following table presents the market shares (by volume) on the market for the
        wholesale supply of FTA TV channels for children content in Spain.
Table 63: Market shares on the market for the wholesale supply of FTA TV channels
for children content in Spain (2018-2020)
                                          2018                  2019             2020
                              Market shares in volume (share of audience)
         WarnerMedia                    [20-30]%              [20-30]%         [30-40]%
          Combined                     [20-30]%              [20-30]%         [30-40]%
            RTVE                        [40-50]%              [40-50]%         [40-50]%
            Disney                      [20-30]%              [20-30]%         [20-30]%
           Regional                      [0-5]%                [0-5]%           [0-5]%
         Total market                     100%                  100%             100%
Source: Annex 10 to Chapter 3 of the Form CO
(187) The largest player on the Spanish market for the wholesale supply of FTA TV
        channels for children content is RTVE with a market share around [40-50]% in
        2020. WarnerMedia is the number two in the market with a market share around
        [30-40]% in 2020, and is followed by Disney with a market share of around
        [20-30]% in 2020. The number four in the market is Regional which had a market
        share of [0-5]% in 2020. Since Discovery is not active in the market, the Transaction
        will not affect the current market structure
5.3.10.2. Wholesale supply of pay TV channels for sports content
(188) The following table presents the market shares (by volume) on the market for the
        wholesale supply of pay TV channels for sports content in Spain.
                                                     53
 ---pagebreak--- Table 64: Market shares on the market for the wholesale supply of pay TV channels
for sports content in Spain (2018-2020)
                                           2018                 2019          2020
                              Market shares in volume (share of audience)
           Discovery                    [10-20]%              [20-30]%      [40-50]%
          Combined                     [10-20]%              [20-30]%      [40-50]%
           Telefonica                    [5-10]%              [30-40]%      [50-60]%
         DAZN group                          /                    /             /
           Mediapro                     [70-80]%              [20-30]%          /
            La Liga                       [0-5]%               [0-5]%           /
          Total market                     100%                 100%          100%
Source: Annex 10 to Chapter 3 of the Form CO
(189) The largest player on the Spanish market for the wholesale supply of pay TV
        channels for sports content is Telefonica with a market share around [50-60]% in
        2020. Discovery is the number two in the market with a market share around
        [40-50]% in 2020. Since WarnerMedia is not active in the market, the Transaction
        will not affect the current market structure.
5.3.11. Sweden
5.3.11.1. Wholesale supply of pay TV channels
(190) The following table presents the market shares (by volume) on the market for the
        wholesale supply of pay TV channels in Sweden.
Table 65: Market shares on the market for the wholesale supply of pay TV channels in
Sweden (2018-2020)
                                           2018                 2019          2020
                              Market shares in volume (share of audience)
           Discovery                    [10-20]%              [20-30]%      [20-30]%
         WarnerMedia                      [0-5]%               [0-5]%        [0-5]%
          Combined                     [20-30]%              [20-30]%      [20-30]%
            NENT                        [30-40]%              [30-40]%      [30-40]%
            Bonnier                     [20-30]%              [20-30]%      [20-30]%
            Disney                       [5-10]%               [0-5]%        [0-5]%
          ViacomCBS                       [0-5]%               [0-5]%        [0-5]%
             BBC                          [0-5]%               [0-5]%        [0-5]%
            Hearst                        [0-5]%               [0-5]%        [0-5]%
            RTVE                          [0-5]%               [0-5]%        [0-5]%
              TV2                         [0-5]%               [0-5]%        [0-5]%
             Other                        [0-5]%               [0-5]%        [0-5]%
          Total market                     100%                 100%          100%
Source: Annex 10 to Chapter 3 of the Form CO
(191) The market leader in the Swedish market for the wholesale supply of pay TV
        channels is NENT, with approximately [30-40]% market shares. Bonnier is the
        second market player, with approximately [20-30]% market shares. Discovery is the
        third market participant with approximately [20-30]% market shares. The rest of the
        market is fragmented, with WarnerMedia being the sixth market participant. The
        merged entity will be the third market participant.
                                                     54
 ---pagebreak--- 5.3.11.2. Wholesale supply of TV channels for news content
(192) The following table presents the market shares (by volume) on the market for the
        wholesale supply of TV channels for news content in Sweden.
Table 66: Market shares on the market for the wholesale supply of TV channels for
news content in Sweden (2018-2020)
                                              2018                        2019                          2020
                                Market shares in volume (share of audience)
         WarnerMedia                       [10-20]%                    [10-20]%                      [40-50]%
          Combined                        [10-20]%                    [10-20]%                      [40-50]%
              SVT                          [80-90]%                    [80-90]%                      [50-60]%
             Other                           [0-5]%                      [0-5]%                        [0-5]%
          Total market                        100%                        100%                          100%
Source: Annex 10 to Chapter 3 of the Form CO
(193) The largest player on the Swedish market for the wholesale supply of TV channels
        for news content is dominated by SVT with a market share around [50-60]% in
        2020, and the number two in the market is WarnerMedia which reached a market
        share of [40-50]% in 2020.95 Since Discovery is not active in the market, the
        Transaction will not affect the current market structure.
5.3.11.3. Wholesale supply for pay TV channels for news content
(194) The following table presents the market shares (by volume) on the market for the
        wholesale supply of pay TV channels for news content in Sweden.
Table 67: Market shares on the market for the wholesale supply of pay TV channels
for news content in Sweden (2018-2020)
                                              2018                        2019                          2020
                                Market shares in volume (share of audience)
         WarnerMedia                      [90-100]%                   [90-100]%                     [90-100]%
          Combined                       [90-100]%                   [90-100]%                     [90-100]%
             Other                          [5-10]%                     [5-10]%                       [5-10]%
          Total market                        100%                        100%                          100%
Source: Annex 10 to Chapter 3 of the Form CO
(195) The largest market player on the Swedish market for the wholesale supply of TV
        channels for news content is WarnerMedia with a market share around [90-100]% in
        2020. Since Discovery is not active in the market, the Transaction will not affect the
        current market structure.
5.3.11.4. Retail supply of non-linear pay AV services
(196) The following table presents the market shares (both by value and ) on the market for
        the retail supply of non-linear pay AV services in Norway.
95      The Commission observes that WarnerMedia’s high market share in the news segment in 2020 corresponds to an
        unusual high peak, which can be explained by the occurrence of the US Presidential election in 2020.
                                                             55
 ---pagebreak--- Table 68: Market shares on the market for the retail supply of non-linear pay AV
services in Sweden (2018-2020)
                                               2018                           2019                        2020
                                           Market shares in value (EUR)
            Discovery                         [0-5]%                         [0-5]%                      [0-5]%
          WarnerMedia                        [10-20]%                      [10-20]%                     [10-20]%
           Combined                         [10-20]%                      [10-20]%                     [10-20]%
             Netflix                         [30-40]%                      [40-50]%                     [40-50]%
             Viaplay                         [30-40]%                      [20-30]%                     [20-30]%
             C More                          [10-20]%                      [10-20]%                     [10-20]%
     Amazon Prime Video                       [0-5]%                         [0-5]%                      [0-5]%
            Disney+                                /                             /                       [0-5]%
              DAZN                                 /                            /                           /
              Others                          [0-5]%                         [0-5]%                      [0-5]%
          Total market                         100%                          100%                         100%
                               Market shares in volume (number of subscribers)
            Discovery                         [0-5]%                        [0-5]%                       [0-5]%
          WarnerMedia                       [20-30]%                      [20-30]%                     [10-20]%
           Combined                         [20-30]%                      [20-30]%                     [20-30]%
             Netflix                        [40-50]%                      [30-40]%                     [20-30]%
            Viaplay                         [10-20]%                      [20-30]%                     [20-30]%
             C More                          [5-10]%                       [5-10]%                      [5-10]%
           Apple TV+                              /                         [0-5]%                      [5-10]%
            Disney+                               /                             /                        [0-5]%
     Amazon Prime Video                       [0-5]%                        [0-5]%                       [0-5]%
          Canal Digital                       [0-5]%                        [0-5]%                       [0-5]%
              Boxer                           [0-5]%                        [0-5]%                       [0-5]%
             DAZN                                 /                             /                        [0-5]%
             Others                          [5-10]%                       [5-10]%                       [0-5]%
          Total market                         100%                          100%                         100%
Source: Annex 1 to Chapter 4 of the Form CO
(197) The Swedish market for the retail supply of non-linear pay TV services is dominated
        by Netflix both by value and volume. The second market participant is Viaplay with
        market shares of approximately [20-30]% both by volume and by value. The third
        market participant is WarnerMedia. The merged entity will be the second market
        participant by volume and the third market participant by value.
5.4.    Horizontal Assessment
(198) The Horizontal Merger Guidelines considers that concentrations which, by reason of
        the limited market share of the undertakings concerned, are not liable to impede
        effective competition may be presumed to be compatible with the common market.
        Without prejudice to Articles 101 and 102 of the TFEU, an indication to this effect
        exists, in particular, where the market share of the undertakings concerned does not
        exceed 25 % either in the common market or in a substantial part of it.96
(199) Furthermore, the Horizontal Merger Guidelines indicate that the Commission is
        unlikely to identify horizontal competition concerns in a market with a post-merger
        HHI97 below 1 000. Such markets normally do not require extensive analysis.
96      Horizontal Merger Guidelines, paragraph 18. See also recital 32 of the Merger Regulation.
97      The Herfindahl-Hirschman Index (“HHI”) is calculated by summing the squares of the individual market shares
        of all the firms in the market. The HHI gives proportionately greater weight to the market shares of the larger
        firms. Although it is best to include all firms in the calculation, lack of information about very small firms may
        not be important because such firms do not affect the HHI significantly. While the absolute level of the HHI can
                                                                 56
 ---pagebreak---       Similarly, the Commission is unlikely to identify horizontal competition concerns in
      a merger with a post-merger HHI between 1 000 and 2 000 and a delta below 250, or
      a merger with a post-merger HHI above 2 000 and a delta below 150, except where
      (i) a merger involved a potential entrant or a recent entrant with a small market
      share; (ii) one or more merging parties are important innovators in ways not reflected
      in market shares; (iii) there are significant cross-shareholdings among the market
      participants; (iv) one of the merging firms is a maverick firm with a high likelihood
      of disrupting coordinated conduct; (v) indications of part or ongoing coordination, or
      facilitating practices, are present; and, (vi) one of the merging parties has a pre-
      merger market share of 50% or more.98
(200) A merger giving rise to significant impediment of effective competition may do so
      as a result of the creation or strengthening of a dominant position in the relevant
      markets. Moreover, mergers in oligopolistic markets involving the elimination of
      important constraints that the parties previously exerted on each other, together with
      a reduction of competitive pressure on the remaining competitors, may also result in
      a significant impediment to effective competition, even in the absence of
      dominance.99
(201) In fact, the Horizontal Merger Guidelines describe horizontal non-coordinated100
      effects as follows: “A merger may significantly impede effective competition in a
      market by removing important competitive constraints on one or more sellers who
      consequently have increased market power. The most direct effect of the merger will
      be the loss of competition between the merging firms. For example, if prior to the
      merger one of the merging firms had raised its price, it would have lost some sales
      to the other merging firm. The merger removes this particular constraint. Non-
      merging firms in the same market can also benefit from the reduction of competitive
      pressure that results from the merger, since the merging firms’ price increase may
      switch some demand to the rival firms, which, in turn, may find it profitable to
      increase their prices. The reduction in these competitive constraints could lead to
      significant price increases in the relevant market.”101
(202) The Horizontal Merger Guidelines list a number of factors which may influence
      whether or not significant horizontal non-coordinated effects are likely to result from
      a merger, such as the large market shares of the merging firms, the fact that the
      merging firms are close competitors, the limited possibilities for customers to switch
      suppliers, or the fact that the merger would eliminate an important competitive
      give an initial indication of the competitive pressure in the market post-merger, the change in the HHI (known as
      the “Delta”) is a useful proxy for the change in concentration directly brought about by the merger.
98    Horizontal Merger Guidelines, paragraphs 19-20.
99    Horizontal Merger Guidelines, paragraph 25.
100   The Commission, as evidenced by the market investigation, does not consider that the Transaction could give rise
      to coordinated effects in any of the horizontally affected markets as a result of the Transaction, due to (i) the very
      limited market shares increments in most horizontally affected markets; (ii) the existence of several competitors
      with assymetric market shares, different geographic focuses and financing models and methods; (iii) the
      existence of numerous market players at all the levels of the value chain; (iv) the increased innovation on the
      market in terms of customer reach and content produced; and, (v) the constraints exercised by the levels of the
      value chain on one another (for example, since the wholesale supply of TV channels is an intermediate market,
      wholesalers would be constrained by AV content producers and retailers). Therefore, even in the markets with
      higher market shares increments, the Commission concludes that the Transaction does not raise serious doubts as
      to its compatibility with the internal market as a result of coordinated effects.
101   Horizontal Merger Guidelines, paragraph 24.
                                                                57
 ---pagebreak---        force.102 That list of factors applies equally regardless of whether a merger would
       create or strengthen a dominant position, or would otherwise significantly impede
       effective competition due to non-coordinated effects. Furthermore, not all of these
       factors need to be present to make significant non-coordinated effects likely and it is
       not an exhaustive list.103
(203) In addition, the Horizontal Merger Guidelines describe a number of factors, which
       could counteract the harmful effects of the merger on competition, including the
       likelihood of buyer power, the entry of new competitors on the market, and
       efficiencies.
5.4.1. Introductory remarks
(204) During the market investigation, some market participants have expressed concerns
       that the Parties may benefit from an increased bargaining power as a result of the
       Transaction, notably due to the merged entity’s market shares in the markets for the
       licensing of broadcasting rights and wholesale supply of TV channels.
(205) With regards to the market for the licensing of broadcasting rights (including all
       plausible segments), the Commission notes that the Transaction does not give rise to
       any horizontally affected markets in any Member State. This implies either that in
       any segment of the market for the licensing of broadcasting rights, the Parties would
       not have a combined market share in excess of 20% or that the Transaction does not
       give rise to any horizontal market share increase. The Notifying Party further
       confirmed that there are no instances where either Discovery or WarnerMedia
       individually have a market share in excess of 30% in any segment of the market for
       the licensing of broadcasting rights.104 This implies that there are alternative
       providers supplying at least 70% of the market. Therefore, even if the Transaction
       were to increase the Parties’ bargaining power, the Commission excludes this could
       increase the market power of the merged entity.
(206) With regards to the market for the wholesale supply of TV channels, the
       Commission notes that any significant degree of bargaining power would only be
       possible if the Parties had a significant combined market share in the overall market
       for the wholesale supply of TV channels, without considering segmentations by
       genre. However, in all countries except Poland, the Transaction either (i) does not
       lead to a combined market shares of the Parties exceeding 20%; or, (ii) to any market
       share increment. Therefore, the Commission excludes that the Transaction may
       significantly increase the Parties’ market power with regards to the market for
       wholesale supply of TV channels. For an assessment of the Polish market and all
       other horizontally affected markets, the Commission refers to its assessment below
       which explains why the Commission considers that the Transaction does not raise
       serious doubts as to its compatibility with the internal market as a result of horizontal
       effects.
102    Horizontal Merger Guidelines, paragraphs 27 and following.
103    Horizontal Merger Guidelines, paragraph 26.
104    See Notifying Party’s response to RFI 8, question 2.
                                                            58
 ---pagebreak--- 5.4.2. Finland
5.4.2.1. Market for the retail supply of non-linear AV services in Finland
        (A)       Notifying Party’s views
(207) The Notifying Party submits that the Transaction would not raise competitive
        concerns in the market for the retail supply of non-linear AV services in Finland for
        the following reasons.
(208) First, the Notifying Party submits that the Transaction results in a negligeable market
        shares increment.105
(209) Second, the Notifying Party submits that the retail services offered by the Parties do
        not compete particularly closely.106
(210) Third, the Notifying Party submits that the Parties face strong competition from
        many sources, including commercial and publicly funded broadcasters, third-party
        pay TV, SVOD and other OTT platforms.107
(211) Fourth, the Notifying Party submits that consumers are willing to switch between
        different retail offerings.108 This is notably due to the insignificance and reduction in
        switching costs and to changing consumer habits who rely on multiple retail TV
        services.
        (B)       Commission’s assessment
(212) The Commission considers that the Transaction does not raise horizontal concerns in
        the market for the retail supply of non-linear AV services in Finland, for the
        following reasons.
(213) First, the Parties’ combined market shares remain moderate and consistently below
        20%. In particular, the combined market shares of the Parties in 2020 was of
        [20-30]% by volume and of [20-30]% by value.
(214) Second, the Transaction only gives rise to an insignificant market shares increment.
        Indeed, in 2020, WarnerMedia already accounted for [20-30]% market shares by
        volume and [20-30]% by value whereas Discovery only accounted for [0-5]%
        market shares by volume and [0-5]% by value. The limited change brought along by
        the merger is further evidenced by HHI calculations. Indeed, when considering the
        market shares by value, the Delta remains consistently below 50. When considering
        the market shares by volume, the Delta remains consistently below 10.
(215) Third, the Commission notes that after the Transaction, there will remain numerous
        alternative retailers of non-linear pay TV services such as Netflix (with a market
        share of approximately [30-40]% by volume and value in 2020), Viaplay (with a
        market share of approximately [10-20]% by volume and [20-30]% by value in 2020),
        Ruutu+ (with a market share of approximately [10-20]% by volume and value in
        2020), Disney+ (with a market share of approximately [0-5]% by volume in 2020),
105     Form CO, Chapter 4, paragraphs 122-124.
106     Form CO, Chapter 4, paragraphs 125-126.
107     Form CO, Chapter 4, paragraphs 127-151.
108     Form CO, Chapter 4, paragraphs 152-157.
                                                    59
 ---pagebreak---         Apple TV, Amazon Prime and C More (each with market shares of approximately
        [0-5]% by volume in 2020). Other smaller market participants include Canal Digital
        and DAZN.
(216) Finally, the Commission notes that it has not received any substantiated complaints
        from the respondents to the market investigation regarding the market for the retail
        supply of non-linear AV services in Finland.
(217) Therefore, for the reasons set out above, the Commission concludes that the
        Transaction does not raise serious doubts as to its compatibility with the internal
        market as a result of horizontal effects on the market for the retail supply of non-
        linear pay AV services in Finland and all plausible market segmentations thereof.
5.4.3. Germany
5.4.3.1. Market for the wholesale supply of pay TV channels in Germany
        (A)       Notifying Party’s views
(218) The Notifying Party submits that the Transaction would not raise competitive
        concerns in the market for the wholesale supply of pay TV channels in Germany for
        the following reasons.
(219) First, the Notifying Party submit that German FTA broadcasting regulations and the
        broad availability of FTA TV channels severely constrain the market position of pay
        TV operators.109
(220) Second, the Notifying Party submits that the Transaction will give rise to an
        insignificant increment in the market for the wholesale supply of pay TV channels in
        Germany.110
(221) Third, the Notifying Party submits that the Parties are not each other’s closest
        competitors.111
(222) Fourth, the Notifying Party submits that the merged entity will continue to be
        constrained by large competitors,112 including by on demande services such as
        AVOD and SVOD platforms.
(223) Fifth, the Notifying Party submits that the merged entity will continue to be
        constrained by large customers.113
        (B)       Commission’s assessment
(224) The Commission considers that the Transaction does not raise horizontal concerns in
        the market for the wholesale supply of pay TV channels in Germany, for the
        following reasons.
109     Form CO, Chapter 3, paragraphs 92-100.
110     Form CO, Chapter 3, paragraphs 101-102.
111     Form CO, Chapter 3, paragraphs 103-108.
112     Form CO, Chapter 3, paragraphs 109-113.
113     Form CO, Chapter 3, paragraphs 114-120.
                                                  60
 ---pagebreak--- (225) First, the Parties’ combined market shares remain moderate and consistently
        below 25% when considering volume-based market shares since 2018.
(226) Second, the Transaction only gives rise to an insignificant market shares increment.
        Indeed, in 2020, WarnerMedia already accounted for [10-20]% market shares by
        volume whereas Discovery only accounted for [0-5]% market shares by volume.
        Therefore, the change on the market brought about by the Transaction is
        insignificant.
(227) Third, the Commission notes that after the Transaction, there will remain numerous
        alternative wholesale suppliers of pay TV channels such as Sky Group (with a
        market share of approximately [20-30]% by volume in 2020), NBCU (with a market
        share of approximately [10-20]% by volume in 2020), Disney (with a market share
        of approximately [10-20]% by volume in 2020), RTL Group (with a market share of
        approximately [5-10]% by volume in 2020), and Hearst (with market shares of
        approximately [0-5]% by volume in 2020).
(228) Finally, the Commission notes that it has not received any substantiated complaints
        from the respondents to the market investigation regarding the market for the
        wholesale supply of pay TV channels in Germany.
(229) Therefore, the Commission concludes that the Transaction does not raise serious
        doubts as to its compatibility with the internal market as a result of horizontal effects
        on the market for the wholesale supply of pay TV channels in Germany and all
        plausible market segmentations thereof.
5.4.3.2. Market for the wholesale supply of pay TV channels for other content in Germany
        (A)       Notifying Party’s views
(230) The Notifying Party submits that the Transaction would not raise competitive
        concerns in the market for the wholesale supply of pay TV channels for other
        content in Germany for the following reasons.
(231) First, the Notifying Party submit that German FTA broadcasting regulations and the
        broad availability of FTA TV channels severely constrain the market position of pay
        TV operators.114
(232) Second, the Notifying Party submits that the Transaction will give rise to an
        insignificant increment in the market for the wholesale supply of pay TV channels
        for other content in Germany.115
(233) Third, the Notifying Party submits that the Parties are not each other’s closest
        competitors.116
(234) Fourth, the Notifying Party submits that the merged entity will continue to be
        constrained by large competitors,117 including by on demande services such as
        AVOD and SVOD platforms.
114     Form CO, Chapter 3, paragraphs 92-100.
115     Form CO, Chapter 3, paragraphs 101-102.
116     Form CO, Chapter 3, paragraphs 103-108.
                                                   61
 ---pagebreak--- (235) Fifth, the Notifying Party submits that the merged entity will continue to be
        constrained by large customers.118
        (B)       Commission’s assessment
(236) The Commission considers that the Transaction does not raise horizontal concerns in
        the market for the wholesale supply of pay TV channels for other content in
        Germany, for the following reasons.
(237) First, the Parties’ combined market shares remain moderate and consistently
        below 25% when considering volume-based market shares since 2018, and were
        even below 20% in 2018 and 2019.
(238) Second, the Transaction only gives rise to a limited market shares increment. Indeed,
        in 2020, WarnerMedia already accounted for [10-20]% market shares by volume
        whereas Discovery only accounted for [0-5]% market shares by volume. The limited
        change brought along by the merger is further evidenced by HHI calculations.
        Indeed, when considering the market shares by value, the Delta remains consistently
        below 150.
(239) Third, the Commission notes that after the Transaction, there will remain numerous
        alternative wholesale suppliers of pay TV channels for other content such as NBCU
        (with a market share of approximately [30-40]% by volume in 2020), Disney (with a
        market share of approximately [20-30]% by volume in 2020), RTL Group (with a
        market share of approximately [10-20]% by volume in 2020), Hearst (with a market
        share of approximately [5-10]% by volume in 2020).
(240) Finally, the Commission notes that it has not received any substantiated complaints
        from the respondents to the market investigation regarding the market for the
        wholesale supply of pay TV channels for other content in Germany.
(241) Therefore, for the reasons set out above, the Commission concludes that the
        Transaction does not raise serious doubts as to its compatibility with the internal
        market as a result of horizontal effects on the market for the wholesale supply of pay
        TV channels for other content in Germany and all plausible market segmentations
        thereof.
5.4.4. Italy
5.4.4.1. Market for the wholesale supply of TV channels for children content in Italy
        (A)       Notifying Party’s views
(242) The Notifying Party submits that the Transaction would not raise competitive
        concerns in the market for the wholesale supply of FTA TV channels for children
        content in Italy for the following reasons.
(243) First, the Notifying Party submits that the merged entity will be constrained by large
        competitors. This includes competition from suppliers of pay TV and FTA channels
        and on demand services.119
117     Form CO, Chapter 3, paragraphs 109-113.
118     Form CO, Chapter 3, paragraphs 114-120.
                                                  62
 ---pagebreak--- (244) Second, the Notifying Party submits that the Parties are not each other’s closest
        competitors.120
(245) Third, the Notifying Party submits that the merged entity will be constrained by
        large customers.121
(246) Fourth, the Notifying Party submits that the merged entity will neither have the
        incentive nor the ability to put FTA content behind a pay-wall.122
(247) Fifth, the Notifying Party submits that there are specific sectoral regulations in Italy
        governing TV channels specifically targeted at children.
(248) On 2 December 2021, the Notifying Party provided the Commission with additional
        evidence on all of these points (“Additional Submission”). Notably, the Additional
        Submission provides evidence on the reasons why the Notifying Party would have
        no ability and no incentive to put FTA TV channels for children content behind a
        pay-wall.
(249) First, the Notifying Party notes that the content shown on FTA TV channels is
        generally pre-existing content which tends to be shown first on pay TV and then, on
        second or third windowing, on FTA channels.
(250) Second, the Notifying Party submits that if moving children content currently shown
        on FTA TV channels behind a pay-wall would be a commercially viable strategy,
        WarnerMedia would have already done so by moving content on its pay TV
        channels for children content Boomerang and Cartoon Network.
(251) Third, the Notifying Party notes that for content acquired from third parties, any
        change in model would require the acquisition of pay TV rights and therefore an
        expansion of existing licensing agreements. […].
(252) Fourth, WarnerMedia is committed to continue developing Boing […].
        (B)       Commission’s assessment
(253) The Parties’ activities only overlap in the narrower market for the wholesale supply
        of FTA TV channels for children content in Italy. For the reasons set out in
        section 5.4.4.2 below, the Commission concludes that the Transaction does not raise
        serious doubts as to its compatibility with the internal market as a result of horizontal
        effects on the market for the wholesale supply of TV channels for children content in
        Italy and all plausible market segmentations thereof.
5.4.4.2. Market for the wholesale supply of FTA TV channels for children content in Italy
        (A)       Notifying Party’s views
(254) The Notifying Party submit that the Transaction would not raise competitive
        concerns in the market for the wholesale supply of FTA TV channels for children
        content in Italy for the following reasons.
119     Form CO, Chapter 3, paragraphs 140-159.
120     Form CO, Chapter 3, paragraphs 160-180.
121     Form CO, Chapter 3, paragraphs 181-184.
122     Form CO, Chapter 3, paragraphs 185-191.
                                                  63
 ---pagebreak--- (255) First, the Notifying Party submits that the merged entity will be constrained by large
      competitors. This includes competition from suppliers of pay TV and FTA channels
      and on demand services.123
(256) Second, the Notifying Party submits that the Parties are not each other’s closest
      competitors.124
(257) Third, the Notifying Party submits that the merged entity will be constrained by
      large customers.125
(258) Fourth, the Notifying Party submits that the merged will neither have the incentive
      nor the ability to put FTA content behind a pay-wall.126
(259) Fifth, the Notifying Party submits that there are specific sectoral regulations in Italy
      governing TV channels specifically targeted at children.127
(260) On 2 December 2021, the Notifying Party provided the Commission with additional
      views on all of these points (“Additional Submission”). Notably, the Additional
      Submission provides evidence on the reasons why the Notifying Party would have
      no ability and no incentive to put FTA TV channels for children content behind a
      pay-wall.
(261) First, the Notifying Party notes that the content shown on FTA TV channels is
      generally pre-existing content which tends to be shown first on pay TV channels and
      then, on second or third windowing, on FTA channels.
(262) Second, the Notifying Party submits that if moving children content currently shown
      on FTA TV channels behinda pay-wall would make sense commercially,
      WarnerMedia would have already done so by moving content on its pay TV
      channels for children content Boomerang and Cartoon Network.
(263) Third, the Notifying Party notes that the for content acquired from third parties, any
      change in model would require the acquisition of pay TV rights and therefore an
      expansion of existing licensing agreements. […].
(264) Fourth, WarnerMedia is committed to continue developing Boing […].
      (B)       Commission’s assessment
(265) The Commission considers that the Transaction does not raise horizontal concerns in
      the market for the wholesale supply of FTA TV channels for children content in
      Italy, for the following reasons.
(266) First, the Commission notes that despite the high combined market shares of the
      Parties, there will still be alternative suppliers of FTA TV channels carrying content
      for children in Italy. In particular, RAI, the Italian public broadcaster will continue to
      be active on the market for the wholesale supply of FTA TV channels for children
      content with a market share of approximately [30-40]% as well as ViacomCBS, with
123   Form CO, Chapter 3, paragraphs 140-159.
124   Form CO, Chapter 3, paragraphs 160-180.
125   Form CO, Chapter 3, paragraphs 181-184.
126   Form CO, Chapter 3, paragraphs 185-191.
127   Form CO, Chapter 3, paragraphs 192-200.
                                                  64
 ---pagebreak---       a market share of approximately [10-20]%. Accordingly, the market investigation
      confirmed that there are sufficient alternatives of wholesale suppliers of FTA TV
      channels for children content in Italy beyond the Parties.128
(267) Second, the market investigation found that FTA TV channels operated by
      Discovery and by WarnerMedia (through Boing) are not the closest competitors.129
      In particular, while K2 (operated by Discovery) and Boing (operated by
      WarnerMedia through Boing) are regularly ranked as close competitors, Frisbee
      (Discovery’s other FTA TV channel for children) is perceived to be closer to RAI
      Yoyo. One market participant further considered that Frisbee’s second closest
      competitor to be DeA Junior, a pay TV channel operated by De Agostini. During the
      market investigation, one market participant stressed that “in FTA Discovery and the
      JV (Mediaset/Warner) compete for the same audience, but with a different offer in
      term of contents and editorial positioning”.130 Therefore, after the Transaction, there
      would still be sufficient alternative FTA TV channels from other providers with
      similar focus to those of the Parties.
(268) Third, a majority of market participants who responded to the market investigation
      have confirmed that OTT platforms represent an alternative offering to FTA TV
      channels for children content.131 In Telia Company/Bonnier Broadcasting Holding,
      the Commission considered that “players like Netflix and HBO offering non-linear
      premium AV services at the retail level exercise an indirect competitive constraint on
      Bonnier Broadcasting’s premium pay TV non-sports channels active at the
      wholesale level.”132 One market participant explained that: “A direct to consumer
      service may operate on a subscription fee model or on an advertising supported
      model, whilst the FTA channel will be free to the consumer. Both offerings may not
      be entirely substitutable for consumers (children), or at least in one direction. For
      example, a direct to consumer service which is available for no additional fee (but
      may include adverts) may be more comparable to a FTA channel than a direct to
      consumer services which is available for an additional subscription fee.”133
(269) In this regard, the Commission considers that in Italy, AVOD platforms with specific
      children content are able to exercise an indirect competitive constraint on the merged
      entity’s FTA TV channels for children content since these are both audiovisual
      services provided for free to end-consumers.
(270) In the Additional Submission, the Notifying Party indicated that “AVOD is the most
      comparable service to FTA in terms of business model”.134 The Notifying Party
      provided an extensive list of current providers, other than the Parties, of AVOD
      services in Italy. The Notifying Party notably lists RaiPlay, Mediaset Play, Youtube,
      Youtube Kids, Samsung TV Plus, Pluto TV and Rakuten TV as third party suppliers
      of AVOD platforms with specific children content. Therefore, the Commission
128   Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 33
      and 33.1.
129   Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 32.
130   Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 32.1.
131   Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 35.2
      and 35.2.1.
132   Decision of the Commission of 29 April 2020 in case M.9064 – Telia Company/Bonnier Broadcasting Holding,
      recital 1227.
133   Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 35.2.1.
134   Additional submission, page 18.
                                                          65
 ---pagebreak---       considers that the combined market shares in the market for the wholesale supply of
      the Parties are over-representative of the market power that could be exercised by the
      merged entity.
(271) Fourth, given the specificities of the distribution of FTA TV channels in Italy, the
      Commission considers that it is easy for consumers to switch to another TV channel.
      Indeed, in Italy, FTA TV channels are supplied directly by wholesalers to end
      consumers through DTT.135 Accordingly, any viewer of Discovery’s K2 or Frisbee
      channels or WarnerMedia’s Boing, Cartoonito and Boing Plus channels has access to
      all the TV channels of RAI and to ViacomCBS’s channel Super!. As all FTA TV
      channels for children are freely available to every household, switching from one
      channel to another is easy, timely and cost-free for consumers. Accordingly, any
      content degradation or discontinuance of the channels would shift end consumers to
      other FTA TV channels.
(272) Fifth, the Commission notes that the results of the market investigation have
      indicated that market entry in unlikely and that, going forward, the merged entity
      may have the ability and incentive to discontinue its FTA TV channels for children
      content to end consumers or put the content currently aired on those channels behind
      a pay-wall (either on pay TV channels or on a SVOD platform). However,
      Commission also notes that the exit of either Discovery or WarnerMedia136 or a
      degradation of the quality of content supplied to end consumers through their FTA
      TV channels for children content is unlikely due to the constraints exercised by
      (i) Mediaset over WarnerMedia; and, (ii) TV advertisers over Discovery. Indeed, as
      explained by a market participant, the incentive to move an FTA TV channel behind
      a pay-wall is chiefly determined by the sufficient presence of advertisement revenue
      that can be generated.137
(273) With regards to Discovery, the Commission notes that the third party content
      acquired by Discovery is currently only acquired for an FTA TV window. Therefore,
      in order to be able to put the content acquired behind a pay-wall, Discovery would
      need to amend its licensing agreements and increase its spending for content without
      necessarily being able to negotiate sufficient carriage feed with retail suppliers of
      pay AV services or obtaining subscription revenues from its SVOD platform.
(274) With regards to WarnerMedia, the Commission notes that on 13 December 2021, the
      Notifying Party submitted an additional paper providing additional information on
      the arrangements concerning Boing (“Additional Submission on Boing”). The
      Additional Submission on Boing explains that Boing is jointly controlled by
      Mediaset (with a 51% shareholding) and WarnerMedia (with a 49%
      shareholding).138          [DETAILS            ON         THE         AGREEMENTS                 BETWEEN
      WARNERMEDIA AND MEDIASET]. With regards the acquisition of content,
                                                           139
      WarnerMedia supplies approximately […]% of the content aired on Boing channels.
135   DTT technology is freely available in Italy and reached almost all households, including with high-definition
      content without the need to have a subscription with a retail provider of AV services. For the very limited areas
      not covered with DTT technology, Tivùsat provides free DTH coverage. Therefore, in Italy, all households can
      have access to FTA TV channels for free without needing to have a subscription with a TV retailer. In this
      section, DTT should be understood as covering DTH distribution technology as well where DTT is unavailable.
136   Response to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 34.
137   Minutes of the conference call with ViacomCBS, paragraph 10.
138   Additional Submission on Boing, page 2.
139   Additional Submission on Boing, page 2.
                                                            66
 ---pagebreak---       Other suppliers include […]. The content supplied by WarnerMedia only relates to
      FTA rights […].140 The broadcasting rights are usually supplied […] after these have
      been aired on WarnerMedia’s pay TV channels.141 […].
(275) Therefore, the Commission notes that WarnerMedia’s FTA TV channels for children
      content available in Italy are solely supplied through Boing with Mediaset. The
      commercial agreements for the supply of content between WarnerMedia and Boing
      last at least, until […].142 As part of these commercial agreements, Mediaset is
      tasked with the sale of the advertisement space on the Boing Channels, […]. As
      such, the Commission considers that Mediaset will maintain an incentive to ensure
      that the content supplied by the merged entity will be of sufficient quantity and
      quality to attract advertisement revenues.143 Futhermore, the Commission notes that
      Mediaset will have effective means to ensure that such objectives are maintained
      through its […].
(276) In any event, assuming that the merged entity were to have the ability and incentive
      to discontinue its FTA TV channels and put them behind a pay-wall, the
      Commission notes that this would not concern the three channels operated by Boing,
      which represent the full market share increment brought by WarnerMedia to the
      merged entity. Indeed, the commercial agreements currently in place will continue to
      run until […]. Therefore, the merged entity will not have the ability to use its market
      power to put the Boing channels (which represent the full market share increment
      brought by WarnerMedia) behind a pay-wall in Italy before the expiration of the
      commercial agreements between WarnerMedia and Boing.144
(277) Therefore, for the reasons set out above, the Commission concludes that the
      Transaction does not raise serious doubts as to its compatibility with the internal
      market as a result of horizontal effects on the market for the wholesale supply of
      FTA TV channels for children content in Italy and all plausible market
      segmentations thereof.
140   Additional Submission on Boing, page 5.
141   Additional Submission on Boing, pages 4-5.
142   In this regard, the Notifying Party notes that, should the Parties decide against renewing the commercial
      agreements with Boing in […]. Therefore, the agreement to supply content to Boing will continue well into […].
      The Commission notes that this would give Mediaset sufficient time to arrange for supply agreements for content
      for Boing channels with alternative providers of children content, which already account for 50% of the content
      aired on Boing channels. See the Additional Submission on Boing, page 6.
143   The Commission also notes that, since WarnerMedia already operates, on a stand-alone basis, pay TV channels
      which already broadcast the content visible on Boing channels, if it made commercial sense to maintain such
      content behind a pay-wall, WarnerMedia would already have done so. Second, the Notifying Party has provided
      evidence suggesting that after the launch of HBO Max in Spain, WarnerMedia renewed its commercial
      agreements with the Spanish channels of Boing.
144   Regardless, the Commission notes that FTA TV channels for children are not a core part of wholesaler’s
      business, notably because of regulatory restrictions on the sale of advertising space on children TV channels. In
      particular, during a pre-notification call with the Commission on 21 October 2021, Mediaset stated that “In
      general, the children market revolves around a diversification of the offer. From a business continuity
      perspective, however, the children segment is not a large part of Mediaset’s revenues. Indeed, due to regulatory
      constraints, the amount of advertising that can be included in children TV channels is limited.” See the non-
      confidential minutes of the pre-notification call with Mediaset of 21 October 2021, paragraph 24.
                                                              67
 ---pagebreak--- 5.4.5. Norway
5.4.5.1. Market for the wholesale supply of pay TV channels in Norway
        (A)       Notifying Party’s views
(278) The Notifying Party submits that the Transaction would not raise competitive
        concerns in the market for the wholesale supply of pay TV channels in Norway for
        the following reasons.
(279) First, the Notifying Party submits that the Transaction will give rise to an
        insignificant market shares increment.145
(280) Second, the Notifying Party submits that the Parties are not each other’s closest
        competitors.146
(281) Third, the Notifying Party submits that the merged entity will be constrained by
        large competitors.147
(282) Fourth, the Notifying Party submits that the merged entity will be constrained by
        large customers.148
        (B)       Commission’s assessment
(283) The Commission considers that the Transaction does not raise horizontal concerns in
        the market for the wholesale supply of pay TV channels in Norway, for the
        following reasons.
(284) First, the Parties’ combined market shares remain moderate and consistently
        below 25% when considering volume-based market shares.
(285) Second, the Transaction only gives rise to an insignificant market shares increment.
        Indeed, in 2020, Discovery already accounted for [20-30]% market shares by volume
        whereas WarnerMedia only accounted for [0-5]% market shares by volume. The
        limited change brought along by the merger is further evidenced by HHI
        calculations. Indeed, when considering the market shares by volume, the Delta
        remains below 100 and often below 50.
(286) Third, the Commission notes that after the Transaction, there will remain numerous
        alternative wholesale suppliers of pay TV channels such as Egmont (with a market
        share of approximately [50-60]% by volume in 2020), NENT (with a market share of
        approximately [10-20]% by volume in 2020), Disney (with a market share of
        approximately [0-5]% by volume in 2020), BBC (with a market share of
        approximately [0-5]% by volume in 2020). Other market participants include Hearst
        and TV4Media (previously, Bonnier Broadcasting).
(287) Finally, the Commission notes that it has not received any substantiated complaints
        from the respondents to the market investigation regarding the market for the
        wholesale supply of pay TV channels in Norway.
145     Form CO, Chapter 3, paragraphs 208-213.
146     Form CO, Chapter 3, paragraphs 214-223.
147     Form CO, Chapter 3, paragraphs 224-228.
148     Form CO, Chapter 3, paragraphs 229-231.
                                                  68
 ---pagebreak--- (288) Therefore, for the reasons set out above, the Commission concludes that the
        Transaction does not raise serious doubts as to its compatibility with the internal
        market as a result of horizontal effects on the market for the wholesale supply of pay
        TV channels in Norway and all plausible market segmentations thereof.
5.4.5.2. Market for the retail supply of non-linear AV services in Norway
        (A)       Notifying Party’s views
(289) The Notifying Party submits that the Transaction would not raise competitive
        concerns in the market for the retail supply of non-linear AV services in Norway for
        the following reasons.
(290) First, the Notifying Party submits that the Transaction results in a negligeable market
        shares increment.149
(291) Second, the Notifying Party submits that the retail services offered by the Parties do
        not compete particularly closely.150
(292) Third, the Notifying Party submits that the Parties face strong competition from
        many sources, including commercial and publicly funded broadcasters, third-party
        pay TV, SVOD and other OTT platforms.151
(293) Fourth, the Notifying Party submits that consumers are willing to switch between
        different retail offerings.152 This is notably due to the insignificance and reduction in
        switching costs and to changing consumer habits who rely on multiple retail TV
        services.
        (B)       Commission’s assessment
(294) The Commission considers that the Transaction does not raise horizontal concerns in
        the market for the retail supply of non-linear AV services in Norway, for the
        following reasons.
(295) First, the Parties’ combined market shares remain moderate and consistently below
        20% when considering value-based market shares. When considering volume-based
        market shares, the combined market shares of the Parties have consistently been
        below 25% since 2018.
(296) Second, the Transaction only gives rise to an insignificant market shares increment.
        Indeed, in 2020, WarnerMedia already accounted for [10-20]% market shares by
        volume whereas Discovery only accounted for [0-5]% market shares by volume. The
        limited change brought along by the merger is further evidenced by HHI
        calculations. Indeed, when considering the market shares by volume, the Delta
        remained below 150 in 2018 and 2019, whereas the pre-Transaction and post-
        Transaction HHI in 2020 dropped below 2 000 with a Delta of 156.
149     Form CO, Chapter 4, paragraphs 122-124.
150     Form CO, Chapter 4, paragraphs 125-126.
151     Form CO, Chapter 4, paragraphs 127-151.
152     Form CO, Chapter 4, paragraphs 152-157.
                                                    69
 ---pagebreak--- (297) Third, the Commission notes that after the Transaction, there will remain numerous
        alternative retailers of non-linear pay TV services such as Netflix (with a market
        share of approximately [20-30]% by volume in 2020), Viaplay (with a market share
        of approximately [10-20]% by volume in 2020), TV2 (with a market share of
        approximately [10-20]% by volume in 2020), Disney+ (with a market share of
        approximately [5-10]% by volume in 2020), Apple TV, Amazon Prime and C More
        (each with market shares of approximately [0-5]% by volume in 2020).
(298) Finally, the Commission notes that it has not received any substantiated complaints
        from the respondents to the market investigation regarding the market for the retail
        supply of non-linear AV services in Norway.
(299) Therefore, the Commission concludes that the Transaction does not raise serious
        doubts as to its compatibility with the internal market as a result of horizontal effects
        on the market for the retail supply of non-linear pay AV services in Norway and all
        plausible market segmentations thereof.
5.4.6. Poland
5.4.6.1. Market for the wholesale supply of TV channels in Poland
        (A)       Notifying Party’s views
(300) The Notifying Party submits that the Transaction would not raise competitive
        concerns in the market for the wholesale supply of TV channels in Poland for the
        following reasons.
(301) First, the Notifying Party submits that the Transaction will give rise to an
        insignificant market shares increment.153
(302) Second, the Notifying Party submits that the Parties are not each other’s closest
        competitors.154
(303) Third, the Notifying Party submits that the merged entity will be constrained by
        large competitors.155
(304) Fourth, the Notifying Party submits that the merged entity will be constrained by
        large customers.156
        (B)       Commission’s assessment
(305) The Commission considers that the Transaction does not raise horizontal concerns in
        the market for the wholesale supply of TV channels in Poland, for the following
        reasons.
(306) First, the Parties’ combined market shares remain moderate and consistently
        below 30% when considering volume-based market shares.
153     Form CO, Chapter 3, paragraphs 244-245.
154     Form CO, Chapter 3, paragraphs 246-253.
155     Form CO, Chapter 3, paragraphs 254-262.
156     Form CO, Chapter 3, paragraphs 263-265.
                                                   70
 ---pagebreak--- (307) Second, the Transaction only gives rise to an insignificant market shares increment.
        Indeed, in 2020, Discovery already accounted for [20-30]% market shares by volume
        whereas WarnerMedia only accounted for [0-5]% market shares by volume. The
        limited change brought along by the merger is further evidenced by HHI
        calculations. Indeed, when considering the market shares by volume, the Delta
        remains consistently below 55.
(308) Third, the Commission notes that after the Transaction, there will remain numerous
        alternative wholesale suppliers of TV channels such as TVP (with a market share of
        approximately [30-40]% by volume in 2020), Polsat (with a market share of
        approximately [20-30]% by volume in 2020), TV Puls (with a market share of
        approximately [5-10]% by volume in 2020), ViacomCBS (with a market share of
        approximately [0-5]% by volume in 2020). Other market participants include
        Disney, Vivendi, Hearst, Sony, BBC, NBCU, AMC, 4Fun Media and Euronews.
(309) Finally, the Commission notes that it has not received any substantiated complaints
        from the respondents to the market investigation regarding the market for the
        wholesale supply of TV channels in Poland.
(310) Therefore, the Commission concludes that the Transaction does not raise serious
        doubts as to its compatibility with the internal market as a result of horizontal effects
        on the market for the wholesale supply of TV channels in Poland and all plausible
        market segmentations thereof.
5.4.6.2. Market for the wholesale supply of pay TV channels in Poland
        (A)       Notifying Party’s views
(311) The Notifying Party submits that the Transaction would not raise competitive
        concerns in the market for the wholesale supply of pay TV channels in Poland for
        the following reasons.
(312) First, the Notifying Party submits that the Transaction will give rise to an
        insignificant market shares increment.157
(313) Second, the Notifying Party submits that the Parties are not each other’s closest
        competitors.158
(314) Third, the Notifying Party submits that the merged entity will be constrained by
        large competitors.159
(315) Fourth, the Notifying Party submits that the merged entity will be constrained by
        large customers.160
157     Form CO, Chapter 3, paragraphs 244-245.
158     Form CO, Chapter 3, paragraphs 246-253.
159     Form CO, Chapter 3, paragraphs 254-262.
160     Form CO, Chapter 3, paragraphs 263-265.
                                                   71
 ---pagebreak---         (B)       Commission’s assessment
(316) The Commission considers that the Transaction does not raise horizontal concerns in
        the market for the wholesale supply of pay TV channels in Poland, for the following
        reasons.
(317) First, the Parties’ combined market shares remain moderate and consistently
        below 40% when considering volume-based market shares.
(318) Second, the Transaction only gives rise to an insignificant market shares increment.
        Indeed, in 2020, Discovery already accounted for [30-40]% market shares by volume
        whereas WarnerMedia only accounted for [0-5]% market shares by volume.
        Therefore, the change on the market brought about by the Transaction is
        insignificant.
(319) Third, the Commission notes that after the Transaction, there will remain numerous
        alternative wholesale suppliers of pay TV channels such as Polsat (with a market
        share of approximately [20-30]% by volume in 2020), ViacomCBS (with a market
        share of approximately [5-10]% by volume in 2020), TVP (with a market share of
        approximately [5-10]% by volume in 2020), Disney (with a market share of
        approximately [5-10]% by volume in 2020). Other market participants include
        Vivendi, Hearst, Sony, BBC, NBCU, AMC and Euronews.
(320) Finally, the Commission notes that it has not received any substantiated complaints
        from the respondents to the market investigation regarding the market for the
        wholesale supply of pay TV channels in Poland.
(321) Therefore, for the reasons set out above, the Commission concludes that the
        Transaction does not raise serious doubts as to its compatibility with the internal
        market as a result of horizontal effects on the market for the wholesale supply of pay
        TV channels in Poland and all plausible market segmentations thereof.
5.4.6.3. Market for the wholesale supply of TV channels for other content in Poland
        (A)       Notifying Party’s views
(322) The Notifying Party submits that the Transaction would not raise competitive
        concerns in the market for the wholesale supply of TV channels for other content in
        Poland for the following reasons.
(323) First, the Notifying Party submits that the Transaction will give rise to an
        insignificant market shares increment.161
(324) Second, the Notifying Party submits that the Parties are not each other’s closest
        competitors.162
(325) Third, the Notifying Party submits that the merged entity will be constrained by
        large competitors.163
161     Form CO, Chapter 3, paragraphs 244-245.
162     Form CO, Chapter 3, paragraphs 246-253.
163     Form CO, Chapter 3, paragraphs 254-262.
                                                  72
 ---pagebreak--- (326) Fourth, the Notifying Party submits that the merged entity will be constrained by
        large customers.164
        (B)       Commission’s assessment
(327) The Commission considers that the Transaction does not raise horizontal concerns in
        the market for the wholesale supply of TV channels for other content in Poland, for
        the following reasons.
(328) First, the Parties’ combined market shares remain moderate and consistently
        below 25% when considering volume-based market shares.
(329) Second, the Transaction only gives rise to an insignificant market shares increment.
        Indeed, in 2020, Discovery already accounted for [20-30]% market shares by volume
        whereas WarnerMedia only accounted for [0-5]% market shares by volume. The
        limited change brought along by the merger is further evidenced by HHI
        calculations. Indeed, when considering the market shares by volume, the Delta
        remains consistently below 30.
(330) Third, the Commission notes that after the Transaction, there will remain numerous
        alternative wholesale suppliers of TV channels such as TVP (with a market share of
        approximately [20-30]% by volume in 2020), Polsat (with a market share of
        approximately [20-30]% by volume in 2020), TV Puls (with a market share of
        approximately [5-10]% by volume in 2020), Disney (with a market share of
        approximately [0-5]% by volume in 2020). Other market participants include
        ViacomCBS, Hearst, Vivendi, Sony, NBCU, BBC, AMC and 4Fun Media.
(331) Finally, the Commission notes that it has not received any substantiated complaints
        from the respondents to the market investigation regarding the market for the
        wholesale supply of TV channels for other content in Poland.
(332) Therefore, for the reasons set out above, the Commission concludes that the
        Transaction does not raise serious doubts as to its compatibility with the internal
        market as a result of horizontal effects on the market for the wholesale supply of TV
        channels for other content in Poland and all plausible market segmentations thereof.
5.4.6.4. Market for the wholesale supply of pay TV channels for other content in Poland
        (A)       Notifying Party’s views
(333) The Notifying Party submits that the Transaction would not raise competitive
        concerns in the market for the wholesale supply of pay TV channels for other
        content in Poland for the following reasons.
(334) First, the Notifying Party submits that the Transaction will give rise to an
        insignificant market shares increment.165
(335) Second, the Notifying Party submits that the Parties are not each other’s closest
        competitors.166
164     Form CO, Chapter 3, paragraphs 263-265.
165     Form CO, Chapter 3, paragraphs 244-245.
                                                  73
 ---pagebreak--- (336) Third, the Notifying Party submits that the merged entity will be constrained by
        large competitors.167
(337) Fourth, the Notifying Party submits that the merged entity will be constrained by
        large customers.168
        (B)       Commission’s assessment
(338) The Commission considers that the Transaction does not raise horizontal concerns in
        the market for the wholesale supply of pay TV channels for other content in Poland,
        for the following reasons.
(339) First, the Parties’ combined market shares remain moderate and consistently below
        25% when considering volume-based market shares.
(340) Second, the Transaction only gives rise to an insignificant market shares increment.
        Indeed, in 2020, Discovery already accounted for [20-30]% market shares by volume
        whereas WarnerMedia only accounted for [0-5]% market shares by volume. The
        limited change brought along by the merger is further evidenced by HHI
        calculations. Indeed, when considering the market shares by volume, the Delta
        remains consistently below 110.
(341) Third, the Commission notes that after the Transaction, there will remain numerous
        alternative wholesale suppliers of pay TV channels for other content such as Polsat
        (with a market share of approximately [20-30]% by volume in 2020), TVP (with a
        market share of approximately [10-20]% by volume in 2020), Disney (with a market
        share of approximately [5-10]% by volume in 2020), ViacomCBS (with a market
        share of approximately [5-10]% by volume in 2020). Other market participants
        include Hearst, Vivendi, Sony, NBCU, BBC and AMC.
(342) Finally, the Commission notes that it has not received any substantiated complaints
        from the respondents to the market investigation regarding the market for the
        wholesale supply of pay TV channels for other content in Poland.
(343) Therefore, for the reasons set out above, the Commission concludes that the
        Transaction does not raise serious doubts as to its compatibility with the internal
        market as a result of horizontal effects on the market for the wholesale supply of pay
        TV channels for other content in Poland and all plausible market segmentations
        thereof.
5.4.6.5. Market for the sale of advertising space on TV channels in Poland
        (A)       Notifying Party’s views
(344) The Notifying Party submits that the Transaction would not raise competitive
        concerns in the market for the sale of advertising space on TV channels in Poland for
        the following reasons.
166     Form CO, Chapter 3, paragraphs 246-253.
167     Form CO, Chapter 3, paragraphs 254-262.
168     Form CO, Chapter 3, paragraphs 263-265.
                                                  74
 ---pagebreak--- (345) First, the Notifying Party submits that the Transaction results in a negligeable market
      shares increment.169
(346) Second, the Notifying Party submits that buyers will continue to constrain the
      merged entity.170
(347) Third, the Notifying Party submits that there are sufficient alternative of large
      suppliers of advertising space on TV channels in Poland.171
(348) Fourth, the Notifying Party considers that online advertising is steadily growing in
      Poland.172
(349) Finally, the Notifying Party considers that there are regulatory requirements in
      Poland that would constrain the Parties’ advertising activities.173
      (B)       Commission’s assessment
(350) The Commission considers that the Transaction does not raise horizontal concerns in
      the market for the sale of advertising space on TV channels in Poland, for the
      following reasons.
(351) First, the Parties’ combined market shares remain moderate and have been
      consistently declining since 2018, from [40-50]% in 2018 to approximately
      [30-40]% in 2020.
(352) Second, the Transaction only gives rise to an insignificant market shares increment.
      Indeed, in 2020, Discovery already accounted for [30-40]% market shares by value
      whereas WarnerMedia only accounted for [0-5]% market shares by value. Therefore,
      the change on the market brought about by the Transaction is insignificant.
(353) Third, there will remain alternative large sellers of advertising space on TV channels
      in Poland, including Polsat (with approximately [30-40]% market shares in 2020),
      TVP (with approximately [30-40]% market shares in 2020) and other sellers which
      account for approximately [10-20]% of the market.
(354) Finally, the Commission notes that it has not received any substantiated complaints
      from the respondents to the market investigation regarding the market for the sale of
      advertising space on TV channels in Poland.
(355) Therefore, for the reasons set out above, the Commission concludes that the
      Transaction does not raise serious doubts as to its compatibility with the internal
      market as a result of horizontal effects on the market for the sale of advertising space
      on TV channels in Poland and all plausible market segmentations thereof.
169   Form CO, Chatper 6, paragraph 103.
170   Form CO, Chatper 6, paragraph 106.
171   Form CO, Chatper 6, paragraph 107.
172   Form CO, Chatper 6, paragraph 113.
173   Form CO, Chatper 6, paragraph 114.
                                                 75
 ---pagebreak--- 5.4.6.6. Market for the sale of advertising space on pay TV channels in Poland
        (A)       Notifying Party’s views
(356) The Notifying Party submits that the Transaction would not raise competitive
        concerns in the market for the sale of advertising space on pay TV channels in
        Poland for the following reasons.
(357) First, the Notifying Party submits that the Transaction results in a negligeable market
        shares increment.174
(358) Second, the Notifying Party submits that buyers will continue to constrain the
        merged entity.175
(359) Third, the Notifying Party submits that there are sufficient alternative of large
        suppliers of advertising space on pay TV channels in Poland.176
(360) Fourth, the Notifying Party considers that online advertising is steadily growing in
        Poland.177
(361) Finally, the Notifying Party considers that there are regulatory requirements in
        Poland that would constrain the Parties’ advertising activities.178
        (B)       Commission’s assessment
(362) The Commission considers that the Transaction does not raise horizontal concerns in
        the market for the sale of advertising space on pay TV channels in Poland, for the
        following reasons.
(363) First, the Parties’ combined market shares remain moderate and have been
        consistently declining since 2018, from [30-40]% in 2018 to approximately
        [30-40]% in 2020.
(364) Second, the Transaction only gives rise to an insignificant market shares increment.
        Indeed, in 2020, Discovery already accounted for [20-30]% market shares by value
        whereas WarnerMedia only accounted for [0-5]% market shares by value. Therefore,
        the change on the market brought about by the Transaction is insignificant.
(365) Third, there will remain alternative large sellers of advertising space on pay TV
        channels in Poland, including Polsat (with approximately [10-20]% market shares in
        2020), TVP (with approximately [0-5]%) and other smaller sellers which account for
        approximately [50-60]% of the market. Smaller sellers include hundreds of small
        pay TV networks owned by players other than Discovery, TVP and Polsat.179
(366) Finally, the Commission notes that it has not received any substantiated complaints
        from the respondents to the market investigation regarding the market for the sale of
        advertising space on pay TV channels in Poland.
174     Form CO, Chatper 6, paragraph 103.
175     Form CO, Chatper 6, paragraph 106.
176     Form CO, Chatper 6, paragraph 107.
177     Form CO, Chatper 6, paragraph 113.
178     Form CO, Chatper 6, paragraph 114.
179     Form CO, Chatper 6, paragraph 110.
                                                 76
 ---pagebreak--- (367) Therefore, for the reasons set out above, the Commission concludes that the
        Transaction does not raise serious doubts as to its compatibility with the internal
        market as a result of horizontal effects on the market for the sale of advertising space
        on pay TV channels in Poland and all plausible market segmentations thereof.
5.4.7. Sweden
5.4.7.1. Market for the wholesale supply of pay TV channels in Sweden
        (A)       Notifying Party’s views
(368) The Notifying Party submits that the Transaction would not raise competitive
        concerns in the market for the wholesale supply of pay TV channels in Sweden for
        the following reasons.
(369) First, the Notifying Party submits that the Transaction will give rise to an
        insignificant market shares increment.180
(370) Second, the Notifying Party submits that the Parties are not each other’s closest
        competitors.181
(371) Third, the Notifying Party submits that the merged entity will be constrained by
        large competitors.182
(372) Fourth, the Notifying Party submits that the merged entity will be constrained by
        large customers.183
        (B)       Commission’s assessment
(373) The Commission considers that the Transaction does not raise horizontal concerns in
        the market for the wholesale supply of pay TV channels in Sweden, for the
        following reasons.
(374) First, the Parties’ combined market shares remain moderate and consistently
        below 25% when considering volume-based market shares.
(375) Second, the Transaction only gives rise to an insignificant market shares increment.
        Indeed, in 2020, Discovery already accounted for [20-30]% market shares by volume
        whereas WarnerMedia only accounted for [0-5]% market shares by volume. The
        limited change brought along by the merger is further evidenced by HHI
        calculations. Indeed, when considering the market shares by volume, the Delta
        remains consistently below 125.
(376) Third, the Commission notes that after the Transaction, there will remain numerous
        alternative wholesale supply of pay TV channels such as NENT (with a market share
        of approximately [30-40]% by volume in 2020), TV4Media (with a market share of
        approximately [20-30]% by volume in 2020), Disney and Viacom CBS (each with a
        market share of approximately [0-5]% by volume in 2020). Other market
        participants include BBC, Hearst, RTVE and TV2.
180     Form CO, Chapter 3, paragraphs 270-272.
181     Form CO, Chapter 3, paragraphs 273-278.
182     Form CO, Chapter 3, paragraphs 279-283.
183     Form CO, Chapter 3, paragraphs 284-286.
                                                   77
 ---pagebreak--- (377) Finally, the Commission notes that it has not received any substantiated complaints
        from the respondents to the market investigation regarding the market for the
        wholesale supply of pay TV channels in Sweden.
(378) Therefore, for the reasons set out above, the Commission concludes that the
        Transaction does not raise serious doubts as to its compatibility with the internal
        market as a result of horizontal effects on the market for the wholesale supply of pay
        TV channels in Sweden and all plausible market segmentations thereof.
5.4.7.2. Market for the retail supply of non-linear AV services in Sweden
        (A)       Notifying Party’s views
(379) The Notifying Party submits that the Transaction would not raise competitive
        concerns in the market for the retail supply of non-linear AV services in Sweden for
        the following reasons.
(380) First, the Notifying Party submits that the Transaction results in a negligeable market
        shares increment.184
(381) Second, the Notifying Party submits that the retail services offered by the Parties do
        not compete particularly closely.185
(382) Third, the Notifying Party submits that the Parties face strong competition from
        many sources, including commercial and publicly funded broadcasters, third-party
        pay TV, SVOD and other OTT platforms.186
(383) Fourth, the Notifying Party submits that consumers are willing to switch between
        different retail offerings.187 This is notably due to the insignificance and reduction in
        switching costs and to changing consumer habits who rely on multiple retail TV
        services.
        (B)       Commission’s assessment
(384) The Commission considers that the Transaction does not raise horizontal concerns in
        the market for the retail supply of non-linear AV services in Sweden, for the
        following reasons.
(385) First, the Parties’ combined market shares remain moderate and consistently
        below 20% when considering value-based market shares. When considering volume-
        based market shares, the combined market shares of the Parties have consistently
        been below 25% since 2018.
(386) Second, the Transaction only gives rise to an insignificant market shares increment.
        Indeed, in 2020, WarnerMedia already accounted for [10-20]% market shares by
        volume whereas Discovery only accounted for [0-5]% market shares by volume. The
        limited change brought along by the merger is further evidenced by HHI
184     Form CO, Chapter 4, paragraphs 122-124.
185     Form CO, Chapter 4, paragraphs 125-126.
186     Form CO, Chapter 4, paragraphs 127-151.
187     Form CO, Chapter 4, paragraphs 152-157.
                                                    78
 ---pagebreak---        calculations. Indeed, when considering the market shares by volume, the Delta
       remained consistently below 150 since 2018.
(387) Third, the Commission notes that after the Transaction, there will remain numerous
       alternative retailers of non-linear pay TV services such as Netflix (with a market
       share of approximately [20-30]% by volume in 2020), Viaplay (with a market share
       of approximately [20-30]% by volume in 2020), C More (with a market share of
       approximately [5-10]% by volume in 2020), AppleTV+ (with a market share of
       approximately [5-10]% by volume in 2020), Amazon Prime Video (with a market
       share of approximately [0-5]% by volume in 2020), Canal Digital Video (with a
       market share of approximately [0-5]% by volume in 2020). Other smaller market
       participants include Boxer and DAZN.
(388) Finally, the Commission notes that it has not received any substantiated complaints
       from the respondents to the market investigation regarding the market for the retail
       supply of non-linear AV services in Sweden.
(389) Therefore, for the reasons set out above, the Commission concludes that the
       Transaction does not raise serious doubts as to its compatibility with the internal
       market as a result of horizontal effects on the market for the retail supply of non-
       linear pay AV services in Sweden and all plausible market segmentations thereof.
5.5.   Vertical Assessment
5.5.1. Introduction
(390) In this Section, the Commission will assess whether the proposed Transaction would
       give rise to foreclosure in any of the markets that are vertically affected. A merger is
       said to result in foreclosure where actual or potential rivals' access to supplies or
       markets is hampered or eliminated as a result of the Transaction, thereby reducing
       these companies' ability and/or incentive to compete.188
(391) Two forms of foreclosure can be distinguished. The first is where the merger is
       likely to raise the costs of downstream rivals by restricting their access to an
       important input (input foreclosure). The second is where the merger is likely to result
       in foreclosure of upstream rivals by restricting their access to a sufficiently large
       customer base (customer foreclosure).
(392) Input foreclosure arises where, post-merger, the merged entity would be likely to
       restrict access to the products or services that it would have otherwise supplied
       absent the merger, thereby raising its downstream rivals' costs by making it harder
       for them to obtain supplies of the input under similar prices and conditions as absent
       the merger.189
(393) In assessing the likelihood of an anticompetitive input foreclosure scenario, the
       Commission examines, first, whether the merged entity would have, post-merger, the
       ability to substantially foreclose access to inputs, second, whether it would have the
188    Non-Horizontal Merger Guidelines, paragraph 29.
189    Non-Horizontal Merger Guidelines, paragraph 31.
                                                       79
 ---pagebreak---         incentive to do so, and third, whether a foreclosure strategy would have a significant
        detrimental effect on competition downstream.190
(394) Customer foreclosure may occur when a supplier integrates with an important
        customer in the downstream market. Because of this downstream presence, the
        merged entity may foreclose access to a sufficient customer base to its actual or
        potential rivals in the upstream market (the input market) and reduce their ability or
        incentive to compete.191
(395) In assessing the likelihood of an anticompetitive customer foreclosure scenario, the
        Commission examines the three following cumulative elements: first, whether the
        merged entity would have the ability to foreclose access to downstream markets by
        reducing its purchases from its upstream rivals; second, whether it would have the
        incentive to reduce its purchases upstream; and third, whether a foreclosure strategy
        would have a significant detrimental effect on consumers in the downstream market
        intertwined.192
5.5.2. Vertically affected markets arising from the relationships between the markets for
        the production of AV content (upstream), and the markets for the wholesale supply of
        TV channels (downstream)
(396) The Transaction gives rise to affected markets arising from the relationships between
        the markets for the production of AV content (upstream), and the markets for the
        wholesale supply of TV channels (downstream) in Finland, Germany, Italy, Poland,
        and Spain. In each of these Member States, the market investigation led to very
        similar outcomes with respect to all of the relevant vertically affected markets, and
        irrespective of any possible market segmentation. In light of the results of the market
        investigation, in the following recitals, the Commission provides a joint assessment
        of the risk of anticompetitive foreclosure that could arise from the relationships
        between the markets for the production of AV content (upstream), and the markets
        for the wholesale supply of TV channels (downstream), in Finland, Germany, Italy,
        Poland, and Spain.
5.5.2.1. Identification of the vertically affected markets in the relevant Member States
        (A)       Finland
(397) In Finland, the upstream market for the production of commissioned AV content
        (where only Warner Media is active with a presence of [5-10]% in revenue) is
        vertically affected due to its connection with the downstream markets for (i) the
        wholesale supply of pay TV channels (where only Discovery is active with [40-50]%
        market share in TV audience), and (ii) the wholesale supply of pay TV channels for
        other content (where only Discovery is active with [70-80]% market share in TV
        audience).
        (B)       Germany
(398) In Germany, the upstream market for the production of commissioned AV content
        (where the Parties’ marginal combined market share is [0-5]% in revenue), and the
190     Non-Horizontal Merger Guidelines, paragraph 32.
191     Non-Horizontal Merger Guidelines, paragraph 58.
192     Non-Horizontal Merger Guidelines, paragraph 59.
                                                        80
 ---pagebreak---         upstream market for the production of non-captive commissioned AV content
        (where the Parties’ combined market share is [5-10]% in revenue) are vertically
        affected due to their connection with the downstream market for the wholesale
        supply of pay TV channels for children content (where only WarnerMedia is active
        with [90-100]% market share in TV audience).
        (C)       Italy
(399) In Italy, the upstream market for the production of commissioned AV content (where
        only Discovery is active with a marginal presence of less than [0-5]% in revenue) is
        vertically affected due to its connection with the downstream markets for (i) the
        wholesale supply of TV channels for children content (where the Parties’ combined
        market share is [50-60]% in TV audience), and (ii) the wholesale supply of FTA TV
        channels for children content (where the Parties’ combined market share is [50-60]%
        in TV audience).
        (D)       Poland
(400) In Poland, the upstream market for the production of commissioned AV content
        (where only Discovery is active with a marginal market share of [0-5]% in revenue),
        and the upstream market for the production of non-captive commissioned AV
        content (where only Discovery is active with a marginal market share of [0-5]% in
        revenue), are vertically affected due to their connection with the downstream market
        for the wholesale supply of pay TV channels (where the Parties’ combined market
        share is [30-40]% in TV audience).
        (E)       Spain
(401) In Spain, the upstream market for the production of commissioned AV content
        (where he Parties’ marginal combined market share is [0-5]% in revenue), and the
        upstream market for the production of non-captive commissioned AV content
        (where he Parties’ marginal combined market share is [0-5]% in revenue) are
        vertically affected due to their connection with the downstream market for the
        wholesale supply of FTA TV channels for children (where only WarnerMedia is
        active with a market share of [30-40]% in TV audience).
5.5.2.2. The Notifying Party’s view
(402) As regards input foreclosure, the Notifying Party notes that, for all the countries
        considered, due to the merged entity’s limited presence in the upstream markets
        post-Transaction, there is no risk of input foreclosure.
(403) As regards customer foreclosure, the Notifying Party notes that, for all the countries
        considered, the merged entity would have neither the ability nor the incentive to
        pursue a total or partial customer foreclosure strategy, and that any such customer
        foreclosure strategies would have no significant effect on effective competition.
(404) From the outset, the Notifying Party submits that already today and independently of
        the Transaction, both Parties are active at several levels of the audio-visual content
        supply chain, in Finland, Germany, Italy, Poland and Spain. Notwithstanding this
        vertical integration, there has not been any evidence to date of any foreclosure
        concerns, and this will not change post-Transaction. The Parties both already own a
        portfolio of channels in addition to being present upstream in the production of
                                                   81
 ---pagebreak---         commissioned AV content, and external commissioned AV content, and that
        therefore, there is a significantly reduced set of pre-existing customer relationships
        between the Parties as individual broadcasters, and third-party producers of
        commissioned TV content.
(405) Additionally, the Notifying Party notes that, in all the relevant countries, the merged
        entity will not be able to afford to pursue a customer foreclosure strategy, as this
        would reduce the breadth and quality content offered and included in its TV
        channels, and undermine the attractiveness of its wholesale channels. Any increment
        in market share resulting from the Transaction will not beget a commensurate
        increase in the merged entity’s market and bargaining power, especially since the
        Parties and other wholesale suppliers of TV channels are operating in an increasingly
        competitive environment, and will continue to require a broad content line-up to
        retain their customers.
(406) Post-Transaction, the merged entity’s OTT platforms would, if anything, provide an
        incentive to the Parties to increase their acquired audio-visual content from upstream
        rival producers, both with regard to its OTT platforms and in its capacity as a
        broadcaster. Ensuring the distribution of a wide range of third-party content via its
        TV channels, the merged entity will attract additional customers for its OTT
        platforms. Ensuring the distribution of third-party audio-visual content from rival
        upstream producers via its TV channels is therefore likely to increase demand for its
        own flagship OTT products, which constitute a core rationale of the Transaction, and
        applies to all countries where the Parties are active.
(407) Lastly, the Notifying Party observes that, in all of the relevant countries, AV content
        produced upstream is increasingly available via non-traditional services delivered via
        the internet instead of being broadcasted, and that all of these services offer viewers
        the option to stream TV channels live, as well as interactive and on-demand video
        streaming services. Therefore, any refusal to acquire commissioned content from
        competing providers would not have any material impact (foreclosure effects). Rival
        content providers can supply content to the wide variety of companies active post-
        Transaction on the and retail markets, including OTT platforms, as well as set up
        their own retail platform.
5.5.2.3. The Commission’s assessment
(408) With respect to the risk of input foreclosure, the Commission observes that, in all of
        the relevant Member States, the presence of the merged entity in the upstream
        markets is small and therefore, that the merged entity would not have the ability to
        engage in input foreclosure after the Transaction.
(409) With respect to the risk of customer foreclosure, the Commission considers that, in
        all of the relevant Member States, a number of factors indicate that the merged entity
        would likely have no ability, nor incentive, to foreclose access to the downstream
        market for the wholesale supply of TV channels, irrespective of any possible market
        definition.
        (A)       Ability to engage in total or partial customer foreclosure
(410) The Commission considers that, in all of the relevant Member States, the merged
        entity will not have the ability to engage in foreclosure by restricting access to the
        merged entity’s TV channels, irrespective of any possible market definition, to rival
                                                    82
 ---pagebreak---       suppliers active in the upstream markets for the market for the production of
      commissioned AV content, and external commissioned AV content, for the
      following reasons.
(411) First, the Commission’s investigation in Germany, Finland, Italy, and Poland,
      suggests that the Transaction would likely have no material impact on the markets
      for the production of AV content. In Spain, where the market investigation yields
      mixed results, market participants raised concerns related to input foreclosure rather
      than customer foreclosure. Additionally, in all of these countries no market
      participants put forward evidence suggesting that the Transaction would affect any
      of the potential segments differently.193
(412) Second, for customer foreclosure to be a concern, the vertical merger must involve a
      company which is an important customer with a significant degree of market power
      in the downstream market.194 Except for Finland, in all of the vertical links
      considered, there is always one Party that is present both upstream and downstream.
      Therefore, for those countries, the Commission observes that the affected vertical
      relationship is pre-existing to the Transaction, and there is no evidence of a customer
      foreclosure strategy currently in place. Additionally, considering the very limited
      market shares (and increments when relevant) in the upstream markets, there is no
      evidence to suggest that the Transaction will alter the existing risk of anticompetitive
      customer foreclosure in any of the relevant Member State.
(413) Third, competition concerns regarding customer foreclosure are unlikely to arise
      when there is a sufficiently large customer base, at present or in the future, that is
      likely to turn to other suppliers active in the upstream market.195 In that regard, the
      market for the wholesale supply of TV channels, irrespective of any possible market
      definition, is not a necessary intermediary for undertakings active in the markets for
      the production of commissioned AV content, and external commissioned AV
      content, to make their product available to end consumers. Notably, recent
      technological advances and evolving consumers’ habits have largely affected the
      landscape of the distribution of AV content. Indeed, the Commission observes that
      digitalisation has lowered entry barriers to the distribution of content, such that
      content producers can easily reach viewers through Direct to Consumers (DTC)
      technologies (e.g., for instance through the internet by supplying their content to an
      OTT AV retailer). The traditional distribution infrastructure (involving for instance
      TV towers, cable systems, etc.), which requires AV content to be aggregated into TV
      channels before being supplied, is no longer a necessary means of distribution for
      AV content to reach consumers.196
193   Responses to questionnaire Q1 – Questionnaires to market participantsnparticipants in the AV sector (Italy),
      question 49; Responses to questionnaire Q5 – Questionnaires to market participants in the AV sector (Germany),
      question 21; Responses to questionnaire Q8 – Questionnaires to market participants in the AV sector (Finland),
      question 27; Responses to questionnaire Q10 – Questionnaires to market participants in the AV sector (Poland),
      question 27; Responses to questionnaire Q11 – Questionnaires to market participants in the AV sector (Spain),
      question 27.
194   Non-Horizontal Merger Guidelines, paragraph 60.
195   Non-Horizontal Merger Guidelines, paragraph 60.
196   NERA, The Impact of Online Video Distribution on the Global Market for Digital Content, 3, available at
      https://www.nera.com/content/dam/nera/publications/2019/NERA-The-Impact-of-Online-Video-Distribution.pdf.
                                                               83
 ---pagebreak--- (414) Moreover, in all of the relevant Member States, the market investigation confirmed
      that the traditional three-layer classification197 fails to properly take into account the
      markets dynamics resulting from Direct-to-Consumer broadcasting, as the frontiers
      between the different layers are becoming increasingly blurred as a consequence of
      the global market trend for vertical integration. In particular, in Germany, one
      respondent explained that: “the respective levels of the value chain obviously mix
      with one another, because the upstream market […] also engages in the downstream
      market for the retail supply of AV services towards end-customers […]. Therefore, in
      particular the upstream market also competes with the intermediate and the
      downstream market for end-customer products for AV content.”198 In Finland, one
      respondent indicated that: “the content owners, such as film studios and sports rights
      owners are building their own direct-to-consumer retail offerings, “bypassing”
      broadcasters, competing broadcasters and teleoperators.”199
(415) Furthermore, in Italy one respondent explained that: “the competitive landscape has
      changed considerably in the recent past. More specifically, the downstream market
      for the retail supply of AV services should no longer be segmented according to
      traditional drivers; and vertical integration is now widespread, which in turn has
      implications on the availability of AV content to be purchased at the upstream and
      intermediate levels of the supply chain.”200 In Spain, one respondent also stated that:
      “We consider that the frontiers between the different models or markets of AV
      content are becoming more and more blurred”201 Finally in Poland, one respondent
      indicated that: “The traditional value chain […] is more and more challenged by
      market developments and changing consumer behaviour, particularly the switch to
      non-linear and OTT viewing. Content providers are increasingly by-passing channel
      providers and traditional distribution platforms and offering their content directly to
      the consumer via an app on an OTT basis.”202
(416) Fourth, the market investigation showed that market participants active in the
      production of commissioned content, and external commissioned content, in the
      Member States concerned, are largely vertically integrated and also active in the
      retail market, such that any third party is not an absolute necessity for them to make
      their content available to end consumers. This is for instance the case of RAI -
      Radiotelevisione italiana S.p.A., Sky Italia, Telecom Italia (TIM) in Italy;203 of
      Deutsche Telekom AG, ARD, The Walt Disney Company, or Sky Deutschland
      GmbH in Germany;204 or of NBC Universal, and Radio Television Española (RTVE)
      in Spain.205
(417) Therefore, the Commission considers that, in all of the relevant Member States, there
      are sufficient economic alternatives for the upstream rivals to sell their output,
      without incurring significantly higher costs, and that the merged entity would lack
197   The three layer classification is defined in paragraph (7) of this decision. It comprises i) the production and
      supply of AV content; (ii) the wholesale supply of TV channels, and; (iii) the retail supply of AV services to end
      customers.
198   Responses to questionnaire Q5 – Questionnaires to market participants in the AV sector (Germany), questions 5,
      5.1, 5.2.
199   Responses to questionnaire Q8 – Questionnaires to market participants in the AV sector (Finland), question 5.1.
200   Responses to questionnaire Q1 – Questionnaires to market participants in the AV sector (Italy), question 5.1.
201   Responses to questionnaire Q11 – Questionnaires to market participants in the AV sector (Spain), question 5.1.
202   Responses to questionnaire Q10 – Questionnaires to market participants in the AV sector (Poland), question 5.1.
203   Responses to questionnaire Q1 – Questionnaires to market participants in the AV sector (Italy), question 4.
204   Responses to questionnaire Q5 – Questionnaires to market participants in the AV sector (Germany), question 4.
205   Responses to questionnaire Q11 – Questionnaires to market participants in the AV sector (Spain), question 4.
                                                           84
 ---pagebreak---       the ability to engage into a customer foreclosure strategy, irrespective of the market
      definition.
      (B)         Incentive to engage in total or partial customer foreclosure
(418) The Commission considers that, in all of the relevant Member States, the merged
      entity will likely not have the incentives to engage in foreclosure by restricting
      access to the merged entity’s TV channels, irrespective of any possible market
      definition, to rival suppliers active in the upstream markets for the market for the
      production of commissioned AV content, and external commissioned AV content,
      for the following reasons.
(419) First, in all of the countries considered, the presence of the Parties upstream in the
      markets for the production of commissioned content, and external commissioned
      content, is very limited, and therefore that the current incentives to acquire content
      from upstream producers will remain largely unchanged post-Transaction. More
      particularly, the Commission observes that the market for the retail supply of AV
      services is very dynamic. Retail suppliers have strong incentives to provide access to
      a large variety and volume of content, more specifically to original content, in order
      to be sufficiently competitive in the market. In particular, in 2015 the European
      Audiovisual Observatory (EAO) already observed that: “The provision of original
      content for the online world is a relatively new development, which appears to be
      growing exponentially, alongside the other market indicators. New content is of
      particular value for competing SVOD operators in order to create new brands of
      programming and distinguish them from other services.”206 During the market
      investigation, a large majority of market participants confirmed that the need for
      original and comprehensively attractive content to efficiently compete at all level of
      the AV value chain is still relevant today.
(420) Second, if the merged entity plans to further develop its OTT activities on the market
      for the retail supply of AV services in Finland, Germany, Italy, Poland, and Spain, it
      will have incentive post-Transaction to acquire a wide range of content to
      consolidate the service and attract a broad range of viewers, and would lack the
      incentive to engage into a customer foreclosure strategy.
(421) In any event, given the lack of ability to foreclose, it is not necessary to conclude as
      to whether the merged entity will have the incentive to implement a strategy aimed
      at foreclosing competing rivals active in the market for the production of
      commissioned content, and external commissioned content, from accessing its TV
      channels, irrespective of any possible market definition, in Finland, Germany, Italy,
      Poland, and Spain.
      (C)         Conclusion
(422) In view of the above, the Commission concludes that the Transaction does not raise
      serious doubts as to its compatibility with the internal market in relation to potential
      customer foreclosure with respect to:
      (a)       the vertical relationships between the markets for the production of
                commissioned AV content and the production of non-captive commissioned
206   D. Kevin, “Investments in original content by audiovisual services”, EAO, November 2015, page 43, available at
      https://rm.coe.int/16807835ca.
                                                            85
 ---pagebreak---                  content (upstream), and the markets for the wholesale supply of pay TV
                 channels and pay TV channels for other content (downstream) in Finland;
        (b)      the vertical relationships between the markets for the production of
                 commissioned AV content and the production of non-captive commissioned
                 content (upstream), and the market for the wholesale supply of pay TV
                 channels for children content (downstream) in Germany;
        (c)      the vertical relationships between the market for the production of
                 commissioned AV content (upstream), and the markets for the wholesale
                 supply of TV channels for children content and FTA TV channels for
                 children content (downstream) in Italy;
        (d)      the vertical relationships between the markets for the production of
                 commissioned AV content and the production of non-captive commissioned
                 content (upstream), and the market for the wholesale supply of pay TV
                 channels (downstream) in Poland; and
        (e)      the vertical relationships between the markets for the production of
                 commissioned AV content and the production of non-captive commissioned
                 content (upstream), and the market for the wholesale supply of FTA TV
                 channels for children content (downstream) in Spain.
5.5.3. Vertically affected markets arising from the relationships between the markets for
        the licensing of AV content (upstream), and the markets for the wholesale supply of
        TV channels (downstream)
(423) The Transaction gives rise to affected markets arising from the relationships between
        the markets for the licensing of AV content (upstream), and the markets for the
        wholesale supply of TV channels (downstream) in Bulgaria, Finland, Germany,
        Italy, Poland, Romania, and Spain. In each of these Member States, the market
        investigation led to very similar outcomes with respect to all of the relevant
        vertically affected markets, and irrespective of any possible market segmentation. In
        light of the results of the market investigation, in the following recitals, the
        Commission provides a joint assessment of the risk of anticompetitive foreclosure
        that could arise from the relationships between the markets for the licensing of AV
        content (upstream), and the markets for the wholesale supply of TV channels
        (downstream), in Bulgaria, Finland, Germany, Italy, Poland, Romania, and Spain.
5.5.3.1. Identification of the vertically affected markets in the relevant Member States
        (A)        Bulgaria
(424) In Bulgaria, the following markets are vertically affected due to their connection
        with the downstream market for the wholesale supply of pay TV channels for
        children content (where only WarnerMedia is active with [30-40]% market shares):
        (i) the upstream markets for the licensing of broadcasting rights for other AV content
        (where the Parties’ combined market share is below 20%), (ii) the licensing of
        broadcasting rights for sports AV content (where only Discovery is active with
        market share below 30%), (iii) the licensing of broadcasting rights for children AV
        content (where the Parties’ combined market share is below 20%), (iv) the licensing
        of broadcasting rights for AV content in the first pay exhibition window (where the
        Parties’ combined market share is below 20%), and (v) the licensing of broadcasting
                                                   86
 ---pagebreak---       rights for AV content in the second pay exhibition window (where the Parties’
      combined market share is below 20%).
      (B)       Finland
(425) In Finland, the following upstream markets are vertically affected due to their
      connection with the downstream markets for: (i) the wholesale supply of pay TV
      channels (where only Discovery is active with [40-50]% market share), and (ii) the
      wholesale supply of pay TV channels for other content (where only Discovery is
      active with [70-80]% market share) (i) the licensing of broadcasting rights for AV
      content (excluding sports and news content, and where the Parties’ combined market
      share is [0-5]%), (ii) the licensing of broadcasting rights for films AV content (where
      only WarnerMedia is active with market share below 30%), (iii) the licensing of
      broadcasting rights for US films AV content (where only WarnerMedia is active
      with market share below 30%), (iv) the licensing of broadcasting rights for non-US
      films AV content (where only WarnerMedia is active with market share below 30%),
      (v) the licensing of broadcasting rights for other AV content (where only the Parties’
      combined market share is below 20%), (vi) the licensing of broadcasting rights for
      children AV content (where only the Parties’ combined market share is below 20%),
      (vii) the licensing of broadcasting rights for AV content in the first pay exhibition
      window (where the Parties’ combined market share is below 20%), and (viii) the
      licensing of broadcasting rights for AV content in the second pay exhibition window
      (where the Parties’ combined market share is below 20%).
      (C)       Germany
(426) In Germany, the following upstream markets are vertically affected due to their
      connection with the downstream market for the wholesale supply of pay TV
      channels for children content (where only WarnerMedia is active with [90-100]%
      market share): (i) the licensing of broadcasting rights for AV content (excluding
      sports and news content, and where the Parties’ combined market share is
      [10-20]%), (ii) the licensing of broadcasting rights for films AV content (where only
      WarnerMedia is active with market share below 30%), (iii) the licensing of
      broadcasting rights for US films AV content (where only WarnerMedia is active
      with market share below 30%), (iv) the licensing of broadcasting rights for non-US
      films AV content (where only WarnerMedia is active with market share below 30%),
      (v) the licensing of broadcasting rights for other AV content (where only the Parties’
      combined market share is below 20%), (vi) the licensing of broadcasting rights for
      children AV content (where only the Parties’ combined market share is below 20%),
      (vii) the licensing of broadcasting rights for AV content in the first pay exhibition
      window (where the Parties’ combined market share is below 20%), and (viii) the
      licensing of broadcasting rights for AV content in the second pay exhibition window
      (where the Parties’ combined market share is below 20%).
      (D)       Italy
(427) In Italy, the following upstream markets are vertically affected due to their
      connection with the downstream markets for (i) the wholesale supply of TV channels
      for children content (where the Parties’ combined market share is [50-60]%), and
      (ii) the wholesale supply of FTA TV channels for children content (where the
      Parties’ combined market share is [50-60]%): (i) the licensing of broadcasting rights
      for AV content (excluding sports and news content, and where the Parties’ combined
      market share is [10-20]%), (ii) the licensing of broadcasting rights for films AV
                                                  87
 ---pagebreak---       content (where only WarnerMedia is active with market share below 30%), (iii) the
      licensing of broadcasting rights for US films AV content (where only WarnerMedia
      is active with market share below 30%), (iv) the licensing of broadcasting rights for
      non-US films AV content (where only WarnerMedia is active with market share
      below 30%), (v) the licensing of broadcasting rights for other AV content (where
      only the Parties’ combined market share is below 20%), (vi) the licensing of
      broadcasting rights for children AV content (where only the Parties’ combined
      market share is below 20%), (vii) the licensing of broadcasting rights for sports AV
      content (where only Discovery is active with share below 30%), and (viii) the
      licensing of broadcasting rights for AV content in the FTA exhibition window
      (where the Parties’ combined market share is below 20%).
      (E)       Poland
(428) In Poland, the following upstream markets are vertically affected due to their
      connection with the downstream market for the wholesale supply of pay TV
      channels (where the Parties’ combined market share is [30-40]%): (i) the licensing of
      broadcasting rights for AV content (excluding sports and news content, and where
      the Parties’ combined market share is [0-5]%), (ii) the licensing of broadcasting
      rights for films AV content (where only WarnerMedia is active with market share
      below 30%), (iii) the licensing of broadcasting rights for US films AV content
      (where only WarnerMedia is active with market share below 30%), (iv) the licensing
      of broadcasting rights for non-US films AV content (where only WarnerMedia is
      active with market share below 30%), (v) the licensing of broadcasting rights for
      other AV content (where only the Parties’ combined market share is below 20%),
      (vi) the licensing of broadcasting rights for children AV content (where only the
      Parties’ combined market share is below 20%), (vii) the licensing of broadcasting
      rights for sports AV content (where only Discovery is active with share below 30%),
      (viii) the licensing of broadcasting rights for AV content in the first pay exhibition
      window (where the Parties’ combined market share is below 20%), and (ix) the
      licensing of broadcasting rights for AV content in the second pay exhibition window
      (where the Parties’ combined market share is below 20%).
      (F)       Romania
(429) In Romania, the following upstream markets are vertically affected due to their
      connection with the downstream market for the wholesale supply of pay TV
      channels for children (where the Parties’ combined market share is [30-40]%): (i) the
      licensing of broadcasting rights for AV content (excluding sports and news content,
      and where the Parties’ combined market share is [0-5]%), (ii) the licensing of
      broadcasting rights for other AV content (where only the Parties’ combined market
      share is below 20%), (iii) the licensing of broadcasting rights for children AV
      content (where only the Parties’ combined market share is below 20%), (iv) the
      licensing of broadcasting rights for sports AV content (where only Discovery is
      active with share below 30%), (v) the licensing of broadcasting rights for AV
      content in the first pay exhibition window (where the Parties’ combined market
      share is below 20%), and (vi) the licensing of broadcasting rights for AV content in
      the second pay exhibition window (where the Parties’ combined market share is
      below 20%).
                                                88
 ---pagebreak---         (G)       Spain
(430) In Spain, the following upstream markets are vertically affected due to their
        connection with the downstream market for the wholesale supply of FTA TV
        channels children (where the Parties’ combined market share is [30-40]%): (i) the
        licensing of broadcasting rights for AV content (excluding sports and news content,
        and where the Parties’ combined market share is [5-10]%), (ii) the licensing of
        broadcasting rights for other AV content (where only the Parties’ combined market
        share is below 20%), (iii) the licensing of broadcasting rights for children AV
        content (where only the Parties’ combined market share is below 20%), (iv) the
        licensing of broadcasting rights for sports AV content (where only Discovery is
        active with share below 30%), and (v) the licensing of broadcasting rights for AV
        content in the FTA exhibition window (where the Parties’ combined market share is
        below 20%).
5.5.3.2. The Notifying Party’s view
(431) As regards input foreclosure, the Notifying Party notes that, for all the countries
        considered, due to the merged entity’s limited presence in the upstream markets
        post-Transaction, there is no risk of input foreclosure.
(432) As regards customer foreclosure, the Notifying Party notes that, for all the countries
        considered, the merged entity would have neither the ability nor the incentive to
        pursue a total or partial customer foreclosure strategy, and that any such customer
        foreclosure strategies would have no significant effect on effective competition.
(433) From the outset, the Notifying Party submits that already today and independently of
        the Transaction, both Parties are active at several levels of the audio-visual content
        supply chain, in Bulgaria, Finland, Germany, Italy, Poland, Romania, and Spain.
        Notwithstanding this vertical integration, there has not been any evidence to date of
        any foreclosure concerns, and this will not change post-Transaction. The Parties both
        already own a portfolio of channels in addition to being present upstream in the
        licensing of broadcasting rights for AV content, including all possible market
        definition, and that therefore, there is a significantly reduced set of pre-existing
        customer relationships between the Parties as individual broadcasters, and third-
        party licensers of broadcasting rights for AV content.
(434) Additionally, the Notifying Party notes that, in all the relevant countries, the merged
        entity will not be able to afford to pursue a customer foreclosure strategy, as this
        would reduce the breadth and quality content offered and included in its TV
        channels, and undermine the attractiveness of its wholesale channels. Any increment
        in market share resulting from the Transaction will not beget a commensurate
        increase in the merged entity’s market and bargaining power, especially since the
        Parties and other wholesale suppliers of TV channels are operating in an increasingly
        competitive environment, and will continue to require a broad content line-up to
        retain their customers.
(435) Post-Transaction, the merged entity’s OTT platforms would, if anything, provide an
        incentive to the Parties to increase their acquired audio-visual content from upstream
        rival licensers, both with regard to its OTT platforms and in its capacity as a
        broadcaster. Ensuring the distribution of a wide range of third-party content via its
        TV channels, the merged entity will attract additional customers for its OTT
        platforms. Ensuring the distribution of third-party audio-visual content from rival
                                                    89
 ---pagebreak---         upstream licensers via its TV channels is therefore likely to increase demand for its
        own flagship OTT products, which constitute a core rationale of the Transaction, and
        applies to all countries where the Parties are active.
(436) Lastly, the Notifying Party observes that, in all of the relevant countries, AV content
        licensed upstream is increasingly available via non-traditional services delivered via
        the internet instead of being broadcasted, and that all of these services offer viewers
        the option to stream TV channels live, as well as interactive and on-demand video
        streaming services. Therefore, any refusal to acquire commissioned content from
        competing licensers would not have any material impact (foreclosure effects). Rival
        AV content licenser can supply content to the wide variety of companies active post-
        Transaction on the and retail markets, including OTT platforms, as well as set up
        their own retail platform.
5.5.3.3. The Commission’s assessment
        (A)        Ability to engage in total or partial customer foreclosure
(437) The Commission considers that, in all of the relevant Member States and irrespective
        of any possible market definition, the merged entity will not have the ability to
        engage in foreclosure by restricting access to the merged entity’s TV channels, to
        rival suppliers active in the upstream markets for the licensing of AV content, for the
        following reasons.
(438) First, in all of the relevant Member States, the market investigation yields mixed
        results as regards the impact of the Transaction on the markets for the licencing of
        AV content. However, the majority of the concerns raised relate to input foreclosure
        rather than customer foreclosure.207
(439) Second, competition concerns regarding customer foreclosure are unlikely to arise
        when there is a sufficiently large customer base, at present or in the future, that is
        likely to turn to other suppliers active in the upstream market.208 In that regard, the
        market for the wholesale supply of TV channels, irrespective of any possible market
        definition, is not a necessary intermediary for undertakings active in the markets for
        the licensing of AV content, irrespective of the market definition, to make their
        product available to end consumers. Notably, recent technological advances and
        evolving consumers’ habits have largely affected the landscape of the distribution of
        AV content. Digitalisation has lowered entry barriers to the distribution of content,
        such that content licensors can easily reach viewers through Direct to Consumers
        (DTC) technologies (e.g., for instance through the internet by supplying their content
        to an OTT AV retailer). The traditional distribution infrastructure (involving for
        instance TV towers, cable systems, etc.), which requires AV content to be
207     Responses to questionnaire Q1 – Questionnaires to market participants in the AV sector (Italy); Responses to
        questionnaire Q5 – Questionnaires to market participants in the AV sector (Germany); Responses to
        questionnaire Q6 – Questionnaires to market participants in the AV sector (Romania); Responses to
        questionnaire Q7 – Questionnaires to market participants in the AV sector (Bulgaria); Responses to questionnaire
        Q8 – Questionnaires to market participants in the AV sector (Finland); Responses to questionnaire Q10 –
        Questionnaires to market participants in the AV sector (Poland); Responses to questionnaire Q11 –
        Questionnaires to market participants in the AV sector (Spain).
208     Non-Horizontal Merger Guidelines, paragraph 60.
                                                              90
 ---pagebreak---       aggregated into TV channels before being supplied, is no longer a necessary means
      of distribution for AV content to reach consumers.209
(440) Moreover, in all of the relevant Member States, the market investigation confirmed
      that the traditional three-layer classification fails to properly take into account the
      markets dynamics resulting from Direct-to-Consumer broadcasting, as the frontiers
      between the different layers are becoming increasingly blurred as a consequence of
      the global market trend for vertical integration. In particular, in Germany, one
      respondent explained that: “the respective levels of the value chain obviously mix
      with one another, because the upstream market […] also engages in the downstream
      market for the retail supply of AV services towards end-customers […]. Therefore, in
      particular the upstream market also competes with the intermediate and the
      downstream market for end-customer products for AV content.”210 In Finland, one
      respondent indicated that: “the content owners, such as film studios and sports rights
      owners are building their own direct-to-consumer retail offerings, “bypassing”
      broadcasters, competing broadcasters and teleoperators.”211
(441) Furthermore, in Italy one respondent explained that: “the competitive landscape has
      changed considerably in the recent past. More specifically, the downstream market
      for the retail supply of AV services should no longer be segmented according to
      traditional drivers; and vertical integration is now widespread, which in turn has
      implications on the availability of AV content to be purchased at the upstream and
      intermediate levels of the supply chain.”212 In Spain, one respondent also provided
      that: “We consider that the frontiers between the different models or markets of AV
      content are becoming more and more blurred”213 Finally in Poland, one respondent
      indicated that: “The traditional value chain […] is more and more challenged by
      market developments and changing consumer behaviour, particularly the switch to
      non-linear and OTT viewing. Content providers are increasingly by-passing channel
      providers and traditional distribution platforms and offering their content directly to
      the consumer via an app on an OTT basis.”214215
(442) Third, from the market investigation, the Commission understands that, in the
      Member States concerned, market participants active in the licensing of broadcasting
      rights for AV content, irrespective of the market definition, are largely vertically
      integrated and also active in the retail market, such that any third party is not an
      absolute necessity for them to make their content available to end consumers. This is
      for instance the case of RAI - Radiotelevisione italiana S.p.A., Sky Italia, Telecom
      Italia (TIM) in Italy;216 of Deutsche Telekom AG, ARD, The Walt Disney Company,
209   NERA, The Impact of Online Video Distribution on the Global Market for Digital Content, 3, available at
      https://www.nera.com/content/dam/nera/publications/2019/NERA-The-Impact-of-Online-Video-
      Distribution.pdf.
210   Responses to questionnaire Q5 – Questionnaires to market participants in the AV sector (Germany), questions 5,
      5.1, 5.2.
211   Responses to questionnaire Q8 – Questionnaires to market participants in the AV sector (Finland), question 5.1.
212   Responses to questionnaire Q1 – Questionnaires to market participants in the AV sector (Italy), question 5.1.
213   Responses to questionnaire Q11 – Questionnaires to market participants in the AV sector (Spain), question 5.1.
214   Responses to questionnaire Q10 – Questionnaires to market participants in the AV sector (Poland), question 5.1.
215   Responses to questionnaire Q6 – Questionnaires to market participants in the AV sector (Romania), and
      Responses to questionnaire Q7 – Questionnaires to market participants in the AV sector (Bulgaria), also confirm
      the views that the market is undergoing rapid changes with respect to the ways content is supplied to end-
      consumers.
216   Responses to questionnaire Q1 – Questionnaires to market participants in the AV sector (Italy), question 4.
                                                          91
 ---pagebreak---       or Sky Deutschland GmbH in Germany;217 or of NBC Universal, and Radio
      Television Española (RTVE) in Spain.218
(443) Therefore, the Commission considers that, in all of the relevant Member States, there
      are sufficient economic alternatives for the upstream rivals to sell their output,
      without incurring significantly higher costs, and that the merged entity would lack
      the ability to engage into a customer foreclosure strategy, irrespective of the market
      definition.
      (B)           Incentive to engage in total or partial customer foreclosure
(444) The Commission considers that, in all of the relevant Member States, the merged
      entity will likely not have the incentives to engage in foreclosure by restricting
      access to the merged entity’s TV channels, irrespective of any possible market
      definition, to rival suppliers active in the upstream markets for the market for the
      licensing of AV content, irrespective of the market definition, for the following
      reasons.
(445) First, in all of the countries considered, the presence of the Parties upstream in the
      markets for the licensing of AV content, irrespective of the market definition, is not
      sufficient to provide market power, and therefore that the current incentives to
      acquire content from upstream producers will remain largely unchanged post-
      Transaction. More particularly, the market for the retail supply of AV services is
      very dynamic, and retail suppliers have strong incentives to provide access to a large
      variety and volume of content, more specifically to original content, in order to be
      sufficiently competitive in the market. In particular, in 2015 the European
      Audiovisual Observatory (EAO) already observed that: “The provision of original
      content for the online world is a relatively new development, which appears to be
      growing exponentially, alongside the other market indicators. New content is of
      particular value for competing SVOD operators in order to create new brands of
      programming and distinguish them from other services.”219 During the market
      investigation, a large majority of market participants confirmed that the need for
      original and comprehensively attractive content to efficiently compete at all level of
      the AV value chain is still relevant today.
(446) Second, if the merged entity plans to further develop its OTT activities on the market
      for the retail supply of AV services in Bulgaria, Finland, Germany, Italy, Poland,
      Romania, and Spain, it will have incentive post-Transaction to acquire a wide range
      of content to consolidate the service and attract a broad range of viewers, and would
      lack the incentive to engage into a customer foreclosure strategy.
(447) In any event, given the lack of ability to foreclose, it is not necessary to conclude as
      to whether the merged entity will have the incentive to implement a strategy aimed
      at foreclosing competing rivals active in the market for the licensing of AV content,
      irrespective of the market definition, from accessing its TV channels, irrespective of
      any possible market definition, in Bulgaria, Finland, Germany, Italy, Poland,
      Romania, and Spain.
217   Responses to questionnaire Q5 – Questionnaires to market participants in the AV sector (Germany), question 4.
218   Responses to questionnaire Q11 – Questionnaires to market participants in the AV sector (Spain), question 4.
219   D. Kevin, “Investments in original content by audiovisual services”, EAO, November 2015, page 43, available at
      https://rm.coe.int/16807835ca.
                                                            92
 ---pagebreak---       (C)      Conclusion
(448) In view of the above, the Commission concludes that the Transaction does not raise
      serious doubts as to its compatibility with the internal market in relation to potential
      customer foreclosure with respect to:
      (a)    the vertical relationship between the markets for (i) the licensing of
             broadcasting rights for other AV content (excluding sports and news
             content), (ii) the licensing of broadcasting rights for sports AV content,
             (iii) the licensing of broadcasting rights for children AV content, (iv) the
             licensing of broadcasting rights for AV content in the first pay exhibition
             window, and (v) the licensing of broadcasting rights for AV content in the
             second pay exhibition window, (all upstream); and the market for the
             wholesale supply of pay TV channels for children content (downstream), in
             Bulgaria.
      (b)    the vertical relationship between the markets for (i) the licensing of
             broadcasting rights for AV content (excluding sports and news content),
             (ii) the licensing of broadcasting rights for films AV content, (iii) the
             licensing of broadcasting rights for US films AV content, (iv) the licensing of
             broadcasting rights for non-US films AV content, (v) the licensing of
             broadcasting rights for other AV content, (vi) the licensing of broadcasting
             rights for children AV content, (vii) the licensing of broadcasting rights for
             AV content in the first pay exhibition window, and (viii) the licensing of
             broadcasting rights for AV content in the second pay exhibition window, (all
             upstream); and the markets for (i) the wholesale supply of pay TV channels,
             and (ii) the wholesale supply of pay TV channels for other content, (all
             downstream), in Finland;
      (c)    the vertical relationship between the markets for (i) the licensing of
             broadcasting rights for AV content (excluding sports and news content),
             (ii) the licensing of broadcasting rights for films AV content, (iii) the
             licensing of broadcasting rights for US films AV content, (iv) the licensing of
             broadcasting rights for non-US films AV content, (v) the licensing of
             broadcasting rights for other AV content, (vi) the licensing of broadcasting
             rights for children AV content, (vii) the licensing of broadcasting rights for
             AV content in the first pay exhibition window, and (viii) the licensing of
             broadcasting rights for AV content in the second pay exhibition window, (all
             upstream); and the market for the wholesale supply of pay TV channels for
             children content (downstream), in Germany.
      (d)    the vertical relationship between the markets for (i) the licensing of
             broadcasting rights for AV content (excluding sports and news content),
             (ii) the licensing of broadcasting rights for films AV content, (iii) the
             licensing of broadcasting rights for US films AV content, (iv) the licensing of
             broadcasting rights for non-US films AV content, (v) the licensing of
             broadcasting rights for other AV content, (vi) the licensing of broadcasting
             rights for children AV content, (vii) the licensing of broadcasting rights for
             sports AV content, and (viii) the licensing of broadcasting rights for AV
             content in the FTA exhibition window, (all upstream); and the markets for
             (i) the wholesale supply of TV channels for children content, and (ii) the
             wholesale supply of FTA TV channels for children content, (all downstream),
             in Italy.
                                                93
 ---pagebreak---         (e)     the vertical relationship between the markets for (i) the licensing of
                broadcasting rights for AV content (excluding sports and news content),
                (ii) the licensing of broadcasting rights for films AV content, (iii) the
                licensing of broadcasting rights for US films AV content, (iv) the licensing of
                broadcasting rights for non-US films AV content, (v) the licensing of
                broadcasting rights for other AV content, (vi) the licensing of broadcasting
                rights for children AV content, (vii) the licensing of broadcasting rights for
                sports AV content, (viii) the licensing of broadcasting rights for AV content
                in the first pay exhibition window, and (ix) the licensing of broadcasting
                rights for AV content in the second pay exhibition window, (all upstream);
                and the market for the wholesale supply of pay TV channels (downstream),
                in Poland.
        (f)     the vertical relationship between the markets for (i) the licensing of
                broadcasting rights for AV content (excluding sports and news content),
                (ii) the licensing of broadcasting rights for other AV content, (iii) the
                licensing of broadcasting rights for children AV content, (iv) the licensing of
                broadcasting rights for sports AV content, (v) the licensing of broadcasting
                rights for AV content in the first pay exhibition, and (vi) the licensing of
                broadcasting rights for AV content in the second pay exhibition window, (all
                upstream); and the market for the wholesale supply of pay TV channels for
                children (downstream), in Romania.
        (g)     the vertical relationships between the markets for (i) the licensing of
                broadcasting rights for AV content (excluding sports and news content),
                (ii) the licensing of broadcasting rights for other AV content, (iii) the
                licensing of broadcasting rights for children AV content, (iv) the licensing of
                broadcasting rights for sports AV content, and (v) the licensing of
                broadcasting rights for AV content in the FTA exhibition window, (all
                upstream); and the market for the wholesale supply of FTA TV channels
                children (downstream), in Spain.
5.5.4. Vertically affected markets arising from the relationships between the markets for
        the wholesale supply of TV channels (upstream), and the markets for the retail
        supply of AV services (downstream)
5.5.4.1. Bulgaria
(449) In Bularia, the upstream market for the wholesale supply of pay TV channels for
        children content (where only Warner Media is active with [30-40]% market share in
        TV audience) is vertically affected due to its connection with the downstream
        markets for (i) the retail supply of pay AV services (where the Parties’ combined
        market share is [0-5]% in revenue), and (ii) the retail supply of non-linear pay AV
        services or SVOD services (where the Partie’s combined market share is [5-10]% in
        subscriptions).
        (A)       The Notifying Party’s view
(450) As regards customer foreclosure, the Notifying Party notes that, due to the merged
        entity’s limited presence in the downstream markets post-Transaction, there is no
        risk of customer foreclosure.
                                                   94
 ---pagebreak--- (451) As regards input foreclosure, the Notifying Party notes that the merged entity would
      have neither the ability nor the incentive to pursue a total or partial input foreclosure
      strategy, and that any such input foreclosure strategies would have no significant
      effect on effective competition.
(452) From the outset, the Notifying Party submits that already today and independently of
      the Transaction, both Parties are active at several levels of the audio-visual content
      supply chain. Notwithstanding this vertical integration, there has not been any
      evidence to date of any foreclosure concerns, and this will not change post-
      Transaction. There is only one Party present in the upstream market, and both Parties
      are present pre-Transaction in the downstream markets, such that there are no new
      link created by the Transaction. This means that the Transaction does not create (or,
      if there was any ability pre-Transaction, add to) the ability to engage in vertical
      foreclosure.
(453) Additionally, the Notifying Party argues that, to sustain a theory of harm based on
      input foreclosure, the increase in the downstream share would need to be sufficient
      to create an incentive to engage in vertical foreclosure post-Transaction. By contrast,
      the Transaction leads to only a modest increase in downstream share and hence it not
      plausible in the Parties’ view that such a modest increase could create such an
      incentive to foreclose.
      (B)       The Commission’s assessment
(454) With respect to the risk of customer foreclosure, the Commission observes that the
      presence of the merged entity in the downstream market is below 30% and therefore,
      that the merged entity would not have the ability to engage in input foreclosure after
      the Transaction.
(455) With respect to the risk of input foreclosure, the Commission considers that a
      number of factors indicate that the merged entity would likely have no ability, nor
      incentive, to foreclose access to the upstream market for the wholesale supply of pay
      TV channels for children content.
      (B.i)     Ability to engage in total or partial input foreclosure
(456) The Commission considers that the merged entity will not have the ability to engage
      in foreclosure by restricting access to the merged entity’s pay TV channels for
      children content, to rival retailers active downstream in the retail supply of pay AV
      services, and the retail supply of non-linear pay AV services (SVOD services), for
      the following reasons.
(457) First, input foreclosure may raise competition problems only if it concerns an
      important input for the downstream product, for instance because it is a critical
      component, or because it is a significant source of product differentiation.220 The
      affected vertical relationship links an upstream market as narrowly defined on the
      basis of its thematic content, with downstream markets which, to the contrary,
      include various types of thematic content. During the market investigation, a
      majority of the respondents explained that the segmentation of TV channels by
      thematic content is not relevant to assess the situation in Bulgaria today, and that
220   Non-Horizontal Merger Guidelines, paragraph 34.
                                                      95
 ---pagebreak---       there are many TV channels offered in the market which are not specialised by
      genre. Additionally, none of the market participants considered that TV channels
      specialised in content targeted to children constitute an input of particular
      importance to compete in the market for the retail supply of AV services.221 This
      suggests that pay TV channels specialized in content targeted to children cannot be
      considered to be particularly important inputs for the downstream markets for (i) the
      retail supply of pay AV services, and (ii) the retail supply of non-linear pay AV
      services (or SVOD services) in Bulgaria.
(458) Second, for an input foreclosure concern to arise, the vertically integrated firm
      resulting from the merger must have a significant degree of market power in the
      upstream market, such that reducing access to the merged entity’s upstream product
      could negatively affect the overall availability of inputs or the downstream markets
      in terms of price or quality.222 However, the Transaction will not strengthen the
      merged entity’s position in the relevant upstream market because only WarnerMedia
      is active in the wholesale supply of pay TV channels for children content, with a
      market share that is below 40%, and therefore not in itself representative of a very
      large market position.223 Additionally, the presence of sufficient existing or potential
      alternatives in the market for the wholesale supply of TV channels for children
      content is supported by the market investigation where one respondent explained
      that: “broadcasters [of non-genre specific TV channels can easily start producing
      specialized TV channels – they already have different types of content and can easily
      acquire further content of a given genre – provided that this is profitable due to the
      current market situation.”224
(459) Third, the Commission observes that the affected vertical relationship is pre-existing
      to the Transaction, as WarnerMedia is also active in the downstream markets, and
      there is no evidence of an input foreclosure strategy currently in place. Additionally,
      considering the very limited combined market shares and increments in the two
      downstream markets considered, there is no evidence to suggest that the Transaction
      will alter any existing risk of anticompetitive input foreclosure.
(460) Therefore, the Commission considers that there are sufficient economic alternatives
      for the downstream rivals to have adequate access to inputs, without incurring
      significantly higher costs, and that the merged entity would lack the ability to engage
      into an input foreclosure strategy.
      (B.ii)      Incentive to engage in total or partial input foreclosure
(461) The Commission considers that the merged entity will likely not have the incentives
      to engage in foreclosure by restricting access to the merged entity’s pay TV channels
      for children content, to rival suppliers active in the downtream markets for (i) the
      retail supply of pay AV services and (ii) the retail supply of non-linear pay AV
      services.
221   Responses to questionnaire Q7 – Questionnaires to market participants in the AV sector (Bulgaria), questions 11,
      11.1, 11.1.1, 14.2, and 14.2.1.
222   Non-Horizontal Merger Guidelines, paragraph 35 and 36.
223   Horizontal Merger Guidelines, paragraph 17.
224   Responses to questionnaire Q7 – Questionnaires to market participants in the AV sector (Bulgaria),
      question 11.1.1.
                                                          96
 ---pagebreak--- (462) The presence of the Parties downstream in the markets the retail supply of pay AV
        services, and the retail supply of non-linear pay AV services (or SVOD services), is
        very limited, and therefore that the current incentives to supply content to
        downstream retailers will remain largely unchanged post-Transaction. More
        particularly, the Commission observes that the Parties would bear the full cost of a
        hypothetical input foreclosure strategy, but would reap only a small fraction of any
        hypothetical benefits with such a low combined share in the downstream markets
        (below [5-10]%). The Parties’ low combined share suggests that customers
        switching from an AV retail supplier that the Parties tried to foreclose would be
        more likely to switch to rivals than to the merged entity.
(463) In any event, given the lack of ability to foreclose, it is not necessary to conclude as
        to whether the merged entity will have the incentive to implement a strategy aimed
        at foreclosing competing downstream rivals active in the markets for the retail
        supply of pay AV services, and the retail supply of non-linear pay AV services (or
        SVOD services), from accessing its pay TV channels for children content in
        Bulgaria.
        (B.iii)   Conclusion
(464) In view of the above, the Commission concludes that the Transaction does not raise
        serious doubts as to its compatibility with the internal market in relation to potential
        input foreclosure with respect to the vertical relationships between the market for the
        wholesale supply of pay TV channels for children content (upstream), and the
        markets for (i) the retail supply of pay AV services, and (ii) the retail supply of non-
        linear pay AV services or SVOD services, (downstream) in Bulgaria.
5.5.4.2. Finland
(465) In Finland, the upstream markets for (i) the wholesale supply of pay TV channels
        (where only Discovery is active with [40-50]% market share in TV audience),
        (ii) the wholesale supply of pay TV channels for sports content (where only
        Discovery is active with [40-50]% market share in TV audience), and (iii) the
        wholesale supply of pay TV channels for other content (where only Discovery is
        active with [70-80]% market share in TV audience); are vertically affected due to
        their connection with the downstream markets for (i) the retail supply of pay AV
        services (where the Parties’ combined market share is [5-10]% in revenue), and
        (ii) the retail supply of non-linear pay AV services (or SVOD services) (where the
        Partie’s combined market share is [20-30]% in subscriptions).
        (A)       The Notifying Party’s view
(466) As regards customer foreclosure, the Notifying Party notes that, due to the merged
        entity’s limited presence in the downstream markets post-Transaction (always below
        30%), there is no risk of customer foreclosure.
(467) As regards input foreclosure, the Notifying Party notes that the merged entity would
        have neither the ability nor the incentive to pursue a total or partial input foreclosure
        strategy, and that any such input foreclosure strategies would have no significant
        effect on effective competition.
(468) From the outset, the Notifying Party submits that already today and independently of
        the Transaction, both Parties are active at several levels of the audio-visual content
                                                   97
 ---pagebreak---       supply chain. Notwithstanding this vertical integration, there has not been any
      evidence to date of any foreclosure concerns, and that this will not change post-
      Transaction. There is only one Party present in the upstream market, and both Parties
      are present pre-Transaction in the downstream markets, such that there is no new
      link created by the Transaction. This means that the Transaction does not create (or,
      if there was any ability pre-Transaction, add to) the ability to engage in vertical
      foreclosure.
(469) Additionally, the Notifying Party argues that, to sustain a theory of harm based on
      input foreclosure, the increase in the downstream share would need to be sufficient
      to create an incentive to engage in vertical foreclosure post-Transaction. By contrast,
      the Transaction leads to only a modest increase in downstream share (notably in the
      market for the retail supply of pay AV services) and hence it is not plausible in the
      Parties’ view that such a modest increase could create such an incentive to foreclose.
(470) With respect to the market for the retail supply of non-linear pay AV services (or
      SVOD services), where the merged entity’s market share will be slightly higher, the
      Notifying Party submits that in Finland, the Parties do not supply downstream
      SVOD competitors with linear channels. Therefore, the Parties have no ability to
      engage in input foreclosure. The Notifying Party also argues that in any event, retail
      platforms can source their content (in the form of programs, formats, series, films,
      etc. and not merely TV channels) from a wide range of sources, locally or
      internationally, and hence that wholesale suppliers of TV channels are constrained
      by a multitude of AV suppliers.225
      (B)         The Commission’s assessment
(471) With respect to the risk of customer foreclosure, the Commission observes that the
      presence of the merged entity in the downstream market is below 30% and therefore,
      that the merged entity would not have the ability to engage in customer foreclosure
      after the Transaction.
(472) With respect to the risk of input foreclosure, the Commission considers that a
      number of factors indicate that the merged entity would likely have no ability, nor
      incentive, to foreclose access to the upstream markets for (i) the wholesale supply of
      pay TV channels, (ii) the wholesale supply of pay TV channels for sports content,
      and (iii) the wholesale supply of pay TV channels for other content.
      (B.i)       Ability to engage in total or partial input foreclosure
(473) The Commission considers that the merged entity will not have the ability to engage
      in foreclosure by restricting access to the merged entity’s pay TV channels, pay TV
      channels for sports content, and pay TV channels for other content; to rival retailers
      active downstream in the retail supply of pay AV services, and the retail supply of
      non-linear pay AV services (SVOD services), for the following reasons.
(474) First, input foreclosure may raise competition problems only if it concerns an
      important input for the downstream product, for instance because it is a critical
      component, or because it is a significant source of product differentiation.226 Except
      for the upstream markets for the wholesale supply of pay TV channels, the affected
225   Chapter 7 to the Form CO, paragraph 131.
226   Non-Horizontal Merger Guidelines, paragraph 34.
                                                      98
 ---pagebreak---       vertical relationships link upstream markets which are narrowly defined on the basis
      of their thematic content, with downstream markets which, to the contrary, include
      various type of thematic content. During the market investigation, a majority of the
      respondents explained that the segmentation of TV channels by thematic content is
      not relevant to assess the situation in Finland today, and that there are many TV
      channels offered in the market which are not specialised by genre. Additionally,
      none of the market participants raised the concern that TV channels specialised in
      sports content and/or other content constitute an input of particular importance to
      compete in the market for the retail supply of AV services.227 This suggest that pay
      TV channels specialized in sports content and/or other content cannot be considered
      to be particularly important inputs for the downstream markets for (i) the retail
      supply of pay AV services, and (ii) the retail supply of non-linear pay AV services
      (or SVOD services) in Finland.
(475) Second for input foreclosure to be a concern, the vertically integrated firm resulting
      from the merger must have a significant degree of market power in the upstream
      market, such that reducing access to the merged entity’s upstream product could
      negatively affect the overall availability of inputs or the downstream markets in
      terms of price or quality.228 However, the Transaction will not strengthen the merged
      entity’s position in the relevant upstream markets because only Discovery is active
      in (i) the wholesale supply of pay TV channels, (ii) the wholesale supply of pay TV
      channels for sports content, and (iii) the wholesale supply of pay TV channels for
      other content. Additionally, the Commission observes that the affected vertical
      relationship is pre-existing to the Transaction, as Discovery is also active in the
      downstream markets, and there is no evidence of an input foreclosure strategy
      currently in place.
(476) Third, considering the very limited combined market shares and increments on the
      the downstream market for the retail supply of pay AV services, there is no evidence
      to suggest that the Transaction will alter the existing risk of anticompetitive input
      foreclosure.
(477) Fourth, the downstream market for the retail supply of non-linear pay AV services
      (SVOD services), where the Parties have a higher combined market share, is a
      relatively recent and dynamic market which has been largely impacted by the
      technological advances (e.g., internet accessibility), and evolving consumer habits
      (e.g., consumption of on demand content). TV channels do not represent the most
      important input for retailers of SVOD services, which can also acquire valuable
      input in the form of un-aggregated content directly from other actors active in the
      market for the production of AV content or the market for the licensing of AV
      content. The market investigation also confirmed that the traditional three-layer
      classification fails to properly take into account the markets dynamics resulting from
      Direct-to-Consumer services, as the frontiers between the different layers are
      becoming increasingly blurred as a consequence of the global market trend for
      vertical integration. In particular, one respondent explained that: “Examples of the
      recent and significant changes in the AV value chain are […] SVOD providers like
      Netflix competing directly with pay TV for end-costumers and operating as vertically
      integrated service providers […]; and Broadcasters operating in retail with their
227   Responses to questionnaire Q3 – Questionnaires to market participants in the AV sector (Finland), questions 11.1
      and 11.1.1.
228   Non-Horizontal Merger Guidelines, paragraph 35 and 36.
                                                          99
 ---pagebreak---       own DtC (direct to consumer) streaming services (digital subscriptions), thereby
      bypassing traditional distributors for end-customer relationships.”229
(478) Therefore, the Commission considers that there are sufficient economic alternatives
      for the downstream rivals to have adequate access to inputs, without incurring
      significantly higher costs, and that the merged entity would lack the ability to engage
      into an input foreclosure strategy.
      (B.ii)     Incentive to engage in total or partial input foreclosure
(479) The Commission considers that the merged entity will likely not have the incentives
      to engage in foreclosure by restricting access to the merged entity’s pay TV
      channels, pay TV channels for sports content, and pay TV channels for other
      content, to rival suppliers active in the downstream markets for (i) the retail supply
      of pay AV services and (ii) the retail supply of non-linear pay AV services, for the
      following reasons.
(480) First, the presence of the Parties , and therefore the current incentives to supply
      content to downstream retailers on the downstream market for the retail supply of
      pay AV serviceswill remain largely unchanged post-Transaction. More particularly,
      the Commission observes that the Parties would bear the full cost of a hypothetical
      input foreclosure strategy, but would reap only a small fraction of any hypothetical
      benefits with such a low combined share in the downstream markets (around
      [5-10]%). The Parties’ low combined share suggests that customers switching from
      an AV retail supplier that the Parties tried to foreclose would be more likely to
      switch to rivals than to the merged entity.
(481) Second, both Parties are active on to the downstream market for the retail supply of
      non-linear pay AV services (or SVOD services), where the Parties have a higher
      combined market share, through platforms of very differentiated focus. Discovery
      only has [0-5]% market share with the Discovery+ and Eurosport Player SVOD
      services, focusing on general entertainment and sports content. WarnerMedia has
      [20-30]% market share with the SVOD services associated with HBO, focusing on
      premium films and TV series content. Post-Transacion, any additional market power
      downstream would come from WarnerMedia’s SVOD services. Additionally,
      WarnerMedia’s SVOD services are not likely to benefit from Discovery’s TV
      channels which, due to their focus, would not represent a critical input. Therefore,
      the current incentives to supply content to downstream retailers will remain largely
      unchanged post-Transaction. More particularly, the Commission observes that the
      Parties would bear the full cost of a hypothetical input foreclosure strategy, but
      would reap only a small fraction of any hypothetical benefits, as Discovery’s TV
      channels are not likely to lead to a significant increase in the number of subscribers
      of the merged entity’s SVOD services.
(482) In any event, given the lack of ability to foreclose, it is not necessary to conclude as
      to whether the merged entity will have the incentive to implement a strategy aimed
      at foreclosing competing downstream rivals active in the markets for the retail
      supply of pay AV services, and the retail supply of non-linear pay AV services (or
      SVOD services), from accessing its pay TV channels, pay TV channels for sports
      content, and pay TV channels for other content, in Finland.
229   Responses to questionnaire Q3 – Questionnaires to market participants in the AV sector (Finland), question 5.1.
                                                         100
 ---pagebreak---         (B.iii)   Conclusion
(483) In view of the above, the Commission concludes that the Transaction does not raise
        serious doubts as to its compatibility with the internal market in relation to potential
        input foreclosure with respect to the vertical relationships between the markets for (i)
        the wholesale supply of pay TV channels (upstream), (ii) the wholesale supply of
        pay TV channels for sports content (upstream), and (iii) the wholesale supply of pay
        TV channels for other content (upstream); and the markets for (i) the retail supply of
        pay AV services (downstream), and (ii) the retail supply of non-linear pay AV
        services (or SVOD services) (downstream), in Finland.
5.5.4.3. Italy
(484) In Italy, the upstream markets for (i) the wholesale supply of TV channels for
        children content (where the Parties’ combined market share is [50-60]% in TV
        audience), and (ii) the wholesale supply of FTA TV channels for children content
        (where the Parties’ combined market share is [50-60]% in TV audience); are
        vertically affected due to their connection with the downstream markets for (i) the
        retail supply of pay AV services (where only Discovery is active with [0-5]% market
        share revenue), (ii) the retail supply of non-linear pay AV services (or SVOD
        services) (where only Discovery is active with [0-5]% market share in
        subscriptions), and (iii) the retail supply of non-linear FTA AV services (or AVOD
        services) (where only Discovery is active with [0-5]% market share Revenue).
        (A)       The Notifying Party’s view
(485) As regards customer foreclosure, the Notifying Party notes that, due to the merged
        entity’s limited presence in the downstream markets post-Transaction, there is no
        risk of customer foreclosure.
(486) As regards input foreclosure, the Notifying Party notes that the merged entity would
        have neither the ability nor the incentive to pursue a total or partial input foreclosure
        strategy, and that any such input foreclosure strategies would have no significant
        effect on effective competition.
(487) From the outset, the Notifying Party submits that already today and independently of
        the Transaction, both Parties are active at several levels of the audio-visual content
        supply chain. Notwithstanding this vertical integration, there has not been any
        evidence to date of any foreclosure concerns, and this will not change post-
        Transaction. There is only one Party present in the upstream market, and both Parties
        are present pre-Transaction in the downstream markets, such that there is no new
        link created by the Transaction. This means that the Transaction does not create (or,
        if there was any ability pre-Transaction, add to) the ability to engage in vertical
        foreclosure.
(488) Additionally, the Notifying Party argues that, to sustain a theory of harm based on
        input foreclosure, the increase in the downstream share would need to be sufficient
        to create an incentive to engage in vertical foreclosure post-Transaction. By contrast,
        the Transaction leads to only a modest increase in downstream share and hence it is
        not plausible in the Parties’ view that such a modest increase could create such an
        incentive to foreclose.
                                                   101
 ---pagebreak---       (B)         The Commission’s assessment
(489) With respect to the risk of customer foreclosure, the Commission observes that the
      presence of the merged entity in the downstream market is below 30% and therefore,
      that the merged entity would not have the ability to engage in customer foreclosure
      after the Transaction.
(490) With respect to the risk of input foreclosure, the Commission considers that a
      number of factors indicate that the merged entity would likely have no ability, nor
      incentive, to foreclose access to the upstream markets for (i) the wholesale supply of
      TV channels for children content, and (ii) the wholesale supply of FTA TV channels
      for children content.
      (B.i)       Ability to engage in total or partial input foreclosure
(491) The Commission considers that the merged entity will not have the ability to engage
      in foreclosure by restricting access to the merged entity’s pay TV channels for
      children content, to rival retailers active downstream in the retail supply of pay AV
      services, the retail supply of non-linear pay AV services (SVOD services), and the
      retail supply of non-linear FTA AV services (AVOD services), for the following
      reasons.
(492) First, input foreclosure may raise competition problems only if it concerns an
      important input for the downstream product, for instance because it is a critical
      component, or because it is a significant source of product differentiation.230 The
      affected vertical relationships link upstream markets which are narrowly defined on
      the basis thematic content, with downstream markets which, to the contrary, include
      various type of thematic content. During the market investigation, although a
      majority of the respondents explained that the segmentation of TV channels by
      thematic content could be relevant to assess the situation in Italy today, the market
      investigation also suggested that providers of retail AV services wish to offer a
      complementary range of genres, and have flexibility regarding the composition of
      their offering.231 This suggests that TV channels specialized in content targeted to
      children cannot be considered to be particularly important inputs for the downstream
      markets for (i) the retail supply of pay AV services, (ii) the retail supply of non-
      linear pay AV services (or SVOD services), and (iii) the retail supply of non-linear
      FTA AV services (or AVOD services) in Italy.
(493) Second, for input foreclosure to be a concern, the vertically integrated firm resulting
      from the merger must have a significant degree of market power in the upstream
      market, such that reducing access to the merged entity’s upstream product could
      negatively affect the overall availability of inputs or the downstream markets in
      terms of price or quality.232 However, as already explained in Section 5.4.4, the
      Transaction will not strengthen the merged entity’s position in the relevant upstream
      markets, notably due to the existence of sufficient alternative suppliers, the
      competitive constraint exercised by retail AVOD service on FTA TV channels, and
      the fact that WarnerMedia’s FTA TV channels for children content available in Italy
230   Non-Horizontal Merger Guidelines, paragraph 34.
231   Responses to questionnaire Q1 – Questionnaires to market participants in the AV sector (Italy), question 15.1
      and 15.1.1.
232   Non-Horizontal Merger Guidelines, paragraph 35 and 36.
                                                        102
 ---pagebreak---       are solely supplied through Boing with Mediaset, [DURATION OF THE
      AGREEMENT BETWEEN WARNERMEDIA AND MEDIASET].
(494) Third, the Commission observes that the affected vertical relationship is pre-existing
      to the Transaction, as Discovery is also active in the downstream markets, and there
      is no evidence of an input foreclosure strategy currently in place. Additionally,
      considering the very limited combined market shares and increments in the two
      downstream markets considered, there is no evidence to suggest that the Transaction
      will alter the existing risk of anticompetitive input foreclosure.
(495) Therefore, the Commission considers that the merged entity would lack the ability to
      engage into an input foreclosure strategy.
      (B.ii)    Incentive to engage in total or partial input foreclosure
(496) The Commission considers that the merged entity will likely not have the incentives
      to engage in foreclosure by restricting access to the merged entity’s TV channels for
      children content and FTA TV channels for children content, to rival suppliers active
      in the downtream markets for (i) the retail supply of pay AV services and (ii) the
      retail supply of non-linear pay AV services.
(497) The presence of the Parties downstream in the markets the retail supply of pay AV
      services, and the retail supply of non-linear pay AV services (or SVOD services), is
      very limited, and therefore that the current incentives to supply content to
      downstream retailers will remain largely unchanged post-Transaction. More
      particularly, the Commission observes that the Parties would bear the full cost of a
      hypothetical input foreclosure strategy, but would reap only a small fraction of any
      hypothetical benefits with such a low combined share in the downstream markets
      (below [0-5]%). The Parties’ low combined share suggests that customers switching
      from an AV retail supplier that the Parties tried to foreclose would be more likely to
      switch to rivals than to the merged entity.
(498) In any event, given the lack of ability to foreclose, it is not necessary to conclude as
      to whether the merged entity will have the incentive to implement a strategy aimed
      at foreclosing competing downstream rivals active in the markets for the retail
      supply of pay AV services, and the retail supply of non-linear pay AV services (or
      SVOD services), from accessing its TV channels for children content and FTA TV
      channels for children content in Italy.
      (B.iii)   Conclusion
(499) In view of the above, the Commission concludes that the Transaction does not raise
      serious doubts as to its compatibility with the internal market in relation to potential
      input foreclosure with respect to the vertical relationships between the markets for
      (i) the wholesale supply of TV channels for children content (upstream), (ii) the
      wholesale supply of FTA TV channels for children content (upstream); and (i) the
      retail supply of pay AV services (downstream), (ii) the retail supply of non-linear
      pay AV services (or SVOD services) (downstream), and (iii) the retail supply of
      non-linear FTA AV services (or AVOD services) (downstream), in Italy.
                                                 103
 ---pagebreak--- 5.5.4.4. Norway
(500) In Norway, the upstream market for the wholesale supply of pay TV channels for
        sports content (where only Discovery is active with [40-50]% market share in TV
        audience), is vertically affected due to its connection with the downstream markets
        for (i) the retail supply of pay AV services (where the Parties’ combined market
        share is [5-10]% in Revenue), and (ii) the retail supply of non-linear pay AV services
        (or SVOD services) (where the Partie’s combined market share is [20-30]% in
        subscriptions).
        (A)         The Notifying Party’s view
(501) As regards customer foreclosure, the Notifying Party notes that, due to the merged
        entity’s limited presence in the downstream markets post-Transaction, there is no
        risk of customer foreclosure.
(502) As regards input foreclosure, the Notifying Party notes that the merged entity would
        have neither the ability nor the incentive to pursue a total or partial input foreclosure
        strategy, and that any such input foreclosure strategies would have no significant
        effect on effective competition.
(503) From the outset, the Notifying Party submits that already today and independently of
        the Transaction, both Parties are active at several levels of the audio-visual content
        supply chain. Notwithstanding this vertical integration, there has not been any
        evidence to date of any foreclosure concerns, and that this will not change post-
        Transaction. There is only one Party present in the upstream market, and both Parties
        are present pre-Transaction in the downstream markets, such that there is no new
        link created by the Transaction. This means that the Transaction does not create (or,
        if there was any ability pre-Transaction, add to) the ability to engage in vertical
        foreclosure.
(504) Additionally, the Notifying Party argues that, to sustain a theory of harm based on
        input foreclosure, the increase in the downstream share would need to be sufficient
        to create an incentive to engage in vertical foreclosure post-Transaction. By contrast,
        the Transaction leads to only a modest increase in downstream share (notably in the
        market for the retail supply of pay AV services) and hence it is not plausible in the
        Parties’ view that such a modest increase could create such an incentive to foreclose.
(505) With respect to the market for the retail supply of non-linear pay AV services (or
        SVOD services), where the merged entity’s market share will be slightly higher, the
        Notifying Party submits that in Norway, the Parties do not supply downstream
        SVOD competitors with linear channels. Therefore, the Parties have no ability to
        engage in input foreclosure. The Notifying Party also argues that in any event, retail
        platforms can source their content (in the form of programs, formats, series, films,
        etc. and not merely TV channels) from a wide range of sources, locally or
        internationally, and hence that wholesale suppliers of TV channels are constrained
        by a multitude of AV suppliers.233
233     Chapter 7 to the Form CO, paragraph 165.
                                                  104
 ---pagebreak---       (B)        The Commission’s assessment
(506) With respect to the risk of customer foreclosure, the Commission observes that the
      presence of the merged entity in the downstream market is below 30% and therefore,
      that the merged entity would not have the ability to engage in customer foreclosure
      after the Transaction.
(507) With respect to the risk of input foreclosure, the Commission considers that a
      number of factors indicate that the merged entity would likely have no ability, nor
      incentive, to foreclose access to the upstream market for the wholesale supply of pay
      TV channels for sports content.
      (B.i)      Ability to engage in total or partial input foreclosure
(508) The Commission considers that the merged entity will not have the ability to engage
      in foreclosure by restricting access to the merged entity’s pay TV channels for sports
      content, to rival retailers active downstream in the retail supply of pay AV services,
      and the retail supply of non-linear pay AV services (SVOD services), for the
      following reasons.
(509) First, input foreclosure may raise competition problems only if it concerns an
      important input for the downstream product, for instance because it is a critical
      component, or because it is a significant source of product differentiation.234 The
      affected vertical relationships link one upstream market which is narrowly defined
      on the basis of its thematic content, with downstream markets which, to the contrary,
      include various type of thematic content. During the market investigation, a majority
      of the respondents explained that the segmentation of TV channels by thematic
      content is not relevant to assess the situation in Norway today, and that there are
      many TV channels offered in the market which are not specialised by genre.
      Additionally, none of the market participants raised the concern that TV channels
      specialised in sports content constitute an input of particular importance to compete
      in the market for the retail supply of AV services.235 This suggest that pay TV
      channels specialized in sports content cannot be considered to be particularly
      important inputs for the downstream markets for (i) the retail supply of pay AV
      services, and (ii) the retail supply of non-linear pay AV services (or SVOD services)
      in Norway.
(510) Second for input foreclosure to be a concern, the vertically integrated firm resulting
      from the merger must have a significant degree of market power in the upstream
      market, such that reducing access to the merged entity’s upstream product could
      negatively affect the overall availability of inputs or the downstream markets in
      terms of price or quality.236 However, the Transaction will not strengthen the merged
      entity’s position in the relevant upstream markets because only Discovery is active
      in the wholesale supply of pay TV channels for sports content. Additionally, the
      Commission observes that the affected vertical relationship is pre-existing to the
      Transaction, as Discovery is also active in the downstream markets, and there is no
      evidence of an input foreclosure strategy currently in place.
234   Non-Horizontal Merger Guidelines, paragraph 34.
235   Responses to questionnaire Q9 – Questionnaires to market participants in the AV sector (Norway),
      questions 11.1 and 11.1.1.
236   Non-Horizontal Merger Guidelines, paragraph 35 and 36.
                                                        105
 ---pagebreak--- (511) Third, with respect to the downstream market for the retail supply of pay AV
      services, considering the very limited combined market shares and increments on the
      market, there is no evidence to suggest that the Transaction will alter the existing
      risk of anticompetitive input foreclosure.
(512) Fourth, the downstream market for the retail supply of non-linear pay AV services
      (SVOD services), where the Parties have a higher combined market share, is a
      relatively recent and dynamic market which has been largely impacted by the
      technological advances (e.g., internet accessibility), and evolving consumer habits
      (e.g., consumption of on demand content). TV channels do not represent the most
      important input for retailers of SVOD services, which can also acquire valuable
      input in the form of un-aggregated content directly from other actors active in the
      market for the production of AV content or the market for the licensing of AV
      content. The market investigation also confirmed that the traditional three-layer
      classification fails to properly take into account the markets dynamics resulting from
      Direct-to-Consumer services, as the frontiers between the different layers are
      becoming increasingly blurred as a consequence of the global market trend for
      vertical integration.237
(513) Therefore, the Commission considers that there are sufficient economic alternatives
      for the downstream rivals to have adequate access to inputs, without incurring
      significantly higher costs, and that the merged entity would lack the ability to engage
      into an input foreclosure strategy.
      (B.ii)     Incentive to engage in total or partial input foreclosure
(514) The Commission considers that the merged entity will likely not have the incentives
      to engage in foreclosure by restricting access to the merged entity’s pay TV channels
      for sports content, to rival suppliers active in the downtream markets for (i) the retail
      supply of pay AV services and (ii) the retail supply of non-linear pay AV services,
      for the following reasons.
(515) First, the presence of the Parties, and therefore the current incentives to supply
      content to downstream retailers will remain largely unchanged post-Transaction on
      the downstream market for the retail supply of pay AV services, . More particularly,
      the Commission observes that the Parties would bear the full cost of a hypothetical
      input foreclosure strategy, but would reap only a small fraction of any hypothetical
      benefits with such a low combined share in the downstream markets (below
      [5-10]%). The Parties’ low combined share suggests that customers switching from
      an AV retail supplier that the Parties tried to foreclose would be more likely to
      switch to rivals than to the merged entity.
(516) Second, both Parties are active in the market on the downstream market for the retail
      supply of non-linear pay AV services (or SVOD services), where the Parties have a
      higher combined market share, through platforms of very differentiated focus.
      Discovery only has [10-20]% market share with the Discovery+ and Eurosport
      Player SVOD services, focusing on general entertainment and sports content.
      WarnerMedia has [10-20]% market share with the SVOD services associated with
      HBO, focusing on premium films and TV series content. Post-Transacion, any
237   Responses to questionnaire Q9 – Questionnaires to market participants in the AV sector (Norway), questions 5.1
      and 5.2.
                                                         106
 ---pagebreak---         additional market power downstream would come from WarnerMedia’s SVOD
        services. Additionally, WarnerMedia’s SVOD services are not likely to beneficiate
        from Discovery’s TV channels which, due to their focus, would not represent a
        critical input. Therefore, the current incentives to supply content to downstream
        retailers will remain largely unchanged post-Transaction. More particularly, the
        Commission observes that the Parties would bear the full cost of a hypothetical input
        foreclosure strategy, but would reap only a small fraction of any hypothetical
        benefits, as Discovery’s TV channels are not likely to lead to a significant increase in
        the number of subscribers of the merged entity’s SVOD services.
(517) In any event, given the lack of ability to foreclose, it is not necessary to conclude as
        to whether the merged entity will have the incentive to implement a strategy aimed
        at foreclosing competing downstream rivals active in the markets for the retail
        supply of pay AV services, and the retail supply of non-linear pay AV services (or
        SVOD services), from accessing its pay TV channels, pay TV channels for sports
        content, and pay TV channels for other content, in Norway.
        (B.iii)   Conclusion
(518) In view of the above, the Commission concludes that the Transaction does not raise
        serious doubts as to its compatibility with the internal market in relation to potential
        input foreclosure with respect to the vertical relationships between the market for the
        wholesale supply of pay TV channels for sports content (upstream); and (i) the retail
        supply of pay AV services (downstream), and (ii) the retail supply of non-linear pay
        AV services (or SVOD services) (downstream), in Norway.
5.5.4.5. Poland
(519) In Poland, the upstream markets for (i) the wholesale supply of TV channels for
        news content (where only Discovery is active with [40-50]% market share in TV
        audience), (ii) the wholesale supply of pay TV channels (where the Parties’
        combined market share is [30-40]% in TV audience), (iii) the wholesale supply of
        pay TV channels for sports content (where only Discovery is active with [30-40]%
        market share in TV audience), and (iv) the wholesale supply of pay TV channels for
        news content (where only Discovery is active with [70-80]% market share in TV
        audience), are vertically affected due to their connection with the downstream
        markets for (i) the retail supply of pay AV services (where the Parties’ combined
        market share is [0-5]% in revenue), and (ii) the retail supply of non-linear pay AV
        services (or SVOD services) (where the Partie’s combined market share is [5-10]%
        in subscriptions).
        (A)       The Notifying Party’s view
(520) As regards customer foreclosure, the Notifying Party notes that, due to the merged
        entity’s limited presence in the downstream markets post-Transaction, there is no
        risk of customer foreclosure.
(521) As regards input foreclosure, the Notifying Party notes that the merged entity would
        have neither the ability nor the incentive to pursue a total or partial input foreclosure
        strategy, and that any such input foreclosure strategies would have no significant
        effect on effective competition.
                                                  107
 ---pagebreak--- (522) From the outset, the Notifying Party submits that already today and independently of
      the Transaction, both Parties are active at several levels of the audio-visual content
      supply chain. Notwithstanding this vertical integration, there has not been any
      evidence to date of any foreclosure concerns, and this will not change post-
      Transaction. There is at least one Party present in the upstream markets, and both
      Parties are present pre-Transaction in the downstream markets, such that there is no
      new link created by the Transaction. This means that the Transaction does not create
      (or, if there was any ability pre-Transaction, add to) the ability to engage in vertical
      foreclosure.
(523) Additionally, the Notifying Party argues that, to sustain a theory of harm based on
      input foreclosure, the increase in the downstream share would need to be sufficient
      to create an incentive to engage in vertical foreclosure post-Transaction. By contrast,
      the Transaction leads to only a modest increase in downstream share and hence it not
      plausible in the Parties’ view that such a modest increase could create such an
      incentive to foreclose.
      (B)        The Commission’s assessment
(524) With respect to the risk of customer foreclosure, the Commission observes that the
      presence of the merged entity in the downstream market is below 30% and therefore,
      that the merged entity would not have the ability to engage in customer foreclosure
      after the Transaction.
(525) With respect to the risk of input foreclosure, the Commission considers that a
      number of factors indicate that the merged entity would likely have no ability, nor
      incentive, to foreclose access to the upstream markets for (i) the wholesale supply of
      TV channels for news content, (ii) the wholesale supply of pay TV channels, (iii) the
      wholesale supply of pay TV channels for sports content, and (iv) the wholesale
      supply of pay TV channels for news content.
      (B.i)      Ability to engage in total or partial input foreclosure
(526) The Commission considers that the merged entity will not have the ability to engage
      in foreclosure by restricting access to the merged entity’s TV channels for news
      content, pay TV channels, pay TV channels for sports content, and pay TV channels
      for news content, to rival retailers active downstream in the retail supply of pay AV
      services, and the retail supply of non-linear pay AV services (SVOD services), for
      the following reasons.
(527) First, input foreclosure may raise competition problems only if it concerns an
      important input for the downstream product, for instance because it is a critical
      component, or because it is a significant source of product differentiation.238 Except
      for the wholesale supply of pay TV channels, the affected vertical relationships link
      upstream markets which are narrowly defined on the basis of thematic content, with
      downstream markets which, to the contrary, include various type of thematic
      content. During the market investigation, a majority of the respondents explained
      that the segmentation of TV channels by thematic content is not relevant to assess
      the situation in Poland today.239 This suggests that specialised TV channels should
238   Non-Horizontal Merger Guidelines, paragraph 34.
239   Responses to questionnaire Q10 – Questionnaires to market participants in the AV sector (Poland), questions 11
      and 11.1.
                                                         108
 ---pagebreak---       not be considered to be particularly important inputs for the downstream markets for
      (i) the retail supply of pay AV services, and (ii) the retail supply of non-linear pay
      AV services (or SVOD services) in Poland.
(528) Second, for input foreclosure to be a concern, the vertically integrated firm resulting
      from the merger must have a significant degree of market power in the upstream
      market, such that reducing access to the merged entity’s upstream product could
      negatively affect the overall availability of inputs or the downstream markets in
      terms of price or quality.240 However, the Transaction will not strengthen the merged
      entity’s position in the relevant upstream market as the Commission observes that
      the affected vertical relationship is pre-existing to the Transaction. Indeed, whenever
      one Party is active upstream, it is also active in the downstream markets, and there is
      no evidence of an input foreclosure strategy currently in place. Additionally,
      considering the very limited combined market shares and increments in the
      downstream markets considered, there is no evidence to suggest that the Transaction
      will alter the existing risk of anticompetitive input foreclosure.
(529) Third, from the market shares provided by the Parties, the Commission observes that
      in all of the relevant upstream markets where the merged entity will be active in
      Poland, several alternative suppliers will continue to exercise sufficient competitive
      constraint on the Parties. More particularly, the competitor Polsat will represent a
      major competitor to the merged entity in in the upstream markets for (i) the
      wholesale supply of TV channels for news content, (ii) the wholesale supply of pay
      TV channels, (iii) the wholesale supply of pay TV channels for sports content, and
      (iv) the wholesale supply of pay TV channels for news content. 241
(530) Therefore, the Commission considers that there are sufficient economic alternatives
      for the downstream rivals to have adequate access to inputs, without incurring
      significantly higher costs, and that the merged entity would lack the ability to engage
      into an input foreclosure strategy.
      (B.ii)      Incentive to engage in total or partial input foreclosure
(531) The Commission considers that the merged entity will likely not have the incentives
      to engage in foreclosure by restricting access to the merged entity’s TV channels for
      news, pay TV channels, pay TV channels for news content, and pay TV channels for
      sports content, to rival suppliers active in the downtream markets for (i) the retail
      supply of pay AV services and (ii) the retail supply of non-linear pay AV services.
(532) The presence of the Parties downstream in the markets the retail supply of pay AV
      services, and the retail supply of non-linear pay AV services (or SVOD services), is
      very limited, and therefore the current incentives to supply content to downstream
      retailers will remain largely unchanged post-Transaction. More particularly, the
      Commission observes that the Parties would bear the full cost of a hypothetical input
      foreclosure strategy, but would reap only a small fraction of any hypothetical
      benefits with such a low combined share in the downstream markets (below
      [5-10]%). The Parties’ low combined share suggests that customers switching from
      an AV retail supplier that the Parties tried to foreclose would be more likely to
      switch to rivals than to the merged entity.
240   Non-Horizontal Merger Guidelines, paragraph 35 and 36.
241   See the relevant market shares in Section 5.3.8 of this decision.
                                                              109
 ---pagebreak--- (533) In any event, given the lack of ability to foreclose, it is not necessary to conclude as
        to whether the merged entity will have the incentive to implement a strategy aimed
        at foreclosing competing downstream rivals active in the markets for the retail
        supply of pay AV services, and the retail supply of non-linear pay AV services (or
        SVOD services), from accessing its TV channels for news content, pay TV channels,
        pay TV channels for news content, and pay TV channels for sports content, in
        Poland.
        (B.iii)   Conclusion
(534) In view of the above, the Commission concludes that the Transaction does not raise
        serious doubts as to its compatibility with the internal market in relation to potential
        input foreclosure with respect to the vertical relationships between the markets for
        (i) the wholesale supply of TV channels for news content (upstream), (ii) the
        wholesale supply of pay TV channels (upstream), (iii) the wholesale supply of pay
        TV channels for sports content (upstream), and (iv) the wholesale supply of pay TV
        channels for news content (upstream); and (i) the retail supply of pay AV services
        (downstream), and (ii) the retail supply of non-linear pay AV services (or SVOD
        services) (downstream), in Poland.
5.5.4.6. Romania
(535) In Romania, the upstream market for the wholesale supply of pay TV channels for
        children content (where only WarnerMedia is active with [30-40]% market share in
        TV audience), is vertically affected due to its connection with the downstream
        markets for (i) the retail supply of pay AV services (where the Parties’ combined
        market share is [0-5]% in revenue), and (ii) the retail supply of non-linear pay AV
        services (or SVOD services) (where the Parties’ combined market share is [5-10]%
        in subscriptions).
        (A)       The Notifying Party’s view
(536) As regards customer foreclosure, the Notifying Party notes that, due to the merged
        entity’s limited presence in the downstream markets post-Transaction, there is no
        risk of customer foreclosure.
(537) As regards input foreclosure, the Notifying Party notes that the merged entity would
        have neither the ability nor the incentive to pursue a total or partial input foreclosure
        strategy, and that any such input foreclosure strategies would have no significant
        effect on effective competition.
(538) From the outset, the Notifying Party submits that already today and independently of
        the Transaction, both Parties are active at several levels of the audio-visual content
        supply chain. Notwithstanding this vertical integration, there has not been any
        evidence to date of any foreclosure concerns, and that this will not change post-
        Transaction. There is only one Party present in the upstream market, and both Parties
        are present pre-Transaction in the downstream markets, such that there is no new
        link created by the Transaction. This means that the Transaction does not create (or,
        if there was any ability pre-Transaction, add to) the ability to engage in vertical
        foreclosure.
(539) Additionally, the Notifying Party argues that, to sustain a theory of harm based on
        input foreclosure, the increase in the downstream share would need to be sufficient
                                                  110
 ---pagebreak---       to create an incentive to engage in vertical foreclosure post-Transaction. By contrast,
      the Transaction leads to only a modest increase in downstream share and hence it not
      plausible in the Parties’ view that such a modest increase could create such an
      incentive to foreclose.
      (B)        The Commission’s assessment
(540) With respect to the risk of customer foreclosure, the Commission observes that the
      presence of the merged entity in the downstream market is below 30% and therefore,
      that the merged entity would not have the ability to engage in customer foreclosure
      after the Transaction.
(541) With respect to the risk of input foreclosure, the Commission considers that a
      number of factors indicate that the merged entity would likely have no ability, nor
      incentive, to foreclose access to the upstream market for the wholesale supply of pay
      TV channels for children content.
      (B.i)      Ability to engage in total or partial input foreclosure
(542) The Commission considers that the merged entity will not have the ability to engage
      in foreclosure by restricting access to the merged entity’s pay TV channels for
      children content, to rival retailers active downstream in the retail supply of pay AV
      services, and the retail supply of non-linear pay AV services (SVOD services), for
      the following reasons.
(543) First, input foreclosure may raise competition problems only if it concerns an
      important input for the downstream product, for instance because it is a critical
      component, or because it is a significant source of product differentiation.242 The
      affected vertical relationship links an upstream market narrowly defined on the basis
      of its thematic content, with downstream markets which, to the contrary, include
      various type of thematic content. During the market investigation, a majority of the
      respondents explained that the segmentation of TV channels by thematic content is
      not relevant to assess the situation in Romania today, and that there are many TV
      channels offered in the market which are not specialised by genre. Additionally, non
      of the market participants consider that TV channels specialised in content targeted
      to children constitute an input of particular importance to compete in the market for
      the retail supply of AV services.243 This suggest that pay TV channels specialized in
      content targeted to children cannot be considered to be particularly important inputs
      for the downstream markets for (i) the retail supply of pay AV services, and (ii) the
      retail supply of non-linear pay AV services (or SVOD services) in Romania.
(544) Second for input foreclosure to be a concern, the vertically integrated firm resulting
      from the merger must have a significant degree of market power in the upstream
      market, such that reducing access to the merged entity’s upstream product could
      negatively affect the overall availability of inputs or the downstream markets in
      terms of price or quality.244 However, the Transaction will not strengthen the merged
      entity’s position in the relevant upstream market because only WarnerMedia is
      active in the wholesale supply of pay TV channels for children content, with a
242   Non-Horizontal Merger Guidelines, paragraph 34.
243   Responses to questionnaire Q6 – Questionnaires to market participants in the AV sector (Romania),
      questions 11.1 and 11.1.1.
244   Non-Horizontal Merger Guidelines, paragraph 35 and 36.
                                                        111
 ---pagebreak---       market share that is below 40%, and therefore not in itself representative of a very
      large market position.245 Additionally, the presence of sufficient existing or potential
      alternatives in the market for the wholesale supply of TV channels for children
      content is supported by the market investigation where one respondent explained
      that: “there is a high degree of supply-side substitutability regarding channel
      content. Wholesale suppliers of TV channels in Romania tend to produce both
      general TV channels (which are not genre-specific) and specialized TV channels.”,
      and indicated that: “Many of the channels offered on the market do not specialize in
      certain genre, but they offer a mix of general interest content, which includes
      (among others) films, content for youth, sports and news.”246
(545) Third, the Commission observes that the affected vertical relationship is pre-existing
      to the Transaction, as WarnerMedia is also active in the downstream markets, and
      there is no evidence of an input foreclosure strategy currently in place. Additionally,
      considering the very limited combined market shares and increments on the two
      downstream markets considered, there is no evidence to suggest that the Transaction
      will alter the existing risk of anticompetitive input foreclosure.
(546) Therefore, the Commission considers that there are sufficient economic alternatives
      for the downstream rivals to have adequate access to inputs, without incurring
      significantly higher costs, and that the merged entity would lack the ability to engage
      into an input foreclosure strategy.
      (B.ii)     Incentive to engage in total or partial input foreclosure
(547) The Commission considers that the merged entity will likely not have the incentives
      to engage in foreclosure by restricting access to the merged entity’s pay TV channels
      for children content, to rival suppliers active in the downtream markets for (i) the
      retail supply of pay AV services and (ii) the retail supply of non-linear pay AV
      services, for the following reason.
(548) First, the presence of the Parties downstream in the markets the retail supply of pay
      AV services, and the retail supply of non-linear pay AV services (or SVOD
      services), is very limited, and therefore that the current incentives to supply content
      to downstream retailers will remain largely unchanged post-Transaction. More
      particularly, the Commission observes that the Parties would bear the full cost of a
      hypothetical input foreclosure strategy, but would reap only a small fraction of any
      hypothetical benefits with such a low combined share in the downstream markets
      (below [5-10]%). The Parties’ low combined share suggests that customers
      switching from an AV retail supplier that the Parties tried to foreclose would be
      more likely to switch to rivals than to the merged entity.
(549) In any event, given the lack of ability to foreclose, it is not necessary to conclude as
      to whether the merged entity will have the incentive to implement a strategy aimed
      at foreclosing competing downstream rivals active in the markets for the retail
      supply of pay AV services, and the retail supply of non-linear pay AV services (or
      SVOD services), from accessing its pay TV channels for children content in
      Romania.
245   Horizontal Merger Guidelines, paragraph 17.
246   Responses to questionnaire Q6 – Questionnaires to market participants in the AV sector (Romania),
      question 11.1.1.
                                                    112
 ---pagebreak---         (B.iii)   Conclusion
(550) In view of the above, the Commission concludes that the Transaction does not raise
        serious doubts as to its compatibility with the internal market in relation to potential
        input foreclosure with respect to the vertical relationships between the markets for
        the wholesale supply of pay TV channels for children content (upstream); and (i) the
        retail supply of pay AV services (downstream), and (ii) the retail supply of non-
        linear pay AV services (or SVOD services) (downstream), in Romania.
5.5.4.7. Spain
(551) In Spain, the upstream markets for (i) the wholesale supply of FTA TV channels for
        children content (where only WarnerMedia is active with [30-40]% market share in
        TV audience), and (ii) the wholesale supply of pay TV channels for sports content
        (where only Discovery is active with [40-50]% market share in TV audience); are
        vertically affected due to their connection with the downstream markets for (i) the
        retail supply of pay AV services (where the Parties’ combined market share is
        [0-5]% in revenue), and (ii) the retail supply of non-linear pay AV services (or
        SVOD services) (where the Parties’ combined market share is [5-10]% in revenue).
(552) Furthermore, the wholesale supply of FTA TV channels for children content (where
        only WarnerMedia is active with [30-40]% market share in TV audience), is also
        vertically affected due to its connection the wholesale supply of non-linear FTA AV
        services (or AVOD services) (where only Discovery is active with [0-5]% market
        share in revenue).
        (A)       The Notifying Party’s view
(553) As regards customer foreclosure, the Notifying Party notes that, due to the merged
        entity’s limited presence in the downstream markets post-Transaction, there is no
        risk of customer foreclosure.
(554) As regards input foreclosure, the Notifying Party notes that the merged entity would
        have neither the ability nor the incentive to pursue a total or partial input foreclosure
        strategy, and that any such input foreclosure strategies would have no significant
        effect on effective competition.
(555) From the outset, the Notifying Party submits that already today and independently of
        the Transaction, both Parties are active at several levels of the audio-visual content
        supply chain. Notwithstanding this vertical integration, there has not been any
        evidence to date of any foreclosure concerns, and that this will not change post-
        Transaction. There is only one Party present in the upstream market, and both Parties
        are present pre-Transaction in the downstream markets, such that there is no new
        link created by the Transaction. This means that the Transaction does not create (or,
        if there was any ability pre-Transaction, add to) the ability to engage in vertical
        foreclosure.
(556) Additionally, the Notifying Party argues that, to sustain a theory of harm based on
        input foreclosure, the increase in the downstream share would need to be sufficient
        to create an incentive to engage in vertical foreclosure post-Transaction. By contrast,
        the Transaction leads to only a modest increase in downstream share and hence it not
        plausible in the Parties’ view that such a modest increase could create such an
        incentive to foreclose.
                                                  113
 ---pagebreak---       (B)         The Commission’s assessment
(557) With respect to the risk of customer foreclosure, the Commission observes that the
      presence of the merged entity in the downstream market is below 30% and therefore,
      that the merged entity would not have the ability to engage in customer foreclosure
      after the Transaction.
(558) With respect to the risk of input foreclosure, the Commission considers that a
      number of factors indicate that the merged entity would likely have no ability, nor
      incentive, to foreclose access to the upstream markets for (i) the wholesale supply of
      FTA TV channels for children content, and (ii) the wholesale supply of pay TV
      channels for sports content.
      (B.i)       Ability to engage in total or partial input foreclosure
(559) The Commission considers that the merged entity will not have the ability to engage
      in foreclosure by restricting access to the merged entity’s FTA TV channels for
      children content and pay TV channels for sports content, to rival retailers active
      downstream in the retail supply of pay AV services, the retail supply of non-linear
      pay AV services (SVOD services), and the retail supply of non-linear FTA AV
      services (AVOD services), for the following reasons.
(560) First, input foreclosure may raise competition problems only if it concerns an
      important input for the downstream product, for instance because it is a critical
      component, or because it is a significant source of product differentiation.247 The
      affected vertical relationships link upstream markets wich are narrowly defined on
      the basis of its thematic content, with downstream markets which, to the contrary,
      include various type of thematic content. The market investigation yielded mixed
      results as to whether the segmentation of TV channels by thematic content is
      relevant or not to assess the situation in Spain today, and a few market participants
      considered that sports content could constitute a relevant segmentation in the market
      in Spain. However, none of the market participants consider that TV channels
      specialised in content targeted to children constitute an input of particular
      importance to compete in the market for the retail supply of AV services.248 This
      suggests that FTA TV channels specialized in content targeted to children, cannot be
      considered to be particularly important inputs for the downstream markets for (i) the
      retail supply of pay AV services, (ii) the retail supply of non-linear pay AV services
      (or SVOD services), and the retail supply of non-linear FTA AV services (or AVOD
      services), in Spain.
(561) Second, for input foreclosure to be a concern, the vertically integrated firm resulting
      from the merger must have a significant degree of market power in the upstream
      market, such that reducing access to the merged entity’s upstream product could
      negatively affect the overall availability of inputs or the downstream markets in
      terms of price or quality.249 However, with respect to FTA TV channels specialized
      in children content, the Transaction will not strengthen the merged entity’s position
      in the relevant upstream market because only WarnerMedia is active in the
      wholesale supply of pay TV channels for children content, with a market share that
247   Non-Horizontal Merger Guidelines, paragraph 34.
248   Responses to questionnaire Q11 – Questionnaires to market participants in the AV sector (Spain), questions 11.1,
      and 11.1.1.
249   Non-Horizontal Merger Guidelines, paragraph 35 and 36.
                                                          114
 ---pagebreak---       is below 40%, and therefore not in itself representative of a very large market
      position.250
(562) With respect to pay TV channels specialized in sports content, while sports has been
      identified as a relevant segmentation to assess the market in Spain by a few
      respondents to the market investigation, sufficient alternatives to Discovery’s pay
      TV channels specialised in sports currently exist in the market. For instance in 2020,
      Telefónica was the number one actor in the market for the supply of pay TV
      channels specialised in sports content with [50-60]% market share. The Commission
      also observes that, based on the market shares submitted by the Notifying Party, in
      the first two quarters of 2021, the market shares of both Discovery and Telefónica
      decreased as the DAZN group entered the market, with [0-5]% market shares in the
      first quarter of 2021, and [30-40]% market shares in the second quarter (just below
      Telefónica, which had [30-40]% market share in the second quarter of 2021, and
      Discovery, which had [30-40]%).251 This suggests that Discovery does not hold
      enough market power to significantly affect the overall market’s access to pay TV
      channels specialised in sports, following a potential foreclosure strategy.
(563) Additionally, the Commission observes that, when considering the market for the
      supply of both pay and FTA TV channels specialised in sports in Spain, there are a
      several other actors in the market with substantial market shares such as Mediapro
      (with [40-50]% market share in 2020), and RTVE (with [20-30]% market share in
      2020), while Discovery only has [5-10]% market share in that market in 2020. The
      market investigation, further suggests that FTA TV channels also exercise
      competitive constraint on pay TV channels, 252 and therefore that Discovery’s mrket
      share in the supply of pay TV channels specialised in sports is not indicative of a
      high market power in the narrow segmentation for sports content.
(564) Third, the Commission observes that the affected vertical relationship is pre-existing
      to the Transaction, as with respect to FTA TV channels for children, WarnerMedia is
      also active in the downstream markets, and with respect to pay TV channels for
      sports content, Discovery is also active in the downstream markets, and there is no
      evidence of an input foreclosure strategy currently in place. Additionally,
      considering the very limited combined market shares and increments on the
      downstream markets considered, there is no evidence to suggest that the Transaction
      will alter the existing risk of anticompetitive input foreclosure.
(565) Therefore, the Commission considers that there are sufficient economic alternatives
      for the downstream rivals to have adequate access to inputs, without incurring
      significantly higher costs, and that the merged entity would lack the ability to engage
      into an input foreclosure strategy.
      (B.ii)     Incentive to engage in total or partial input foreclosure
(566) The Commission considers that the merged entity will likely not have the incentives
      to engage in foreclosure by restricting access to the merged entity’s FTA TV
      channels for children content and pay TV channels for sports content, to rival
      suppliers active in the downtream markets for (i) the retail supply of pay AV
250   Horizontal Merger Guidelines, paragraph 17.
251   Annex 10 to Chapter 3 of the Form CO.
252   Responses to questionnaire Q11 – Questionnaires to market participants in the AV sector (Spain), questions 6.1
      and 21.
                                                         115
 ---pagebreak---         services, (ii) the retail supply of non-linear pay AV services, and (iii) the retail
        supply of non-linear FTA AV services.
(567) The presence of the Parties downstream in the markets the retail supply of pay AV
        services, the retail supply of non-linear pay AV services (or SVOD services), and the
        retail supply of non-linear FTA AV services (or AVOD services), is very limited,
        and therefore that the current incentives to supply content to downstream retailers
        will remain largely unchanged post-Transaction. More particularly, the Commission
        observes that the Parties would bear the full cost of a hypothetical input foreclosure
        strategy, but would reap only a small fraction of any hypothetical benefits with such
        a low combined share in the downstream markets (below [5-10]%). The Parties’ low
        combined share suggests that customers switching from an AV retail supplier that
        the Parties tried to foreclose would be more likely to switch to rivals than to the
        merged entity..
(568) In any event, given the lack of ability to foreclose, it is not necessary to conclude as
        to whether the merged entity will have the incentive to implement a strategy aimed
        at foreclosing competing downstream rivals active in the markets for the retail
        supply of pay AV services, and the retail supply of non-linear pay AV services (or
        SVOD services), from accessing its pay TV channels for children content in Spain.
        (B.iii)   Conclusion
(569) In view of the above, the Commission concludes that the Transaction does not raise
        serious doubts as to its compatibility with the internal market in relation to potential
        input foreclosure with respect to the vertical relationships between the markets for
        (i) the wholesale supply of FTA TV channels for children content (upstream), and
        (ii) the wholesale supply of pay TV channels for sports content (upstream); and
        (i) the retail supply of pay AV services (downstream), and (ii) the retail supply of
        non-linear pay AV services (or SVOD services) (downstream), in Spain.
(570) The Commission also concludes that the Transaction does not raise serious doubts as
        to its compatibility with the internal market in relation to potential input foreclosure
        with respect to the vertical relationships between the markets for the wholesale
        supply of FTA TV channels for children content (upstream); and the retail supply of
        non-linear FTA AV services (or AVOD services) (downstream), in Spain.
5.5.4.8. Sweden
(571) In Sweden, the upstream markets for (i) the wholesale supply of TV channels for
        news content (where only WarnerMedia is active with [40-50]% market share in TV
        audience), and (ii) the wholesale supply of pay TV channels for news content (where
        only WarnerMedia is active with [90-100]% market share in TV audience); are
        vertically affected due to their connection with the downstream markets for (i) the
        retail supply of pay AV services (where the Parties’ combined market share is
        [5-10]% in revenue), and (ii) the retail supply of non-linear pay AV services (or
        SVOD services) (where the Partie’s combined market share is [20-30]% in
        subscriptions).
(572) Furthermore, the wholesale supply of TV channels for news content (where only
        WarnerMedia is active with [40-50]% market share in TV audience) is vertically
        affected due to its connection with the retail supply of non-linear FTA AV services
                                                   116
 ---pagebreak---       (or AVOD services) (where only Discovery is active with [0-5]% market share in
      revenue).
      (A)        The Notifying Party’s view
(573) As regards customer foreclosure, the Notifying Party notes that, due to the merged
      entity’s limited presence in the downstream markets post-Transaction (always below
      30%), there is no risk of customer foreclosure.
(574) As regards input foreclosure, the Notifying Party notes that the merged entity would
      have neither the ability nor the incentive to pursue a total or partial input foreclosure
      strategy, and that any such input foreclosure strategies would have no significant
      effect on effective competition.
(575) From the outset, the Notifying Party submits that already today and independently of
      the Transaction, both Parties are active at several levels of the audio-visual content
      supply chain. Notwithstanding this vertical integration, there has not been any
      evidence to date of any foreclosure concerns, and that this will not change post-
      Transaction. There is only one Party present in the upstream market, and both Parties
      are present pre-Transaction in the downstream markets, such that there is no new
      link created by the Transaction. This means that the Transaction does not create (or,
      if there was any ability pre-Transaction, add to) the ability to engage in vertical
      foreclosure.
(576) Additionally, the Notifying Party argues that, to sustain a theory of harm based on
      input foreclosure, the increase in the downstream share would need to be sufficient
      to create an incentive to engage in vertical foreclosure post-Transaction. By contrast,
      the Transaction leads to only a modest increase in downstream share (notably in the
      market for the retail supply of pay AV services) and hence it is not plausible in the
      Parties’ view that such a modest increase could create such an incentive to foreclose.
(577) With respect to the market for the retail supply of non-linear pay AV services (or
      SVOD services), where the merged entity’s market share will be slightly higher, the
      Notifying Party submits that in Sweden, the Parties do not supply downstream
      SVOD competitors with linear channels. Therefore, the Parties have no ability to
      engage in input foreclosure. The Notifying Party also argues that in any event, retail
      platforms can source their content (in the form of programs, formats, series, films,
      etc. and not merely TV channels) from a wide range of sources, locally or
      internationally, and hence that wholesale suppliers of TV channels are constrained
      by a multitude of AV suppliers.253
      (B)        The Commission’s assessment
(578) With respect to the risk of customer foreclosure, the Commission observes that the
      presence of the merged entity in the downstream market is below 30% and therefore,
      that the merged entity would not have the ability to engage in customer foreclosure
      after the Transaction.
(579) With respect to the risk of input foreclosure, the Commission considers that a
      number of factors indicate that the merged entity would likely have no ability, nor
253   Additional submission to the Form CO on non-horizontals, received on 26 November 2021.
                                                        117
 ---pagebreak---       incentive, to foreclose access to the upstream markets for (i) the wholesale supply of
      TV channels for news content, and (ii) the wholesale supply of pay TV channels for
      news content.
      (B.i)     Ability to engage in total or partial input foreclosure
(580) The Commission considers that the merged entity will not have the ability to engage
      in foreclosure by restricting access to the merged entity’s TV channels for news
      content and pay TV channels for news content; to rival retailers active downstream
      in the retail supply of pay AV services, the retail supply of non-linear pay AV
      services (SVOD services), and the retail supply of non-linear FTA AV services
      (AVOD services), for the following reasons.
(581) First, input foreclosure may raise competition problems only if it concerns an
      important input for the downstream product, for instance because it is a critical
      component, or because it is a significant source of product differentiation.254 The
      affected vertical relationships link upstream markets which are narrowly defined on
      the basis of their thematic content, with downstream markets which, to the contrary,
      include various type of thematic content, and TV channels specialized in news
      content cannot be considered to be particularly important inputs for the downstream
      markets for (i) the retail supply of pay AV services, (ii) the retail supply of non-
      linear pay AV services (or SVOD services), and (iii) the retail supply of non-linear
      FTA AV services (or AVOD services), in Sweden.
(582) Second, for input foreclosure to be a concern, the vertically integrated firm resulting
      from the merger must have a significant degree of market power in the upstream
      market, such that reducing access to the merged entity’s upstream product could
      negatively affect the overall availability of inputs or the downstream markets in
      terms of price or quality.255 However, the Transaction will not strengthen the merged
      entity’s position in the relevant upstream markets because only WarnerMedia is
      active in (i) the wholesale supply of TV channels for news content, and (ii) the
      wholesale supply of pay TV channels for news content. Additionally, the
      Commission observes that the affected vertical relationship is pre-existing to the
      Transaction, as WarnerMedia is also active in the downstream markets, and there is
      no evidence of an input foreclosure strategy currently in place.
(583) Third, considering the very limited combined market shares and increments on the
      downstream markets for the retail supply of pay AV services, and the retail supply of
      non-linear FTA AV services, there is no evidence to suggest that the Transaction
      will alter the existing risk of anticompetitive input foreclosure.
(584) Fourth, the retail supply of non-linear pay AV services (SVOD services), where the
      Parties have a higher combined market share, is a relatively recent and dynamic
      market which has been largely impacted by the technological advances (e.g., internet
      accessibility), and evolving consumer habits (e.g., consumption of on demand
      content). TV channels do not represent the most important input for retailers of
      SVOD services, which can also acquire valuable input in the form of un-aggregated
      content directly from other actors active in the market for the production of AV
      content or the market for the licensing of AV content, such that the traditional three-
254   Non-Horizontal Merger Guidelines, paragraph 34.
255   Non-Horizontal Merger Guidelines, paragraph 35 and 36.
                                                        118
 ---pagebreak---       layer classification fails to properly take into account the market dynamics resulting
      from Direct-to-Consumer services, as the frontiers between the different layers are
      becoming increasingly blurred as a consequence of the global market trend for
      vertical integration.
(585) Moreover, the Commission observes that WarnerMedia’s high market share in the
      news segment in 2020 corresponds to an unusual high peak, which can be explained
      by the occurrence of the US Presidential election in 2020. First, the Commission
      notes there are not many channels available in the narrow market for TV channels
      specialised in news content in Sweden. Indeed, the main TV channel, and only FTA
      TV channel specialised in news content, is the SVT TV channel which has market
      shares above [80-90]% in the market for the wholesale supply of TV channels
      specialised in news content both in 2018 and 2019. WarnerMedia’s channel, CNN, is
      the other main TV channel specialised in news in Sweden and is a pay TV channel,
      which had market shares around [10-20]% both in 2018 and 2019, and only reached
      [40-50]% in the second quarter of 2020.256 From the market shares provided by the
      Parties, the Commission understands that CNN’s market share in the second quarter
      of 2021 was equal to [10-20]% in the market for the wholesale supply of TV channel
      for news content, which suggests that Discovery does not hold significant market
      power in the provision of news TV channels.
(586) Therefore, the Commission considers that there are sufficient economic alternatives
      for the downstream rivals to have adequate access to inputs, without incurring
      significantly higher costs, and that the merged entity would lack the ability to engage
      into an input foreclosure strategy.
      (B.ii)     Incentive to engage in total or partial input foreclosure
(587) The Commission considers that the merged entity will likely not have the incentives
      to engage in foreclosure by restricting access to the merged entity’s TV channel
      CNN, to rival suppliers active in the downtream markets for (i) the retail supply of
      pay AV services, (ii) the retail supply of non-linear pay AV services, and (iii) the
      retail supply of non-linear FTA AV services, for the following reasons.
(588) First, on the downstream markets for the retail supply of pay AV services and the
      retail supply of retail supply of non-linear FTA AV services, the presence of the
      Parties, and therefore the current incentives to supply content to downstream
      retailers will remain largely unchanged post-Transaction. More particularly, the
      Commission observes that the Parties would bear the full cost of a hypothetical input
      foreclosure strategy, but would reap only a small fraction of any hypothetical
      benefits with such a low combined share in the downstream markets (below
      [5-10]%). The Parties’ low combined share suggests that customers switching from
      an AV retail supplier that the Parties tried to foreclose would be more likely to
      switch to rivals than to the merged entity.
(589) Second, both Parties are active in the market through platforms of very differentiated
      focus on the downstream market for the retail supply of non-linear pay AV services
      (or SVOD services), where the Parties have a higher combined market share.
      Discovery only has [0-5]% market share with the Discovery+ and Eurosport Player
      SVOD services, focusing on general entertainment and sports content. WarnerMedia
256   Annex 10 to Chapter 3 of the Form CO
                                                  119
 ---pagebreak---       has [10-20]% market share with the SVOD services associated with HBO, focusing
      on premium films and TV series content. Post-Transacion, any additional market
      power downstream would come from WarnerMedia’s SVOD services. Additionally,
      WarnerMedia’s SVOD services are not likely to beneficiate from the CNN TV
      channel which, due to its focus, would not represent a critical input. Therefore, the
      current incentives to supply content to downstream retailers will remain largely
      unchanged post-Transaction. More particularly, the Commission observes that the
      Parties would bear the full cost of a hypothetical input foreclosure strategy, but
      would reap only a small fraction of any hypothetical benefits, as Discovery’s TV
      channel is not likely to lead to a significant increase in the number of subscribers of
      the merged entity’s SVOD services.
(590) In any event, given the lack of ability to foreclose, it is not necessary to conclude as
      to whether the merged entity will have the incentive to implement a strategy aimed
      at foreclosing competing downstream rivals active in the markets for the retail
      supply of pay AV services, and the retail supply of non-linear pay AV services (or
      SVOD services), from accessing its pay TV channels, pay TV channels for sports
      content, and pay TV channels for other content, in Sweden.
      (B.iii)   Conclusion
(591) In view of the above, the Commission concludes that the Transaction does not raise
      serious doubts as to its compatibility with the internal market in relation to potential
      input foreclosure with respect to the vertical relationships between the markets for (i)
      the wholesale supply of TV channels for news content (upstream), and (ii) the
      wholesale supply of pay TV channels for news content (upstream); and (i) the retail
      supply of pay AV services (downstream), and (ii) the retail supply of non-linear pay
      AV services (or SVOD services) (downstream), in Sweden.
(592) The Commission also concludes that the Transaction does not raise serious doubts as
      to its compatibility with the internal market in relation to potential input foreclosure
      with respect to the vertical relationships between the markets for the wholesale
      supply of TV channels for news content (upstream); and the retail supply of non-
      linear FTA AV services (or AVOD services) (downstream), in Sweden.
5.6.  Conglomerate Assessment
(593) The Non-Horizontal Guidelines257 indicate that competition concerns can arise in
      circumstances where a merger involves companies that are active in closely related
      markets. While in the majority of circumstances conglomerate mergers will not lead
      to any competition problems, in certain circumstances they can lead to
      anticompetitive effects. One such example is when the combination of products in
      related markets would give the merged entity the ability and incentive to leverage a
      strong market position in one of the markets to the other market by means of tying or
      bundling. Where tying or bundling is likely to lead to a reduction in actual or
      potential rivals’ ability or incentive to compete it may reduce competitive pressure
      on the merged entity, allowing it to increase prices.
(594) The Commission’s assessment of conglomerate effects, in light of the results of the
      market investigation, is set out in the following recitals. For this purpose, consistent
257   Non-Horizontal Merger Guidelines, Section V.A.
                                                     120
 ---pagebreak---         with paragraph 94 of the Non-Horizontal Merger Guidelines, in relation to each of
        these practices, the Commission examines, (i) whether the merged entity would
        have, post-transaction, the ability to foreclose its rivals, (ii) whether it would have
        the incentive to do so, and (iii) whether a foreclosure strategy would have an overall
        negative impact on effective competition.
5.6.1. Belgium
5.6.1.1. Possible foreclosure of competing wholesale suppliers of TV channels for news,
          sports, children and other content
(595) In the present section, the Commission analyses whether the Parties would have the
        ability and incentive to foreclose rival wholesale suppliers of TV channels for news,
        sports, children and other content in Belgium by engaging in potential tying or
        bundling strategies, then assesses whether such foreclosure strategies would have an
        impact on effective competition in those possible markets in Belgium.
        (A)        The Notifying Party’s views
        (A.i)      Ability to foreclose
(596) The Notifying Party submits that the Parties have no ability to foreclose competitors
        in Belgium and that the Transaction will not give them this ability for the following
        reasons.
(597) First, the Notifying Party submis that the possible markets where the Parties, alone
        or collectively, have more than a 30% market share do not constitute relevant
        product markets from a market definition perspective and, consequently, the market
        shares calculated are artificial and in no way a display of any possible market power
        on the side of the merged entity.
(598) Irrespective of the above element, the Notifying Party adds that the Parties’ shares of
        those possible relevant markets do not establish any market power that the merged
        entity would allegedly enjoy because it would own one or more “must have”
        channels that it would use to leverage that power onto other possible content genre
        markets. In that respect, the Notifying Party further submits that the absence of a
        “must have” channel for the Parties in Belgium is the fact that, while being a fairly
        successful sports channels supplier, Eurosport is not retained in the respective
        channel line-up of both Orange and VOO, two of the largest pay TV distributors in
        Belgium. The Notifying Party therefore concludes that the Parties do not control any
        “must have channel” in Belgium and that without such a “must have” channel, the
        Parties cannot engage in anticompetitive leveraging strategies.
(599) The Parties continue to face strong competition in the sports content segment of the
        market such as Telenet and Eleven.258
        (A.ii)     Incentive to foreclose
(600) The Notifying Party considers that the Parties have no incentive to engage in
        foreclosure strategies and that the Transaction will not give them any incentive to do
        so primarily given the competitive constraint that non-linear alternatives impose on
258     Notifying Party’s response to Q1 of RFI 9 on 11 December 2021.
                                                            121
 ---pagebreak---       linear TV. The Notifying Party submits that, if the Parties were to attempt to engage
      in a foreclosure strategy through leveraging practices and thereby attempt to make a
      pay TV provider take extra channels (at extra cost), that pay TV provider could
      either, if it decided to take the bundle, increase prices to its own customers, or, if it
      decided not to take the bundle, drop certain channels and reduce its offering
      accordingly. The Notifying Party submits that either reaction by the pay TV services
      provider could result in end-users leaving that linear TV service for another one.
      However, the Notifying Party argues that there is no reason to believe that those end-
      users exiting the degraded service as a result of the Parties alleged anti-competitive
      leveraging practices, would actually switch to the merged entity’s own non-linear
      services post-Transaction given, in particular, its (very) low market shares at retail
      level in Belgium ([0-5]% combined).259
      (A.iii)    Effects on competition
(601) The Notifying Party submits that there will be no adverse effects on competition in
      the markets affected by the conglomerate relationships in Belgium as the Parties will
      not have the ability or the incentive to engage in anti-competitive leveraging.
      (B)        Commission’s assessment
      (B.i)      Ability to foreclose
(602) The Commission considers that the merged entity will not have the ability to engage
      in foreclosure strategies by leveraging its potential market power in the possible
      markets for the wholesale supply of TV channels for news and/or sports content to
      the possible markets for the wholesale supply of TV channels for children and/or
      other content in Belgium for the reasons set out below.
(603) In the Commission’s market investigation, a number of respondents considered that,
      as a result of the Transaction, the merged entity would have the ability to degrade the
      terms and conditions at which they purchase TV channels through anti-competitive
      bundling/tying practices.260
(604) According to these respondents, such practices would entail forcing purchasers to
      take     packages/bundles            of      TV       channels/programmes                including        less
      desired/performing channels through the leveraging of premium channels. Some
      respondents further argued that this “all or nothing” practice would also result in
      marginalising other suppliers, thereby progressively reducing choice and quality in
      addition to increased prices.261
(605) The Commission considers that these concerns are not justified, as there is no
      indication that any of the Parties’ channels on their own could be considered as a
      “must have” asset in Belgium. Even if, when considered exclusively on a genre
      basis, one of the Parties might have a high share of such possible markets like
      Discovery in the wholesale supply of channels for sports content with its Eurosport
      channel, none of the respondents to the Commission’s market investigation
      mentioned that such channel would constitute a “must have” channel due to the fact
      that most of the popular sporting events (such as, for instance, the matches of
259   Form CO, Chapter 7, Annex 1.
260   Responses to questionnaire Q2 – Questionnaire to market participants in the AV sector (Belgium), question 19.
261   Responses to questionnaire Q2 – Questionnaire to market participants in the AV sector (Belgium), question 20.
                                                         122
 ---pagebreak---       Belgium’s national football team or the Tour de France and the annual cycling
      classics) are broadcast on generalist (essentially public) channels. Consequently, the
      results of the Commission’s market investigation did not indicate that the Eurosport
      channel could be used in the context of anti-competitive leveraging strategies.
(606) Excluding the Eurosport channel discussed in the preceding paragraph, the
      Transaction only adds one genre, that of channels for other content, to
      WarnerMedia’s pre-Transaction portfolio of channels. In addition, the merged
      entity’s market share on that possible market is (very) low (at [5-10]%). This
      confirms the absence of ability of the Parties, as a result of the Transaction, to
      engage in anti-competitive leveraging practices across their channels portfolio.
(607) For the reasons set out above, the Commission concludes that the merged entity
      would not have the ability to engage in foreclosure strategies by leveraging its
      potential market power in the possible markets for the wholesale supply of TV
      channels for news and/or sports content to the possible markets for the wholesale
      supply of TV channels for children and/or other content in Belgium.
      (B.ii)     Incentive to foreclose
(608) The Commission considers that the merged entity will not have the incentive to
      engage in foreclosure strategies by leveraging its potential market power in the
      possible markets for the wholesale supply of TV channels for news and/or sports
      content to the possible markets for the wholesale supply of TV channels for children
      and/or other content in Belgium for the reasons set out below.
(609) The Commission considers that any such attempt would be mostly counter-
      productive and unprofitable for the Parties for the following main reasons: (i) the
      customers that the Parties would try to harm could decide to drop the Parties’
      channels and find alternative individual and/or bundled content options from
      competitors of the Parties262, and/or (ii) the customers that the Parties would try to
      harm could decide to take the unfavourable bundle, increase the prices to their own
      end customers/viewers and see these leave for other offline or online alternative
      retail TV services without the guarantee for the Parties that such customers would
      choose their own retail service given the Parties’ limited market share263 of the retail
      market in Belgium ([0-5]% combined). This very low market share can be
      considered as inversely proportionate to the losses of revenues and profitability the
      merged entity would incur should it decide to pursue such hypothetical strategy.
(610) For the reasons set out above, the Commission concludes that the merged entity
      would not have the incentive to engage in foreclosure strategies by leveraging its
      potential market power in the possible markets for the wholesale supply of TV
      channels for sports content to the possible markets for the wholesale supply of TV
      channels for children, news and/or other content in Belgium.
262   This is confirmed by a customer responding to questionnaire Q2 – Questionnaire to market participants in the
      AV sector (Belgium), question 20.1 and indicating “Wholesale supply of TV channels: [respondent] currently
      has separate deals with Discovery, and WarnerMedia. After the Transaction this will be reduced to one.
      [Respondent] still has deals with more than 50 other broadcasters”.
263   Form CO, Chapter 7, Annex 1.
                                                            123
 ---pagebreak---         (B.iii)    Effects on competition
(611) The Commission considers that due to the lack of ability and incentive, it is not
        necessary to conclude on the question whether any foreclosure strategy as a result of
        conglomerate relationships brought about by the Transaction in Belgium would have
        a negative impact on effective competition.
(612) In any event, the Commission considers that a potential foreclosure strategy of
        competing wholesale suppliers of TV channels in Belgium would have no significant
        detrimental effect on competition because (i) bundling being recognized by the
        respondents to the Commission’s market investigation as a common practice in the
        industry,264 customers will always be able to rely on alternative packaged deals,
        whether larger or narrower in scope, from other international and local suppliers that
        will continue to offer significant competition to the merged entity at all genre levels
        in Belgium, and (ii) customers that would find it more constraining from a
        commercial perspective to deal with the merged entity on the markets for the
        wholesale supply of TV channels for the various types of content, could always
        decide to develop counter-strategies such as creating or commissioning content for
        their own use as a number of market players have done over the last few years.
        (C)        Conclusion
(613) In light of the above, the Commission concludes that the Transaction does not raise
        serious doubts as to the compatibility with the internal market with respect to any
        possible foreclosure practices resulting from the conglomerate relationships between
        the Parties’ activities on the wholesale supply of TV channels for sports, news,
        children and other content under any of the alternative product markets in Belgium
        given the lack of ability, incentive or possible effects of such strategy to foreclose
        competing wholesale suppliers of such TV channels.
5.6.2. Bulgaria
5.6.2.1. Possible foreclosure of competing wholesale suppliers of TV channels for children,
          sports and other content
(614) In the present section, the Commission analyses whether the Parties would have the
        ability and incentive to foreclose rival wholesale suppliers of TV channels for
        children, sports and other content in Bulgaria by engaging in possible tying or
        bundling strategies, then assesses whether such foreclosure strategies would have an
        impact on effective competition in those markets in Bulgaria.
        (A)        The Notifying Party’s views
        (A.i)      Ability to foreclose
(615) The Notifying Party submits that the Parties have no ability to foreclose competitors
        in Bulgaria and that the Transaction will not give them this ability for the reasons set
        out below.
264     Responses to questionnaire Q2 – Questionnaire to market participants in the AV sector (Belgium), questions 17
        and 18.
                                                          124
 ---pagebreak--- (616) The Notifying Party submits that the possible markets where the Parties, alone or
      collectively, have more than a 30% market share do not constitute relevant product
      markets from a market definition perspective and, consequently, the market shares
      calculated are artificial and in no way a display of any possible market power on the
      side of the merged entity.
(617) Irrespective of the above element, the Notifying Party adds that the Parties’ shares of
      those possible relevant markets do not establish any market power that the merged
      entity would allegedly enjoy because it would own one or more “must have”
      channels that it would use to leverage that power onto other possible genre markets.
      The Notifying Party submits, in that respect, that, with [30-40]%, the Parties’ market
      shares on the possible relevant market for the wholesale supply of TV channels for
      children content is merely above the threshold beyond which the Commission
      considers the possible anti-competitive effects of conglomerate relationships
      between neighbouring markets and that, as such, that level of market share cannot
      logically be considered as a position of possible market power that would, in turn,
      enable leveraging strategies. In that respect, the Notifying Party adds that, when all
      genres are part of one and the same market, the merged entity’s market share of the
      pay TV channels in Bulgaria is only [10-20]% and just [0-5]% in the overall (pay
      and FTA) TV channels segment. The Notifying Party therefore submits that,
      irrespective of how the markets are segmented, the merged entity does not own any
      “must have” channel in Bulgaria and is consequently not able to engage in any
      foreclosure strategy based on the leveraging of market power.
(618) The Notifying Party further submits that the merged entity faces competition in the
      wholesale supply of TV channels in Bulgaria from large multinational companies
      such as MTG (with [20-30]%), CME (with [20-30]%), Disney (with [10-20]%),
      ViacomCBS (with [5-10]%) and others local and regional players265 and, that, as a
      consequence, the merged entity can hardly be considered as enjoying any position of
      market power with such numerous and well established competitors.
      (A.ii)    Incentive to foreclose
(619) The Notifying Party considers that the Parties have no incentive to engage in
      foreclosure strategies and that the Transaction will not give them any incentive to do
      so primarily given the competitive constraint that non-linear alternatives impose on
      linear TV. The Notifying Party submits that, if the Parties were to attempt to engage
      in a foreclosure strategy through leveraging practices and thereby attempt to make a
      pay TV provider take extra channels (at extra cost), that pay TV provider could
      either, if it decided to take the bundle, increase prices to its own customers, or, if it
      decided not to take the bundle, drop certain channels and reduce its offering
      accordingly. The Notifying Party submits that either reaction by the pay TV services
      provider could result in end-users leaving that linear TV service for another one.
      However, the Notifying Party argues that there is no reason to believe that those end-
      users exiting the degraded service as a result of the Parties alleged anti-competitive
      leveraging practices, would actually switch to the merged entity’s own non-linear
      services post-Transaction given, in particular, its (very) low market shares at retail
265   Form CO, Chapter 3, Annex 2.
                                                 125
 ---pagebreak---       level in Bulgaria ([5-10]% combined on the SVOD segment of the retail TV services
      market and [0-5]% of the overall subscription pay TV services).266
      (A.iii)    Effects on competition
(620) The Notifying Party submits that there will be no adverse effects on competition in
      the markets affected by the conglomerate relationships in Bulgaria as the Parties will
      not have the ability or the incentive to engage in ant-icompetitive leveraging.
      (B)        Commission’s assessment
      (B.i)      Ability to foreclose
(621) The Commission considers that the merged entity will not have the ability to engage
      in foreclosure strategies by leveraging its potential market power in the possible
      markets for the wholesale supply of TV channels for children content to the possible
      markets for the wholesale supply of TV channels for sports and/or other content in
      Bulgaria for the reasons set out below.
(622) First, the results of the Commission’s market investigation were rather neutral with
      respect to the merged entity’s ability to degrade the terms and conditions at which
      customers purchase TV channels through hypothetical anti-competitive
      bundling/tying practices in Bulgaria, as most respondents did not expect changes
      following the Transaction.267
(623) Second, none of the Parties’ channels on their own can be considered as a “must
      have” asset in Bulgaria given the Parties’ limited market shares on those possible
      individual genres markets. Indeed, even when considered exclusively on a genre
      basis, with the single exception of their share of [30-40]% on the possible market for
      the wholesale supply of pay TV channels for children content, the Parties’ market
      shares all remain below the thresholds relevant for the identification of conglomerate
      relationships. As such, the Parties’ position on the children content genre, which is
      the only addition of genre, as a result of the Transaction, to Discovery’s sports and
      other content channels, can hardly be considered as a display of market power and
      hence a strong basis from which such power could be leveraged onto the other
      genres where the Parties are active (sports and other content channels).
(624) Therefore, the Commission concludes that the merged entity would not have the
      ability to engage in foreclosure strategies by leveraging its potential market power in
      the possible markets for the wholesale supply of TV channels for children content to
      the possible markets for the wholesale supply of TV channels for sports and/or other
      content in Bulgaria.
      (B.ii)     Incentive to foreclose
(625) The Commission considers that the merged entity will not have the incentive to
      engage in foreclosure strategies by leveraging its potential market power in the
      possible markets for the wholesale supply of TV channels for children content to the
      possible markets for the wholesale supply of TV channels for sports and/or other
      content in Bulgaria for the reasons set out below.
266   Form CO, Chapter 7, Annex 1.
267   Responses to questionnaire Q7 – Questionnaire to market participants in the AV sector (Bulgaria), question 28.
                                                         126
 ---pagebreak--- (626) The Commission considers that the Parties do not have the incentive to engage in
      such practices as any such attempt would be mostly counter-productive and
      unprofitable for the Parties for the following main reasons: (i) the customers that the
      Parties would try to harm could decide to drop the Parties’ channels and find
      alternative individual and/or bundled content options from competitors of the Parties
      such as ViacomCBS and/or Disney which are large rivals of the merged entity on the
      wholesale supply of TV channels for children content in Bulgaria268, and/or (ii) the
      customers that the Parties would try to harm could decide to take the unfavourable
      bundle, increase the prices to their own end customers/viewers and see these leave
      for other offline or online alternative retail TV services without the guarantee for the
      Parties that such customers would choose their own retail service given the Parties’
      limited market shares269 of the retail market in Bulgaria ([5-10]% combined on the
      SVOD segment of the retail TV services market and [0-5]% of the overall
      subscription pay TV services). These limited market shares can be considered as
      inversely proportionate to the losses of revenues and profitability the merged entity
      would incur should it decide to pursue such hypothetical strategy.
(627) Therefore, the Commission concludes that the merged entity would not have the
      incentive to engage in foreclosure strategies by leveraging its potential market power
      in the possible markets for the wholesale supply of TV channels for children content
      to the possible markets for the wholesale supply of TV channels for sports and/or
      other content in Bulgaria.
      (B.iii)    Effects on competition
(628) The Commission considers that due to the lack of ability and incentive, it is not
      necessary to conclude on the question whether any foreclosure strategy as a result of
      conglomerate relationships brought about by the Transaction in Bulgaria would have
      a negative impact on effective competition.
(629) In any event, the Commission considers that a potential foreclosure strategy of
      competing wholesale suppliers of TV channels in Bulgaria would have no significant
      detrimental effect on competition because, bundling being recognized by the
      respondents to the Commission’s market investigation as a common practice in the
      industry270. (i) customers will always be able to rely on alternative packaged deals,
      whether larger or narrower in scope, from other international and local suppliers that
      will continue to offer significant competition to the merged entity at all genre levels
      in Bulgaria, and (ii)customers that would find it more constraining from a
      commercial perspective to deal with the merged entity on the markets for the
      wholesale supply of TV channels for the various types of content, could always
      decide to develop counter-strategies such as creating or commissioning content for
      their own use as a number of market players have done over the last few years.
      (C)        Conclusion
(630) In light of the above, the Commission concludes that the Transaction does not raise
      serious doubts as to the compatibility with the internal market with respect to any
268   ViacomCBS is actually the leading supplier of children channels in Bulgaria with [50-60]% (2020), almost twice
      as much as the merged entity’ share.
269   Form CO, Chapter 7, Annex 1.
270   Responses to questionnaire Q7 – Questionnaire to market participants in the AV sector (Bulgaria), questions 26
      and 27.
                                                           127
 ---pagebreak---         possible foreclosure practices resulting from the conglomerate relationships between
        the Parties’ activities on the wholesale supply of TV channels for children, sports
        and other content under any of the alternative product markets in Bulgaria given the
        lack of ability, incentive or possible effects of such strategy to foreclose competing
        wholesale suppliers of such TV channels.
5.6.3. France
5.6.3.1. Possible foreclosure of competing wholesale suppliers of TV channels for sports,
          children and other content
(631) In the present section, the Commission analyses whether the Parties would have the
        ability and incentive to foreclose rival wholesale suppliers of TV channels for sports,
        children and other content in France by engaging in potential tying or bundling
        strategies, then assesses whether such foreclosure strategies would have an impact
        on effective competition in those markets in France.
        (A)        The Notifying Party’s views
        (A.i)      Ability to foreclose
(632) The Notifying Party submits that the Parties have no ability to foreclose competitors
        in France and that the Transaction will not give them this ability for the following
        reasons.
(633) The Notifying Party submits that the possible markets where the Parties, alone or
        collectively, have more than a 30% market share do not constitute relevant product
        markets from a market definition perspective and, consequently, the market shares
        calculated are artificial and in no way a display of any possible market power on the
        side of the merged entity.
(634) Irrespective of the above element, the Notifying Party adds that the Parties’ shares of
        those possible relevant markets do not establish any market power that the merged
        entity would allegedly enjoy because it would own one or more “must have”
        channels that it would use to leverage that power onto other possible genre markets.
        The Notifying Party submits, in that respect, that, with [30-40]%, the Parties’ market
        shares on the possible relevant market for the wholesale supply of TV channels for
        sports content is merely above the threshold beyond which the Commission
        considers the possible anti-competitive effects of conglomerate relationships
        between neighbouring markets and that, as such, that level of market share cannot
        logically be considered as a position of possible market power that would, in turn,
        enable leveraging strategies. In that respect, the Notifying Party adds that, when all
        genres are part of one and the same market, the merged entity’s market share of the
        pay TV channels in France is only [10-20]% and in competition with other strong
        pay TV players including Next Radio TV (with [20-30]%), the RTL Group (with
        [10-20]%), Mediawan (with [10-20]%), Viacom CBS (with [5-10]%) and others.271
(635) The Notifying Party therefore submits that, irrespective of how the markets are
        segmented, the merged entity does not own any “must have” channel in France and
271     Notifying Party’s response to Q9 of RFI 7 on 16 November 2021.
                                                            128
 ---pagebreak---       is consequently not able to engage in any foreclosure strategy based on the
      leveraging of market power.
      (A.ii)     Incentive to foreclose
(636) The Notifying Party considers that the Parties have no incentive to engage in
      foreclosure strategies and that the Transaction will not give them any incentive to do
      so primarily given the competitive constraint that non-linear alternatives impose on
      linear TV. The Notifying Party submits that if the Parties were to attempt to engage
      in a foreclosure strategy through leveraging practices and thereby attempt to make a
      pay TV provider take extra channels (at extra cost), that pay TV provider could
      either, if it decided to take the bundle, increase prices to its own customers, or, if it
      decided not to take the bundle, drop certain channels and reduce its offering
      accordingly. The Notifying Party submits that either reaction by the pay TV service
      provider could result in end-users leaving that linear TV service for another one.
      However, the Notifying Party argues that there is no reason to believe that those end-
      users exiting the degraded service as a result of the Parties alleged anti-competitive
      leveraging practices, would actually switch to the merged entity’s own non-linear
      services post-Transaction given, in particular, its (very) low market shares at retail
      level in France ([0-5]% combined on the SVOD segment of the retail TV services
      market and [0-5]% of the overall subscription pay TV services).272
      (A.iii)    Effects on competition
(637) The Notifying Party submits that there will be no adverse effects on competition in
      the markets affected by the conglomerate relationships in France as the Parties will
      not have the ability or the incentive to engage in anti-competitive leveraging.
      (B)        Commission’s assessment
      (B.i)      Ability to foreclose
(638) The Commission considers that the merged entity will not have the ability to engage
      in foreclosure strategies by leveraging its potential market power in the possible
      markets for the wholesale supply of TV channels for sports content to the possible
      markets for the wholesale supply of TV channels for children and/or other content in
      France for the following reasons.
(639) The Commission’s market investigation indicated that a number of respondents
      considered that, as a result of the Transaction, the merged entity would have the
      ability to degrade the terms and conditions at which they purchase TV channels
      through anti-competitive bundling/tying practices.273
(640) According to these respondents, such practices would entail forcing purchasers to
      take     packages/bundles            of      TV       channels/programmes                including         less
      desired/performing           channels         through         the        leveraging        of       premium
      channels/programmes. Some respondents further argued that this “all or nothing”
      practice would also result in marginalising other suppliers, thereby progressively
272   Form CO, Chapter 7, Annex 1.
273   Responses to questionnaire Q4 – Questionnaire to market participants in the AV sector (France), question 19.
                                                         129
 ---pagebreak---       reducing choice and quality (as well as cultural diversity) in addition to increased
      prices.274
(641) The Commission considers however that these concerns are not justified, as there is
      no indication that any of the Parties’ channels/programmes on their own could be
      considered as a “must have” asset in France given the Parties’ limited market shares
      on those possible individual genres markets. Indeed, even when considered
      exclusively on a genre basis, with the single exception of their share of [30-40]% on
      the possible market for the wholesale supply of pay TV channels for sports content,
      the Parties’ market shares all remain below the thresholds relevant for the
      identification of conglomerate relationships. As such, the Parties’ position on the
      sports content genre can hardly be considered as a display of market power and
      hence a strong basis from which such power could be leveraged onto the other
      genres where the Parties are active (children and other content channels).
(642) Therefore, the Commission concludes that the merged entity would not have the
      ability to engage in foreclosure strategies by leveraging its potential market power in
      the possible markets for the wholesale supply of TV channels for sports content to
      the possible markets for the wholesale supply of TV channels for children and/or
      other content in France.
      (B.ii)      Incentive to foreclose
(643) The Commission considers that the merged entity will not have the incentive to
      engage in foreclosure strategies by leveraging its potential market power in the
      possible markets for the wholesale supply of TV channels for sports content to the
      possible markets for the wholesale supply of TV channels for children and/or other
      content in France .
(644) The Commission considers that any such attempt would be mostly counter-
      productive and unprofitable for the Parties for the following main reasons: (i) the
      customers that the Parties would try to harm could decide to drop the Parties’
      channels and find alternative individual and/or bundled content options from
      competitors of the Parties275, and/or (ii) the customers that the Parties would try to
      harm could decide to take the unfavourable bundle, increase the prices to their own
      end customers/viewers and see these leave for other offline or online alternative
      retail TV services without the guarantee for the Parties that such customers would
      choose their own retail service given the Parties’ limited market shares276 of the
      retail market in France ([0-5]% combined on the SVOD segment of the retail TV
      services market and [0-5]% of the overall subscription pay TV services). These very
      low market shares can be considered as inversely proportionate to the losses of
      revenues and profitability the merged entity would incur should it decide to pursue
      such hypothetical strategy.Therefore, the Commission concludes that the merged
      entity would not have the incentive to engage in foreclosure strategies by leveraging
      its potential market power in the possible markets for the wholesale supply of TV
274   Responses to questionnaire Q4 – Questionnaire to market participants in the AV sector (France), question 20.
275   In that respect, a customer responding to Question 17.1 of Questionnaire 4 for France indicates that the
      Transaction does not change the situation much as, already pre-Transaction, “[it] can not have access to
      Discovery’s portfolio of premium brands in France as long as they are still provided to [another customer] on an
      exclusive basis”.
276   Form CO, Chapter 7, Annex 1.
                                                          130
 ---pagebreak---         channels for sports content to the possible markets for the wholesale supply of TV
        channels for children and/or other content in France.
        (B.iii)    Effects on competition
(645) The Commission considers that due to the lack of ability and incentive, it is not
        necessary to conclude on the question whether any foreclosure strategy as a result of
        conglomerate relationships brought about by the Transaction in France would have a
        negative impact on effective competition.
(646) In any event, the Commission considers that a potential foreclosure strategy of
        competing wholesale suppliers of TV channels in France would have no significant
        detrimental effect on competition because, bundling being recognized by the
        respondents to the Commission’s market investigation as a common practice in the
        industry277, (i) customers will always be able to rely on alternative packaged deals,
        whether larger or narrower in scope, from other international and local suppliers that
        will continue to offer significant competition to the merged entity at all genre levels
        in France, and (ii) customers that would find it more constraining from a commercial
        perspective to deal with the merged entity on the markets for the wholesale supply of
        TV channels for the various types of content, could always decide to develop
        counter-strategies such as creating or commissioning content for their own use as a
        number of market players have done over the last few years.
        (C)        Conclusion
(647) In light of the above, the Commission concludes that the Transaction does not raise
        serious doubts as to the compatibility with the internal market with respect to any
        possible foreclosure practices resulting from the conglomerate relationships between
        the Parties’ activities on the wholesale supply of TV channels for sports, children
        and other content under any of the alternative product markets in France given the
        lack of ability, incentive or possible effects of such strategy to foreclose competing
        wholesale suppliers of such TV channels.
5.6.4. Germany
5.6.4.1. Possible foreclosure of competing wholesale suppliers of TV channels for sports,
          children and other content
(648) In the present section, the Commission analyses whether the Parties would have the
        ability and incentive to foreclose rival wholesale suppliers of TV channels for sports,
        children and other content in Germany by engaging in potential tying or bundling
        strategies, then assesses whether such foreclosure strategies would have an impact
        on effective competition in those markets in Germany.
277     Responses to questionnaire Q4 – Questionnaire to market participants in the AV sector (France), questions 17
        and 18.
                                                          131
 ---pagebreak---       (A)        The Notifying Party’s views
      (A.i)      Ability to foreclose
(649) The Notifying Party submits that the Parties have no ability to foreclose competitors
      in Germany and that the Transaction will not give them this ability for the reasons
      set out below.
(650) First, the Notifying Party submits that the possible markets where the Parties, alone
      or collectively, have more than a 30% market share do not constitute relevant
      product markets from a market definition perspective and, consequently, the market
      shares calculated are artificial and in no way a display of any possible market power
      on the side of the merged entity.
(651) Irrespective of the above element, the Notifying Party adds that the Parties’ shares of
      those possible relevant markets do not establish any market power that the merged
      entity would allegedly enjoy because it would own one or more “must have”
      channels that it would use to leverage that power onto other possible genre markets.
      In that respect, the Notifying Party further submits that the Parties’ market shares of
      [90-100]% on the possible relevant market for the wholesale supply of pay TV
      channels for children content (with WarnerMedia’s Boomerang and Cartoon
      Network channels) is vastly overestimated. The Notifying Party indeed considers
      that, in Germany, pay TV is particularly closely constrained by FTA TV due to
      German FTA broadcasting regulations and the broad availability of FTA channels
      which, in addition to the pay TV competitors278, share almost [80-90]% of the
      audiences via important FTA players such as ARD-ZDF, RTL Group and
      ProSiebenSat.1 Media.279 The Notifying Party therefore rather submits that the
      merged entity’ share of all linear children’s TV channels in Germany (pay TV and
      FTA) is only approximately [0-5]%280 and hence nowhere near that of
      Disney ([30-40]%), ARD-ZDF ([10-20]%), ViacomCBS ([10-20]%) or the RTL
      Group ([10-20]%).281
      (A.ii)     Incentive to foreclose
(652) The Notifying Party considers that the Parties have no incentive to engage in
      foreclosure strategies and that the Transaction will not give them any incentive to do
      so primarily given the competitive constraint that non-linear alternatives impose on
      linear TV. The Notifying Party submits that if the Parties were to attempt to engage
      in a foreclosure strategy through leveraging practices and thereby attempt to make a
      pay TV provider take extra channels (at extra cost), that pay TV provider could
      either, if it decided to take the bundle, increase prices to its own customers, or, if it
      decided not to take the bundle, drop certain channels and reduce its offering
      accordingly. The Notifying Party submits that either reaction by the pay TV services
      provider could result in end-users leaving that linear TV service for another one.
      However, the Notifying Party argues that there is no reason to believe that those end-
      users exiting the degraded service as a result of the Parties alleged anti-competitive
      leveraging practices, would actually switch to the merged entity’s own non-linear
278   Such as NBCU, Disney, Sky Group, RTL Group and Hearst.
279   Form CO, Chapter 3, paragraph 91.
280   [0-5]% in Q4/2020. See Form CO, Chapter 3, Annex 2 (Germany).
281   Form CO, Chapter 3, Annex 2 (Germany).
                                                       132
 ---pagebreak---       services post-Transaction given, in particular, its (very) low market shares at retail
      level in Germany (maximum of [0-5]% combined).282
      (A.iii)     Effects on competition
(653) The Notifying Party submits that there will be no adverse effects on competition in
      the markets affected by the conglomerate relationships in Germany as the Parties
      will not have the ability or the incentive to engage in anti-competitive leveraging.
      (B)         Commission’s assessment
      (B.i)       Ability to foreclose
(654) The Commission considers that the merged entity will not have the ability to engage
      in foreclosure strategies by leveraging its potential market power in the possible
      markets for the wholesale supply of TV channels for children and/or sports content
      to the possible markets for the wholesale supply of TV channels for other content in
      Germany for the reasons set out below.
(655) In the Commission’s market investigation a number of respondents considered that,
      as a result of the Transaction, the merged entity would have the ability to degrade the
      terms and conditions at which they purchase TV channels through anti-competitive
      bundling/tying practices.283
(656) According to these respondents, such practices would entail forcing purchasers to
      take       packages/bundles              of       TV          channels/programmes                  including      less
      desired/performing               channels           through            the       leveraging           of      premium
      channels/programmes. Some respondents further argued that this “all or nothing”
      practice would also result in marginalising other suppliers, thereby progressively
      reducing choice and quality in addition to increased prices.284
(657) The Commission considers that these concerns are not justified, as there is no
      indication that any of the Parties’ channels/programmes on their own could be
      considered as a “must have” asset in Germany. Even if, when considered exclusively
      on a genre basis, one of the Parties might have a high share of such possible markets
      such as WarnerMedia in the wholesale supply of pay TV channels for children
      content (with [90-100]%), the market investigation’s results did not confirm that
      such channel would constitute a “must have” channel, let alone that it could be used
      in the context of anti-competitive strategies.
(658) Excluding WarnerMedia’s two children channels discussed in the preceding
      paragraph and already dismissed as “must have” channels, the Transaction only adds
      two genres of content to WarnerMedia’s pre-Transaction portfolio of channels, that
      of channels for sports content with Discovery’s Eurosport and that of Discovery’s
      other genre content channels. While the Eurosport channel claims a sizeable market
      share of around [40-50]% from a sports genre perspective ([40-50]% in 2020), that
      alone does not make it a “must have” channel. Furthermore, the merged entity is not
      even the leading player on the wholesale supply of TV channels for sports content as
      Constantin Medien has a significantly superior share with [50-60]% (2020) of that
282   Form CO, Chapter 7, Annex 1.
283   Responses to questionnaire Q5 – Questionnaire to market participants in the AV sector (Germany), question 19.
284   Responses to questionnaire Q5 – Questionnaire to market participants in the AV sector (Germany), question 20.
                                                                133
 ---pagebreak---       possible market. Additionally, Discovery’s market shares on the possible market for
      the wholesale supply of channels for other content remains very low at below [0-
      5]%. Those elements together contribute to confirming the absence of ability of the
      Parties, as a result of the Transaction, to engage in anti-competitive leveraging
      practices across their channels portfolio.
(659) Therefore, the Commission concludes that the merged entity would not have the
      ability to engage in foreclosure strategies by leveraging its potential market power in
      the possible markets for the wholesale supply of TV channels for children and/or
      sports content to the possible markets for the wholesale supply of TV channels for
      other content in Germany.
      (B.ii)      Incentive to foreclose
(660) The Commission considers that the merged entity will not have the incentive to
      engage in foreclosure strategies by leveraging its potential market power in the
      possible markets for the wholesale supply of TV channels for children and/or sports
      content to the possible markets for the wholesale supply of TV channels for other
      content in Germany for the reasons set out below.
(661) The Commission considers that any such attempt would be mostly counter-
      productive and unprofitable for the Parties for the following main reasons: (i) the
      customers that the Parties would try to harm could decide to drop the Parties’
      channels and find alternative individual and/or bundled content options from
      competitors of the Parties285, and/or (ii) the customers that the Parties would try to
      harm could decide to take the unfavourable bundle, increase the prices to their own
      end customers/viewers and see these leave for other offline or online alternative
      retail TV services without the guarantee for the Parties that such customers would
      choose their own retail service given the Parties’ limited market share286 of the retail
      market in Germany (maximum of [0-5]% combined). This low market share can be
      considered as inversely proportionate to the losses of revenues and profitability the
      merged entity would incur should it decide to pursue such hypothetical strategy.
(662) Therefore, the Commission concludes that the merged entity would not have the
      incentive to engage in foreclosure strategies by leveraging its potential market power
      in the possible markets for the wholesale supply of TV channels for children and/or
      sports content to the possible markets for the wholesale supply of TV channels for
      other content in Germany.
      (B.iii)     Effects on competition
(663) The Commission considers that due to the lack of ability and incentive, it is not
      necessary to conclude on the question whether any foreclosure strategy as a result of
      conglomerate relationships brought about by the Transaction in Germany would
      have a negative impact on effective competition.
285   In that respect, a customer responding to questionnaire Q5 – Questionnaire to market participants in the AV
      sector (Germany), question 19.1 indicates that “the AV sector is intensely competitive at each level of the supply
      chain and will remain so post-Transaction, with numerous alternatives available to the TV channels of Discovery
      and/or WarnerMedia”.
286   Form CO, Chapter 7, Annex 1.
                                                           134
 ---pagebreak--- (664) In any event, the Commission considers that a potential foreclosure strategy of
        competing wholesale suppliers of TV channels in Germany would have no
        significant detrimental effect on competition because, bundling being recognized by
        the respondents to the Commission’s market investigation as a common practice in
        the industry287, (i) customers will always be able to rely on alternative packaged
        deals, whether larger or narrower in scope, from other international and local
        suppliers that will continue to offer significant competition to the merged entity at all
        genre levels in Germany, and (ii) customers that would find it more constraining
        from a commercial perspective to deal with the merged entity on the markets for the
        wholesale supply of TV channels for the various types of content, could always
        decide to develop counter-strategies such as creating or commissioning content for
        their own use as a number of market players have done over the last few years.
        (C)        Conclusion
(665) In light of the above, the Commission concludes that the Transaction does not raise
        serious doubts as to the compatibility with the internal market with respect to any
        possible foreclosure practices resulting from the conglomerate relationships between
        the Parties’ activities on the wholesale supply of TV channels for children, sports
        and other content under any of the alternative product markets in Germany given the
        lack of ability, incentive or possible effects of such strategy to foreclose competing
        wholesale suppliers of such TV channels.
5.6.5. Italy
5.6.5.1. Possible foreclosure of competing wholesale suppliers of TV channels for children,
          sports and other content
(666) In the present section, the Commission analyses whether the Parties would have the
        ability and incentive to foreclose rival wholesale suppliers of TV channels for
        children, sports and other content in Italy by engaging in potential tying or bundling
        strategies, then assesses whether such foreclosure strategies would have an impact
        on effective competition in those markets in Italy.
        (A)        The Notifying Party’s views
        (A.i)      Ability to foreclose
(667) The Notifying Party submits that the Parties have no ability to foreclose competitors
        in Italy and that the Transaction will not give them this ability for the reasons set out
        below.
(668) The Notifying Party submits that the possible markets where the Parties, alone or
        collectively, have more than a 30% market share do not constitute relevant product
        markets from a market definition perspective and, consequently, the market shares
        calculated are artificial and in no way a display of any possible market power on the
        side of the merged entity.
(669) Irrespective of the above element, the Notifying Party adds that the Parties’ shares of
        those possible relevant markets do not establish any market power that the merged
287     Responses to questionnaire Q5 – Questionnaire to market participants in the AV sector (Germany), questions 17
        and 18.
                                                           135
 ---pagebreak---       entity would allegedly enjoy because it would own one or more “must have”
      channels that it would use to leverage that power onto other possible genre markets.
      The Notifying Party submits, in that respect, that, with [50-60]%, the Parties’ market
      shares on the possible relevant market for the wholesale supply of FTA TV channels
      for children content, while significantly above the threshold beyond which the
      Commission considers the possible anti-competitive effects of conglomerate
      relationships between neighbouring markets, that level of market share cannot be
      considered as a position of possible market power that would, in turn, enable
      leveraging strategies. In that respect, the Notifying Party adds that, when all genres
      are part of one and the same market, the merged entity’s market share of the FTA
      TV channels in Italy is slightly below [5-10]% and significantly behind market
      leaders RAI (with [40-50]%) and Mediaset (with [30-40]%).288
(670) The Notifying Party therefore submits that, irrespective of how the markets are
      segmented, the merged entity does not own any “must have” channel in Italy.
(671) In addition, the Notifying Party submits that children in Italy spend a significant
      proportion of their time watching content on channels other than children’s FTA
      channels as well as AVOD streaming services which both dilutes any hypothetical
      market power of the Parties in that specific genre. In addition, the Notifying Party
      argues that WarnerMedia’s share of that possible relevant market is primarily
      attributable to its channels Boing and Boing Plus through the joint venture with
      Mediaset and concludes, in that respect, that any potential foreclosure strategy by the
      Parties would therefore be constrained by Mediaset’s presence as a partner in that
      joint venture.289
(672) Based on the above, the Notifying Party submits that, irrespective of how the
      markets are segmented, the merged entity is not able to engage in any foreclosure
      strategy based on the leveraging of market power.
      (A.ii)     Incentive to foreclose
(673) The Notifying Party considers that the Parties have no incentive to engage in
      foreclosure strategies and that the Transaction will not give them any incentive to do
      so primarily given the competitive constraint that non-linear alternatives, such as, for
      instance, AVOD services, impose on linear TV, and FTA channels in particular. The
      Notifying Party submits that if the Parties were to attempt to engage in a foreclosure
      strategy through leveraging practices and thereby attempt to make a pay TV provider
      take extra channels (at extra cost), that pay TV provider could either, if it decided to
      take the bundle, increase prices to its own customers, or, if it decided not to take the
      bundle, drop certain channels and reduce its offering accordingly. The Notifying
      Party submits that either reaction by the pay TV services provider could result in
      end-users leaving that linear TV service for another one. However, the Notifying
      Party argues that there is no reason to believe that those end-users exiting the
      degraded service as a result of the Parties alleged anti-competitive leveraging
      practices, would actually switch to the merged entity’s own non-linear services post-
      Transaction given, in particular, its very low market shares at retail level in
288   Notifying Party’s response to Q1 of RFI 9 on 11 December 2021.
289   Notifying Party’s response to Q1 of RFI 9 on 11 December 2021.
                                                          136
 ---pagebreak---       Italy ([0-5]% combined on the SVOD segment of the retail TV services market
      and [0-5]% of the overall subscription pay TV services).290
      (A.iii)     Effects on competition
(674) The Notifying Party submits that there will be no adverse effects on competition in
      the markets affected by the conglomerate relationships in Italy as the Parties will not
      have the ability or the incentive to engage in ant-icompetitive leveraging.
      (B)         Commission’s assessment
      (B.i)       Ability to foreclose
(675) The Commission considers that the merged entity will not have the ability to engage
      in foreclosure strategies by leveraging its potential market power in the possible
      markets for the wholesale supply of TV channels for children content to the possible
      markets for the wholesale supply of TV channels for sports and/or other content in
      Italy for the reasons set out below.
(676) The Commission considers that there is no indication in the results of its market
      investigation that the merged entity will have the ability to engage in foreclosure
      practices through tying/bundling on the market for wholesale supply of channels in
      Italy that would result in a degradation of the terms and conditions at which
      customers purchase TV channels.291
(677) Indeed, for the reasons set out above in section 5.4.4.2, the Commission’s
      assessment of the merged entity’s relatively high market share on the possible
      market for the wholsesale supply of FTA TV channels for children content has
      confirmed that the Transaction does not raise serious doubts as to its compatibility
      with the internal market as a result of horizontal effects on the market for the
      wholesale supply of FTA TV channels for children content in Italy.
(678) On that basis, it can be considered that the merged entity will not own a “must have”
      asset on that possible market in Italy and that, in turn, it will not have the ability to
      leverage any market power onto the other genres where the Parties are active in Italy
      (sports and other content channels).
(679) Therefore, the Commission concludes that the merged entity would not have the
      ability to engage in foreclosure strategies by leveraging its potential market power in
      the possible markets for the wholesale supply of TV channels for children content to
      the possible markets for the wholesale supply of TV channels for sports and/or other
      content in Italy.
      (B.ii)      Incentive to foreclose
(680) The Commission considers that the merged entity will not have the incentive to
      engage in foreclosure strategies by leveraging its potential market power in the
      possible markets for the wholesale supply of TV channels for children content to the
      possible markets for the wholesale supply of TV channels for sports and/or other
      content in Italy for the reasons set out below.
290   Form CO, Chapter 7, Annex 1.
291   Responses to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), question 47.
                                                                137
 ---pagebreak--- (681) The Commission considers that any such attempt would be mostly counter-
      productive and unprofitable for the Parties for the following main reasons: (i) the
      customers that the Parties would try to harm could decide to drop the Parties’
      channels and find alternative individual and/or bundled content options from
      competitors of the Parties, and/or (ii) the customers that the Parties would try to
      harm could decide to take the unfavourable bundle, increase the prices to their own
      end customers/viewers and see these leave for other offline or online alternative
      retail TV services without the guarantee for the Parties that such customers would
      choose their own retail service given the Parties’ very low market shares292 at retail
      level in Italy ([0-5]% combined on the SVOD segment of the retail TV services
      market and [0-5]% of the overall subscription pay TV services). These very low
      market shares can be considered as inversely proportionate to the losses of revenues
      and profitability the merged entity would incur should it decide to pursue such
      hypothetical strategy.Therefore, the Commission concludes that the merged entity
      would not have the incentive to engage in foreclosure strategies by leveraging its
      potential market power in the possible markets for the wholesale supply of TV
      channels for children content to the possible markets for the wholesale supply of TV
      channels for sports and/or other content in Italy.
      (B.iii)   Effects on competition
(682) The Commission considers that due to the lack of ability and incentive, it is not
      necessary to conclude on the question whether any foreclosure strategy as a result of
      conglomerate relationships brought about by the Transaction in Italy would have a
      negative impact on effective competition.
(683) In any event, the Commission considers that a potential foreclosure strategy of
      competing wholesale suppliers of TV channels in Italy would have no significant
      detrimental effect on competition because, bundling being recognized by the
      respondents to the Commission’s market investigation as a common practice in the
      industry293, (i) customers will always be able to rely on alternative packaged deals,
      whether larger or narrower in scope, from other international and local suppliers that
      will continue to offer significant competition to the merged entity at all genre levels
      in Italy, and (ii) customers that would find it more constraining from a commercial
      perspective to deal with the merged entity on the markets for the wholesale supply of
      TV channels for the various types of content, could always decide to develop
      counter-strategies such as creating or commissioning content for their own use as a
      number of market players have done over the last few years.
      (C)       Conclusion
(684) In light of the above, the Commission concludes that the Transaction does not raise
      serious doubts as to the compatibility with the internal market with respect to any
      possible foreclosure practices resulting from the conglomerate relationships between
      the Parties’ activities on the wholesale supply of TV channels for children, sports
      and other content under any of the alternative product markets in Italy given the lack
      of ability, incentive or possible effects of such strategy to foreclose competing
      wholesale suppliers of such TV channels.
292   Form CO, Chapter 7, Annex 1.
293   Responses to questionnaire Q1 – Questionnaire to market participants in the AV sector (Italy), questions 45
      and 46.
                                                       138
 ---pagebreak--- 5.6.6. Norway
5.6.6.1. Possible foreclosure of competing wholesale suppliers of TV channels for sports
          and children content
(685) In the present section, the Commission analyses whether the Parties would have the
        ability and incentive to foreclose rival wholesale suppliers of TV channels for sports
        and children content in Norway by engaging in potential tying or bundling strategies,
        then assesses whether such foreclosure strategies would have an impact on effective
        competition in those markets in Norway.
        (A)         The Notifying Party’s views
        (A.i)       Ability to foreclose
(686) The Notifying Party submits that the Parties have no ability to foreclose competitors
        in Norway and that the Transaction will not give them this ability for the reasons set
        out below.
(687) First, the Notifying Party submits that the possible markets where the Parties, alone
        or collectively, have more than a 30% market share do not constitute relevant
        product markets from a market definition perspective and, consequently, the market
        shares calculated are artificial and in no way a display of any possible market power
        on the side of the merged entity.
(688) Irrespective of the above element, the Notifying Party adds that the Parties’ shares of
        those possible relevant markets do not establish any market power that the merged
        entity would allegedly enjoy because it would own one or more “must have”
        channels that it would use to leverage that power onto other possible genre markets.
        The Notifying Party submits, in that respect, that, with [40-50]%, the Parties’ market
        shares on the possible relevant market for the wholesale supply of TV channels for
        sports content may look high but do not necessarily equate to a position of market
        power that would, in turn, enable leveraging strategies. Indeed, according to the
        Notifying Party, Discovery’s faces stong competitors on that specific genre in
        Norway such as, among others, Egmont (with [30-40]%) and NENT (with
        [10-20]%). The Notifying Party argues that the market shares of the merged entity’s
        competitors alone are sufficient to indicate the lack of market power.
(689) The Notifying further submits that the lack of the “must have” nature of Discovery’s
        Eurosport channels in Norway is further illustrated by the fact that, while it currently
        owns the rights to Norway’s “Eliteserien” football competition, these will be held by
        Egmont’s TV2 channels from 2023 until 2028. In that context, the Notifying Party
        adds that it is its other competitior, NENT, that owns the rights to the English
        Premier League.294 The mere fact that the merged entity will not own any of those
        very important rights can hardly make its Eurosport channel a “must have” in
        Norway.
(690) The Notifying Party therefore submits that, irrespective of how the markets are
        segmented, the merged entity does not own any “must have” channel in Norway and
        is consequently not able to engage in any foreclosure strategy based on the
        leveraging of market power.
294     https://media.sportbusiness.com/2020/02/nents-colossal-premier-league-deal-shakes-up-nordic-market/
                                                            139
 ---pagebreak---       (A.ii)     Incentive to foreclose
(691) The Notifying Party considers that the Parties have no incentive to engage in
      foreclosure strategies and that the Transaction will not give them any incentive to do
      so primarily given the competitive constraint that non-linear alternatives impose on
      linear TV. The Notifying Party submits that if the Parties were to attempt to engage
      in a foreclosure strategy through leveraging practices and thereby attempt to make a
      pay TV provider take extra channels (at extra cost), that pay TV provider could
      either, if it decided to take the bundle, increase prices to its own customers, or, if it
      decided not to take the bundle, drop certain channels and reduce its offering
      accordingly. The Notifying Party submits that either reaction by the pay TV services
      provider could result in end-users leaving that linear TV service for another one.
      However, the Notifying Party argues that there is no reason to believe that those end-
      users exiting the degraded service as a result of the Parties alleged anti-competitive
      leveraging practices, would actually switch to the merged entity’s own non-linear
      services post-Transaction given, in particular, its limited market shares at retail level
      in Norway ([20-30]% combined on the SVOD segment of the retail TV services
      market and [10-20]% of the overall subscription pay TV services).295
      (A.iii)    Effects on competition
(692) The Notifying Party submits that there will be no adverse effects on competition in
      the markets affected by the conglomerate relationships in Norway as the Parties will
      not have the ability or the incentive to engage in anti-competitive leveraging.
      (B)        Commission’s assessment
      (B.i)      Ability to foreclose
(693) The Commission considers that the merged entity will not have the ability to engage
      in foreclosure strategies by leveraging its potential market power in the possible
      markets for the wholesale supply of TV channels for sports content to the possible
      markets for the wholesale supply of TV channels for children content in Norway for
      the reasons set out below.
(694) The Commission considers that there is no indication that the merged entity will
      have the ability to engage in foreclosure practices through tying/bundling on the
      market for wholesale supply of channels in Norway.
(695) First, the results of the Commission’s market investigation were rather neutral with
      respect to the merged entity’s ability to degrade the terms and conditions at which
      customers purchase TV channels through hypothetical anti-competitive
      bundling/tying practices in Norway, as most respondents did not expect changes
      following the Transaction.296
(696) Second, none of the Parties’ channels on their own can be considered as a “must
      have” asset in Norway. First of all, the merged entity’s activity on the wholesale
      supply of TV channels for children content, which is the only addition of genre as a
      result of the Transaction to Discovery’s Eurosport channel, is limited to [10-20]% of
      that possible market and, as such, shows no indication of any market power. Then,
295   Form CO, Chapter 7, Annex 1.
296   Responses to questionnaire Q9 – Questionnaire to market participants in the AV sector (Norway), question 26.
                                                         140
 ---pagebreak---       with respect to the Eurosport channel itself, despite its relatively high share
      ([40-50]%) of the possible market for the wholesale supply of TV channels for
      sports content, it can not either be considered as a must have channel given (i) the
      specialist nature of that channel297, and (ii) the very strong competition it faces from
      Egmont (the owner of TV2) and NENT that are both investing heavily in attractive
      sports content rights.Finally, with regards to the only major sporting event for which
      Discovery holds rights, the Olympics, Discovery is contractually obliged to license
      out at least 100 hours of content for the Winter Olympics, and 200 hours of content
      for the Summer Olympics. That is an additional element that contribute to
      Eurosport’s lack of exclusive or “must have” channel nature.
(697) Therefore, the Commission concludes that the merged entity would not have the
      ability to engage in foreclosure strategies by leveraging its potential market power in
      the possible markets for the wholesale supply of TV channels for sports content to
      the possible markets for the wholesale supply of TV channels for children content in
      Norway.
      (B.ii)      Incentive to foreclose
(698) The Commission considers that the merged entity will not have the incentive to
      engage in foreclosure strategies by leveraging its potential market power in the
      possible markets for the wholesale supply of TV channels for sports content to the
      possible markets for the wholesale supply of TV channels for children content in
      Norway for the reasons set out below.
(699) The merged entity’s incentive to engage in hypothetical anti-competitive practices
      through bundling and tying strategies in Norway is very limited to the extent that,
      other than in sports channels, the merged entity is only active in the wholesale
      supply of channels for children content in Norway. Consequently, should the merged
      entity have the incentive to leverage its position in the possible market for the
      wholesale supply of channels for sports content, it could only do it onto the possible
      market for the wholesale supply of channels for children content. Admittedly, while
      always possible in theory, the much reduced scope (i.e., two genres only) of any
      possible anti-competitive bundle by the merged entity limits the attractiveness of any
      hypothetical bundling strategy involving those two genres.
(700) Notwithstanding the above, the Commission considers that the Parties do not have
      the incentive to engage in such practices as any such attempt would be mostly
      counter-productive and unprofitable for the Parties for the following main reasons:
      (i) the customers that the Parties would try to harm could decide to drop the Parties’
      channels and find alternative individual and/or bundled content options from
      competitors of the Parties, and/or (ii) the customers that the Parties would try to
      harm could decide to take the unfavourable bundle, increase the prices to their own
      end customers/viewers and see these leave for other offline or online alternative
      retail TV services without the guarantee for the Parties that such customers would
      choose their own retail service given the Parties’ limited market share of the retail
297   Eurosport position itself as a “specialist” rather than a “generalist” sports channel. With the exception of the
      Olympic Games for which Discovery currently holds the rights until 2024, Eurosport does not own rights to other
      “high profile” events and, apart from its deal for the Olympics, Eurosport generally has relatively low licensing
      costs.
                                                             141
 ---pagebreak---         market in Norway ([20-30]% combined on the SVOD segment of the retail TV
        services market and [10-20]% of the overall subscription pay TV services).298
(701) Therefore, the Commission concludes that the merged entity would not have the
        incentive to engage in foreclosure strategies by leveraging its potential market power
        in the possible markets for the wholesale supply of TV channels for sports content to
        the possible markets for the wholesale supply of TV channels for children content in
        Norway.
        (B.iii)   Effects on competition
(702) The Commission considers that due to the lack of ability and incentive, it is not
        necessary to conclude on the question whether any foreclosure strategy as a result of
        conglomerate relationships brought about by the Transaction in Norway would have
        a negative impact on effective competition.
(703) In any event, the Commission considers that a potential foreclosure strategy of
        competing wholesale suppliers of TV channels in Norway would have no significant
        detrimental effect on competition because, bundling being recognized by the
        respondents to the Commission’s market investigation as a common practice in the
        industry, (i) customers will always be able to rely on alternative packaged deals,
        whether larger or narrower in scope, from other international and local suppliers that
        will continue to offer significant competition to the merged entity at all genre levels
        in Norway, and (ii) customers that would find it more constraining from a
        commercial perspective to deal with the merged entity on the markets for the
        wholesale supply of TV channels for the various types of content, could always
        decide to develop counter-strategies such as creating or commissioning content for
        their own use as a number of market players have done over the last few years.
        (C)       Conclusion
(704) In light of the above, the Commission concludes that the Transaction does not raise
        serious doubts as to the compatibility with the internal market with respect to any
        possible foreclosure practices resulting from the conglomerate relationships between
        the Parties’ activities on the wholesale supply of TV channels for children and sports
        content under any of the alternative product markets in Norway given the lack of
        ability, incentive or possible effects of such strategy to foreclose competing
        wholesale suppliers of such TV channels.
5.6.7. Poland
5.6.7.1. Possible foreclosure of competing wholesale suppliers of TV channels for news,
          sports, children and other content
(705) In the present section, the Commission analyses whether the Parties would have the
        ability and incentive to foreclose rival wholesale suppliers of TV channels for news,
        sports, children and other content in Poland by engaging in potential tying or
        bundling strategies, then assesses whether such foreclosure strategies would have an
        impact on effective competition in those markets in Poland.
298     Form CO, Chapter 7, Annex 1.
                                                  142
 ---pagebreak---       (A)         The Notifying Party’s views
      (A.i)       Ability to foreclose
(706) The Notifying Party submits that the Parties have no ability to foreclose competitors
      in Poland and that the Transaction will not give them this ability for the reasons set
      out below.
(707) First, the Notifying Party submits that the possible markets where the Parties, alone
      or collectively, have more than a 30% market share do not constitute relevant
      product markets from a market definition perspective and, consequently, the market
      shares calculated are artificial and in no way a display of any possible market power
      on the side of the merged entity.
(708) Irrespective of the above element, the Notifying Party adds that the Parties’ shares of
      those possible relevant markets do not establish any market power that the merged
      entity would allegedly enjoy because it would own one or more “must have”
      channels that it would use to leverage that power onto other possible genre markets.
(709) Indeed, according to the Notifying Party, while the merged entity’ share (i.e., with its
      CNN International channel) of the possible market for the wholesale supply of pay
      TV channels for news content may seem significant, it cannot be considered as a
      “must have” channel in Poland as (i) there is a high number of news TV channels
      available in Poland299 (first and most importantly, local news TV channels which
      inevitably constitute the main source of news at country level, given the prominence
      of the local coverage in news reporting), (ii) international news channels such as
      BBC World, Bloomberg TV and CNBC which, similarly to CNN, report news (in
      English) with largely a global appeal and are widely available in Poland, (iii) general
      FTA and pay TV channels also broadcast a large amount of (local) news content, and
      […].300
(710) The Notifying Party equally considers that the Eurosport channel is not a “must
      have” channel in Poland as (i) it does not own the rights for the local “Ekstraklasa”
      football league which, on its own is worth about 3 times more than all of Eurosport’s
      licensing rights in Poland, (ii) sports content shown on Eurosport is also shown on
      Eurosport Player, Discovery's OTT offering in Poland, and can, consequently, not be
      considered as an exclusive “must have” asset for pay TV services providers to the
      extent that their customers could access it elsewhere, and (iii) while Eurosport owns
      the rights to the World Cup skiing season, it is obligated by local Polish regulations
      to broadcast the ski jumping and cross country skiing events on an FTA basis on the
      Polish television, which it does on its own TVN and Metro FTA channels in
      Poland.301 Finally, with regards to the only major sporting event for which Discovery
      holds rights, the Olympics, Discovery is contractually obliged to license out at least
      100 hours of content for the Winter Olympics, and 200 hours of content for the
      Summer Olympics. That is an additional element that contribute to Eurosport’s lack
      of exclusive or “must have” channel nature in Poland.
299   Tvn, TVP 1, TVP 2, TVP 3, TVP Info, Polsat news, Deutsche Welle CNBC, BBC World, France 24, Bloomberg
      TV, KBS World, Euronews.
300   [INFORMATION RELATED TO WARNERMEDIA’S NEWS CHANNELS DISTRIBUTION STRATEGY
      DURING NEGOTIATIONS WITH POLISH LICENSEES].
301   This obligation has historically been covered through the sublicense of the relevant FTA rights to TVP. The
      rationale [INFORMATION RELATED TO DISCOVERY’S COMMERCIAL STRATEGY IN POLAND].
                                                          143
 ---pagebreak--- (711) The Notifying Party therefore submits that, irrespective of how the markets are
      segmented, the merged entity does not own any “must have” channel in Poland and
      is consequently not able to engage in any foreclosure strategy based on the
      leveraging of market power.
      (A.ii)     Incentive to foreclose
(712) The Notifying Party considers that the Parties have no incentive to engage in
      foreclosure strategies and that the Transaction will not give them any incentive to do
      so primarily given the competitive constraint that non-linear alternatives impose on
      linear TV. The Notifying Party submits that if the Parties were to attempt to engage
      in a foreclosure strategy through leveraging practices and thereby attempt to make a
      pay TV provider take extra channels (at extra cost), that pay TV provider could
      either, if it decided to take the bundle, increase prices to its own customers, or, if it
      decided not to take the bundle, drop certain channels and reduce its offering
      accordingly. The Notifying Party submits that either reaction by the pay TV services
      provider could result in end-users leaving that linear TV service for another one.
      However, the Notifying Party argues that there is no reason to believe that those end-
      users exiting the degraded service as a result of the Parties alleged anti-competitive
      leveraging practices, would actually switch to the merged entity’s own non-linear
      services post-Transaction given, in particular, its limited market shares at retail level
      in Poland ([5-10]% combined on the SVOD segment of the retail TV services
      market and [0-5]% of the overall subscription pay TV services).302
      (A.iii)    Effects on competition
(713) The Notifying Party submits that there will be no adverse effects on competition in
      the markets affected by the conglomerate relationships in Poland as the Parties will
      not have the ability or the incentive to engage in anti-competitive leveraging.
      (B)        Commission’s assessment
      (B.i)      Ability to foreclose
(714) The Commission considers that the merged entity will not have the ability to engage
      in foreclosure strategies by leveraging its potential market power in the possible
      markets for the wholesale supply of TV channels for news and/or sports content to
      the possible markets for the wholesale supply of TV channels for children and/or
      other content in Poland for the reasons set out below.
(715) First, the Commission takes into account the remedy that conditioned its approval
      decision of the Discover/Scripps303 transaction in February of 2018 and which
      guarantees the availability of Discovery’s leading news channels in Poland to all pay
      TV services providers at retail level until February 2025.304
302   Form CO, Chapter 7, Annex 1.
303   Decision pursuant to Article 6(1)(b) in conjunction with Article 6(2) in case M.8665 – Discovery/Scripps of 6
      February 2018.
304   The Commitments consist in an obligation to offer retail pay TV distributors in Poland the right to distribute
      TVN24 and/or TVN24 BiS on a non-exclusive and unbundled basis, for inclusion in a basic pay TV package on
      reasonable commercial terms (and in standard definition, high definition or any other future format that these
      channels are available in, including ancillary rights offered by these channels).
                                                              144
 ---pagebreak--- (716) Second, the Commission considers that there is no indication in the results of its
      market investigation that the merged entity will have the ability to engage in
      foreclosure practices through tying/bundling on the market for wholesale supply of
      channels in Poland that would result in a degradation of the terms and conditions at
      which customers purchase TV channels.305
(717) Indeed, none of the Parties’ channels on their own can be considered as a “must
      have” asset in Poland. Indeed, even when considered exclusively on a genre basis,
      with the exceptions of the merged entity’ share of [70-80]% on the possible market
      for the wholesale supply of pay TV channels for news content and its share of [30-
      40]% on the market for the wholesale supply of pay TV channels for sports content,
      the merged entity’s market shares all remain below the thresholds relevant for the
      identification of conglomerate relationships.
(718) Regarding TVN24, the merged entity’s flagship news channel(s) in Poland, taking
      into account the comments, in paragraph (716) above, they are available on
      reasonable commercial terms to all pay TV services providers in Poland. Regarding
      the CNN channel, the results of the market investigation did not consider it as a
      “must have” channel in Poland as (i) it does not represent the main source of news
      for the viewers among the many national and local news and generalist channels in
      Poland, (ii) its viewership is limited due to the lack of local language dubbing, and
      (ii) it faces the competition of various alternative similar international news channels
      such as Sky News, Euronews, France 24 and BBC World for instance.
(719) Regarding Eurosport, it positions itself as a “specialist” channel rather than a
      generalist sports channel with attractive high-level content as (i) it does not, for
      instance, include Poland’s national football league in its line-up, (ii) outside of the
      Olympics (which it must, contractually, sublicense to some of its competitors), it
      does not own rights to other large worldwide famous sports events such as the World
      Cup, the Tour de France or the Formula 1 championship, (iii) its market shares
      fluctuate significantly quarter by quarter306 depending on what content/events
      Eurosport is actually broadcasting, and (iii) Eurosport faces competition from a
      number of local and international channels such as Polsat, TVP and Vivendi/Canal+.
      This last fact is illustrated by Eurosport’s market share decrease (in the second
      quarter of 2020) to as low as [10-20]% while Polsat Sport, and Vivendi/Canal+
      reported market shares of [50-60]% and [20-30]% respectively over the same period
      on the wholesale supply of pay TV channels for sports content, not taking into
      account the [90-100]% share of TVP Sports on the wholesale supply of FTA TV
      channels for sports content in Poland.307 This last fact illustrates the very volatile
      nature of the possible market for the wholesale supply of TV channels for sports
      content in Poland and the fact that the Parties do not necessarily have a consistent
      market position to exploit in that genre.
(720) Therefore, the Commission concludes that the merged entity would not have the
      ability to engage in foreclosure strategies by leveraging its potential market power in
      the possible markets for the wholesale supply of TV channels for news and/or sports
305   Responses to questionnaire Q10 – Questionnaire to market participants in the AV sector (Poland), questions 26
      and 28.
306   In Q1/2020 it had a [40-50]% market share while in Q2/2020 and Q3/2020 it had [10-20]% and [20-30]%
      respectively. Similar fluctuations apply to the first half of 2021.
307   Form CO, Chapter 7, Annex 1.
                                                               145
 ---pagebreak---       content to the possible markets for the wholesale supply of TV channels for children
      and/other content in Poland.
      (B.ii)    Incentive to foreclose
(721) The Commission considers that the merged entity will not have the incentive to
      engage in foreclosure strategies by leveraging its potential market power in the
      possible markets for the wholesale supply of TV channels for news and/or sports
      content to the possible markets for the wholesale supply of TV channels for children
      and/or content in Poland for the reasons set out below.
(722) The Commission considers that any such attempt would be mostly counter-
      productive and unprofitable for the Parties for the following main reasons: (i) the
      customers that the Parties would try to harm could decide to drop the Parties’
      channels and find alternative individual and/or bundled content options from
      competitors of the Parties, and/or (ii) the customers that the Parties would try to
      harm could decide to take the unfavourable bundle, increase the prices to their own
      end customers/viewers and see these leave for other offline or online alternative
      retail TV services without the guarantee for the Parties that such customers would
      choose their own retail service given the Parties’ limited market shares308 at retail
      level in Poland ([5-10]% combined on the SVOD segment of the retail TV services
      market and [0-5]% of the overall subscription pay TV services). These limited
      market shares can be considered as inversely proportionate to the losses of revenues
      and profitability the merged entity would incur should it decide to pursue such
      hypothetical strategy.
(723) Therefore, the Commission concludes that the merged entity would not have the
      incentive to engage in foreclosure strategies by leveraging its potential market power
      in the possible markets for the wholesale supply of TV channels for news and/or
      sports content to the possible markets for the wholesale supply of TV channels for
      children and/or other content in Poland.
      (B.iii)   Effects on competition
(724) The Commission considers that due to the lack of ability and incentive, it is not
      necessary to conclude on the question whether any foreclosure strategy as a result of
      conglomerate relationships brought about by the Transaction in Poland would have a
      negative impact on effective competition.
(725) In any event, the Commission considers that a potential foreclosure strategy of
      competing wholesale suppliers of TV channels in Poland would have no significant
      detrimental effect on competition because, bundling being recognized by the
      respondents to the Commission’s market investigation as a common practice in the
      industry, (i) customers will always be able to rely on alternative packaged deals,
      whether larger or narrower in scope, from other international and local suppliers that
      will continue to offer significant competition to the merged entity at all genre levels
      in Poland, and (ii) customers that would find it more constraining from a commercial
      perspective to deal with the merged entity on the markets for the wholesale supply of
      TV channels for the various types of content, could always decide to develop
308   Form CO, Chapter 7, Annex 1.
                                               146
 ---pagebreak---         counter-strategies such as creating or commissioning content for their own use as a
        number of market players have done over the last few years.
        (C)       Conclusion
(726) In light of the above, the Commission concludes that the Transaction does not raise
        serious doubts as to the compatibility with the internal market with respect to any
        possible foreclosure practices resulting from the conglomerate relationships between
        the Parties’ activities on the wholesale supply of TV channels for news, sports,
        children and other content under any of the alternative product markets in Poland
        given the lack of ability, incentive or possible effects of such strategy to foreclose
        competing wholesale suppliers of such TV channels.
5.6.8. Romania
5.6.8.1. Possible foreclosure of competing wholesale suppliers of TV channels for children,
          sports and other content
(727) In the present section, the Commission analyses whether the Parties would have the
        ability and incentive to foreclose rival wholesale suppliers of TV channels for
        children, sports and other content in Romania by engaging in potential tying or
        bundling strategies, then assesses whether such foreclosure strategies would have an
        impact on effective competition in those markets in Romania.
        (A)       The Notifying Party’s views
        (A.i)     Ability to foreclose
(728) The Notifying Party submits that the Parties have no ability to foreclose competitors
        in Romania and that the Transaction will not give them this ability for the reasons set
        out below.
(729) First, the Notifying Party submits that the possible markets where the Parties, alone
        or collectively, have more than a 30% market share do not constitute relevant
        product markets from a market definition perspective and, consequently, the market
        shares calculated are artificial and in no way a display of any possible market power
        on the side of the merged entity.
(730) Irrespective of the above element, the Notifying Party adds that the Parties’ shares of
        those possible relevant markets do not establish any market power that the merged
        entity would allegedly enjoy because it would own one or more “must have”
        channels that it would use to leverage that power onto other possible genre markets.
        The Notifying Party submits, in that respect, that, with [30-40]%, the Parties’ market
        shares on the possible relevant market for the wholesale supply of TV channels for
        children content is merely above the threshold beyond which the Commission
        considers the possible anti-competitive effects of conglomerate relationships
        between neighbouring markets and that, as such, that level of market share cannot
        logically be considered as a position of possible market power that would, in turn,
        enable leveraging strategies. In that respect, the Notifying Party adds that, when all
        genres are part of one and the same market, the merged entity’s market share of the
        pay TV channels in Romania is only [5-10]% and in competition with other strong
                                                   147
 ---pagebreak---       regional and international pay TV players including Intact Media (with [30-40]%),
      CME (with [20-30]%), Dogan (with [10-20]%) and others.309
(731) The Notifying Party therefore submits that, irrespective of how the markets are
      segmented, the merged entity does not own any “must have” channel in Romania
      and is consequently not able to engage in any foreclosure strategy based on the
      leveraging of market power.
      (A.ii)     Incentive to foreclose
(732) The Notifying Party considers that the Parties have no incentive to engage in
      foreclosure strategies and that the Transaction will not give them any incentive to do
      so primarily given the competitive constraint that non-linear alternatives impose on
      linear TV. The Notifying Party submits that if the Parties were to attempt to engage
      in a foreclosure strategy through leveraging practices and thereby attempt to make a
      pay TV provider take extra channels (at extra cost), that pay TV provider could
      either, if it decided to take the bundle, increase prices to its own customers, or, if it
      decided not to take the bundle, drop certain channels and reduce its offering
      accordingly. The Notifying Party submits that either reaction by the pay TV services
      provider could result in end-users leaving that linear TV service for another one.
      However, the Notifying Party argues that there is no reason to believe that those end-
      users exiting the degraded service as a result of the Parties alleged anti-competitive
      leveraging practices, would actually switch to the merged entity’s own non-linear
      services post-Transaction given, in particular, its (very) low market shares at retail
      level in Romania ([5-10]% combined on the SVOD segment of the retail TV
      services market and [0-5]% of the overall subscription pay TV services).310
      (A.iii)    Effects on competition
(733) The Notifying Party submits that there will be no adverse effects on competition in
      the markets affected by the conglomerate relationships in Romania as the Parties will
      not have the ability or the incentive to engage in anticompetitive leveraging.
      (B)        Commission’s assessment
      (B.i)      Ability to foreclose
(734) The Commission considers that the merged entity will not have the ability to engage
      in foreclosure strategies by leveraging its potential market power in the possible
      markets for the wholesale supply of TV channels for children content to the possible
      markets for the wholesale supply of TV channels for sports and/or other content in
      Romania for the reasons set out below.
(735) The Commission’s market investigation indicated that a number of respondents
      considered that, as a result of the Transaction, the merged entity would have the
      ability to degrade the terms and conditions at which they purchase TV channels
      through anti-competitive bundling/tying practices.311
309   Notifying Party’s response to Q9 of RFI 7 on 16 November 2021.
310   Form CO, Chapter 7, Annex 1.
311   Responses to questionnaire Q6 – Questionnaire to market participants in the AV sector (Romania), question 19.
                                                          148
 ---pagebreak--- (736) According to these respondents, such practices would entail forcing purchasers to
      take     packages/bundles            of      TV       channels/programmes                including        less
      desired/performing           channels         through         the        leveraging        of      premium
      channels/programmes. Some respondents further argued that this “all or nothing”
      practice would also result in marginalising other suppliers, thereby progressively
      reducing choice and quality in addition to increased prices.312
(737) The Commission considers however that these concerns are not justified, as there is
      no indication that any of the Parties’ channels/programmes on their own could be
      considered as a “must have” asset in Romania given the Parties’ limited market
      shares on those possible individual genres markets. Indeed, even when considered
      exclusively on a genre basis, with the single exception of their share of [30-40]% on
      the possible market for the wholesale supply of pay TV channels for children
      content, the Parties’ market shares all remain below the thresholds relevant for the
      identification of conglomerate relationships. As such, the Parties’ position on the
      children content genre can hardly be considered as a display of market power and
      hence a strong basis from which such power could be leveraged onto the other
      genres where the Parties are active (sports and other content channels).
(738) Therefore, the Commission concludes that the merged entity would not have the
      ability to engage in foreclosure strategies by leveraging its potential market power in
      the possible markets for the wholesale supply of TV channels for children content to
      the possible markets for the wholesale supply of TV channels for sports and/or other
      content in Romania.
      (B.ii)     Incentive to foreclose
(739) The Commission considers that the merged entity will not have the incentive to
      engage in foreclosure strategies by leveraging its potential market power in the
      possible markets for the wholesale supply of TV channels for children content to the
      possible markets for the wholesale supply of TV channels for sports and/or other
      content in Romania for the reasons set out below.
(740) The Commission considers that the Parties do not have the incentive to engage in
      such practices as any such attempt would be mostly counter-productive and
      unprofitable for the Parties for the following main reasons: (i) the customers that the
      Parties would try to harm could decide to drop the Parties’ channels and find
      alternative individual and/or bundled content options from competitors of the
      Parties, and/or (ii) the customers that the Parties would try to harm could decide to
      take the unfavourable bundle, increase the prices to their own end customers/viewers
      and see these leave for other offline or online alternative retail TV services without
      the guarantee for the Parties that such customers would choose their own retail
      service given the Parties’ limited market shares of the retail market in Romania ([5-
      10]% combined on the SVOD segment of the retail TV services market and [0-5]%
      of the overall subscription pay TV services).313 These limited market shares can be
      considered as inversely proportionate to the losses of revenues and profitability the
      merged entity would incur should it decide to pursue such hypothetical strategy.
312   Responses to questionnaire Q6 – Questionnaire to market participants in the AV sector (Romania), question 20.
313   Form CO, Chapter 7, Annex 1.
                                                         149
 ---pagebreak--- (741) Therefore, the Commission concludes that the merged entity would not have the
        incentive to engage in foreclosure strategies by leveraging its potential market power
        in the possible markets for the wholesale supply of TV channels for children content
        to the possible markets for the wholesale supply of TV channels for sports and/or
        other content in Romania.
        (B.iii)    Effects on competition
(742) The Commission considers that due to the lack of ability and incentive, it is not
        necessary to conclude on the question whether any foreclosure strategy as a result of
        conglomerate relationships brought about by the Transaction in Romania would have
        a negative impact on effective competition.
(743) In any event, the Commission considers that a potential foreclosure strategy of
        competing wholesale suppliers of TV channels in Romania would have no
        significant detrimental effect on competition because, bundling being recognized by
        the respondents to the Commission’s market investigation as a common practice in
        the industry314, (i) customers will always be able to rely on alternative packaged
        deals, whether larger or narrower in scope, from other international and local
        suppliers that will continue to offer significant competition to the merged entity at all
        genre levels in Romania, and (ii) customers that would find it more constraining
        from a commercial perspective to deal with the merged entity on the markets for the
        wholesale supply of TV channels for the various types of content, could always
        decide to develop counter-strategies such as creating or commissioning content for
        their own use as a number of market players have done over the last few years.
        (C)        Conclusion
(744) In light of the above, the Commission concludes that the Transaction does not raise
        serious doubts as to the compatibility with the internal market with respect to any
        possible foreclosure practices resulting from the conglomerate relationships between
        the Parties’ activities on the wholesale supply of TV channels for children, sports
        and other content under any of the alternative product markets in Romania given the
        lack of ability, incentive or possible effects of such strategy to foreclose competing
        wholesale suppliers of such TV channels.
5.6.9. Spain
5.6.9.1. Possible foreclosure of competing wholesale suppliers of TV channels for sports,
          children and other content
(745) In the present section, the Commission analyses whether the Parties would have the
        ability and incentive to foreclose rival wholesale suppliers of TV channels for sports,
        children and other content in Spain by engaging in potential tying or bundling
        strategies, then assesses whether such foreclosure strategies would have an impact
        on effective competition in those markets in Spain.
314     Responses to questionnaire Q6 – Questionnaire to market participants in the AV sector (Romania), questions 17
        and 18.
                                                           150
 ---pagebreak---       (A)        The Notifying Party’s views
      (A.i)      Ability to foreclose
(746) The Notifying Party submits that the Parties have no ability to foreclose competitors
      in Spain and that the Transaction will not give them this ability for the reasons set
      out below.
(747) First, the Notifying Party submits that the possible markets where the Parties, alone
      or collectively, have more than a 30% market share do not constitute relevant
      product markets from a market definition perspective and, consequently, the market
      shares calculated are artificial and in no way a display of any possible market power
      on the side of the merged entity.
(748) Irrespective of the above element, the Notifying Party adds that the Parties’ shares of
      those possible relevant markets do not establish any market power that the merged
      entity would allegedly enjoy because it would own one or more “must have”
      channels that it would use to leverage that power onto other possible genre markets.
      In that respect, the Notifying Party considers that the Eurosport channel is not a
      “must have” channel in Spain as (i) it does not own the rights for the local “La Liga”
      football league which, on its own, is worth about close to 200 times more than all of
      Eurosport’s licensing rights for one year in Spain, (ii) with regards to the only major
      sporting event for which Discovery holds rights, the Olympics, Discovery is
      contractually obliged to license out at least 100 hours of content for the Winter
      Olympics, and 200 hours of content for the Summer Olympics, which contributes to
      Eurosport’s lack of exclusive or “must have” channel nature, and (iii) when all
      genres are part of one and the same market, Eurosport’s overall market share of all
      channels is just [0-5]% of all channels in Spain.315
(749) The Notifying Party therefore submits that, irrespective of how the markets are
      segmented, the merged entity does not own any “must have” channel in Spain and is
      consequently not able to engage in any foreclosure strategy based on the leveraging
      of market power.
      (A.ii)     Incentive to foreclose
(750) The Notifying Party considers that the Parties have no incentive to engage in
      foreclosure strategies and that the Transaction will not give them any incentive to do
      so primarily given the competitive constraint that non-linear alternatives impose on
      linear TV. The Notifying Party submits that if the Parties were to attempt to engage
      in a foreclosure strategy through leveraging practices and thereby attempt to make a
      pay TV provider take extra channels (at extra cost), that pay TV provider could
      either, if it decided to take the bundle, increase prices to its own customers, or, if it
      decided not to take the bundle, drop certain channels and reduce its offering
      accordingly. The Notifying Party submits that either reaction by the pay TV services
      provider could result in end-users leaving that linear TV service for another one.
      However, the Notifying Party argues that there is no reason to believe that those end-
      users exiting the degraded service as a result of the Parties alleged anti-competitive
      leveraging practices, would actually switch to the merged entity’s own, non-linear
      services post-Transaction given, in particular, its limited market shares at retail level
315   Notifying Party’s response to Q2 of RFI 9 on 11 December 2021.
                                                          151
 ---pagebreak---       in Spain ([5-10]% combined on the SVOD segment of the retail TV services market
      and [0-5]% of the overall subscription pay TV services).316
      (A.iii)     Effects on competition
(751) The Notifying Party submits that there will be no adverse effects on competition in
      the markets affected by the conglomerate relationships in Spain as the Parties will
      not have the ability or the incentive to engage in anti-competitive leveraging.
      (B)         Commission’s assessment
      (B.i)       Ability to foreclose
(752) The Commission considers that the merged entity will not have the ability to engage
      in foreclosure strategies by leveraging its potential market power in the possible
      markets for the wholesale supply of TV channels for sports and/or children content
      to the possible markets for the wholesale supply of TV channels for other content in
      Spain for the reasons set out below.
(753) The Commission considers that there is no indication in the results of its market
      investigation that the merged entity will have the ability to engage in foreclosure
      practices through tying/bundling on the market for wholesale supply of channels in
      Spain which would result in a degradation of the terms and conditions at which
      customers purchase TV channels.317
(754) None of the Parties’ channels on their own can be considered as a “must have” asset
      in Spain. Indeed, even when considered exclusively on a genre basis, with the
      exceptions of the merged entity’ share of [40-50]% on the possible market for the
      wholesale supply of pay TV channels for sports content and its share of [30-40]% on
      the market for the wholesale supply of FTA TV channels for children content, the
      merged entity’s market shares all remain below the thresholds relevant for the
      identification of conglomerate relationships.
(755) With respect to the merged entity’s position on the possible market for the FTA TV
      channels for children content, which is merely above the threshold considered by the
      Commission in the context of conglomerate relationships (with [30-40]%), it can
      hardly be considered as a display of market power and hence a strong basis from
      which such power could be leveraged onto the other genres where the Parties are
      active (essentially other content channels) as the merged entity faces significant
      competition on that possible market from, among others, RTVE (with [40-50]%) and
      The Walt Disney Company (with [20-30]%). Furthermore, should all children
      channels be lumped together, the merged entity’s market share would decrease
      to [20-30]%.318
(756) With respect to Eurosport, it positions itself as a “specialist” channel rather than a
      generalist sports channel with attractive high-level content as (i) it does not for
      instance propose Spain’s national football league (La Liga) in its line-up, (ii) outside
      of the Olympics (which it must, contractually, sublicense to some of its competitors),
      it does not own rights to other large worldwide famous sports events such as the
316   Form CO, Chapter 7, Annex 1.
317   Responses to questionnaire Q11 – Questionnaire to market participants in the AV sector (Spain), questions 26 and 28.
318   Notifying Party’s response to Q1 of RFI 9 on 11 December 2021.
                                                                152
 ---pagebreak---       World Cup, the Tour de France or the Formula 1 championship, (iii) its market
      shares fluctuate significantly quarter by quarter319 depending on what content/events
      Eurosport is actually broadcasting, and (iii) Eurosport faces competition from a
      number of local and international channels such as Telefonica/Movistar, Mediapro
      and the DAZN Group, depending on where the La Liga rights end up. This last fact
      illustrates the very volatile nature of the possible market for the wholesale supply of
      TV channels for sports content in Spain and the fact that the Parties do not
      necessarily have a consistent market position to exploit in that genre.320
(757) Therefore, the Commission concludes that the merged entity would not have the
      ability to engage in foreclosure strategies by leveraging its potential market power in
      the possible markets for the wholesale supply of TV channels for sports and/or
      children content to the possible markets for the wholesale supply of TV channels for
      other content in Spain.
      (B.ii)      Incentive to foreclose
(758) The Commission considers that the merged entity will not have the incentive to
      engage in foreclosure strategies by leveraging its potential market power in the
      possible markets for the wholesale supply of TV channels for sports and/or children
      content to the possible markets for the wholesale supply of TV channels for other
      content in Spain for the reasons set out below.
(759) The Commission considers that any such attempt would be mostly counter-
      productive and unprofitable for the Parties for the following main reasons: (i) the
      customers that the Parties would try to harm could decide to drop the Parties’
      channels and find alternative individual and/or bundled content options from
      competitors of the Parties, and/or (ii) the customers that the Parties would try to
      harm could decide to take the unfavourable bundle, increase the prices to their own
      end customers/viewers and see these leave for other offline or online alternative
      retail TV services without the guarantee for the Parties that such customers would
      choose their own retail service given the Parties’ limited market shares321 at retail
      level in Spain ([5-10]% combined on the SVOD segment of the retail TV services
      market and [0-5]% of the overall subscription pay TV services). These limited
      market shares can be considered as inversely proportionate to the losses of revenues
      and profitability the merged entity would incur should it decide to pursue such
      hypothetical strategy.
(760) Therefore, the Commission concludes that the merged entity would not have the
      incentive to engage in foreclosure strategies by leveraging its potential market power
      in the possible markets for the wholesale supply of TV channels for sports and/or
      children content to the possible markets for the wholesale supply of TV channels for
      other content in Spain.
      (B.iii)     Effects on competition
(761) The Commission considers that due to the lack of ability and incentive, it is not
      necessary to conclude on the question whether any foreclosure strategy as a result of
319   In Q1/2020 it had a [40-50]% market share while in Q2/2020 and Q3/2020 it had [10-20]% and [20-30]%
      respectively. Similar fluctuations apply to the first half of 2021.
320   Notifying Party’s response to Q1 of RFI 9 on 11 December 2021.
321   Form CO, Chapter 7, Annex 1.
                                                               153
 ---pagebreak---       conglomerate relationships brought about by the Transaction in Spain would have a
      negative impact on effective competition.
(762) In any event, the Commission considers that a potential foreclosure strategy of
      competing wholesale suppliers of TV channels in Spain would have no significant
      detrimental effect on competition because, bundling being recognized by the
      respondents to the Commission’s market investigation as a common practice in the
      industry, (i) customers will always be able to rely on alternative packaged deals,
      whether larger or narrower in scope, from other international and local suppliers that
      will continue to offer significant competition to the merged entity at all genre levels
      in Spain, and (ii) customers that would find it more constraining from a commercial
      perspective to deal with the merged entity on the markets for the wholesale supply of
      TV channels for the various types of content, could always decide to develop
      counter-strategies such as creating or commissioning content for their own use as a
      number of market players have done over the last few years.
      (C)       Conclusion
(763) In light of the above, the Commission concludes that the Transaction does not raise
      serious doubts as to the compatibility with the internal market with respect to any
      possible foreclosure practices resulting from the conglomerate relationships between
      the Parties’ activities on the wholesale supply of TV channels for sports, children
      and other content under any of the alternative product markets in Spain given the
      lack of ability, incentive or possible effects of such strategy to foreclose competing
      wholesale suppliers of such TV channels.
6.    CONCLUSION
(764) For the 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
                                                      Executive Vice-President
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