CELEX: 32020M9676
Language: en
Date: 2020-06-30 00:00:00
Title: Commission Decision of 30/06/2020 declaring a concentration to be compatible with the common market (Case No COMP/M.9676 - LOV GROUP / BANIJAY / ESG) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                Brussels, 30.06.2020
                                                                C(2020) 4520 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                                                                 information omitted has been replaced by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.
                                                                To the notifying party
Subject:            Case M.9676 – Lov Group/Banijay/ESG
                    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 25 May 2020, the Commission received notification of a proposed concentration
          pursuant to Article 4 of Council Regulation (EC) No 139/2004 by which Lov Group
          Invest (“Lov Group”, France) acquires within the meaning of Article 3(1)(b) of the
          Merger Regulation sole control of the whole of both Banijay Group (“Banijay”,
          France), which is currently jointly controlled by Lov Group and DeAgostini, and
          Endemol Shine Group (“ESG”, the Netherlands), which is currently jointly
          controlled by Apollo Management and The Walt Disney Company (the
          “Transaction”).3 Lov Group is hereinafter also referred to as the “Notifying Party”.
          Lov Group, Banijay and ESG are together referred to as the “Parties”.
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    Publication in the Official Journal of the European Union No C 183, 3.6.2020, p. 11.
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--- 1.      THE PARTIES
(2)     Lov Group is a French holding company. Lov Group is active in the production of
        audiovisual (“AV”) content in Europe via Banijay, as well as in the online gambling
        and luxury hotels sectors.
(3)     Banijay is active in the production and distribution of content for television (“TV”)
        and digital platforms (AV content). Banijay creates and produces general
        entertainment content for broadcasters in Europe, the United States, India, Australia,
        New Zealand and Russia and licenses pre-produced content and formats around the
        world mostly through its UK-based distribution arm Banijay Rights. Banijay is
        currently jointly controlled by Lov Group and DeAgostini.
(4)     ESG is an international producer and distributor of AV content. ESG develops
        general entertainment content and licenses its portfolio to third parties through its
        UK-based subsidiary Endemol Shine International, which mainly licenses pre-
        produced content, and its Dutch subsidiary Endemol Shine IP, which mainly licenses
        formats.4 ESG is currently jointly controlled by Apollo Management and The Walt
        Disney Company.
2.      THE OPERATION
(5)     The Transaction concerns the acquisition of sole control over both Banijay and ESG
        by Lov Group.
(6)     First, pursuant to a share purchase agreement dated 25 October 2019 (“SPA”),
        Banijay, via its subsidiary Banijay Entertainment, will acquire 100% of the share
        capital of ESG. Second, upon completion of the acquisition of ESG by Banijay, the
        control over Banijay will change from the current joint control by Lov Group and
        DeAgostini to sole control by Lov Group via its holding company Lov Group Invest,
        through a decrease in DeAgostini’s shareholding. DeAgostini will thus only retain a
        minority shareholding that will not provide it with joint control.
(7)     These two transactions are interdependent within the meaning of paragraphs 38 et
        seq. of the Commission’s Consolidated Jurisdictional Notice and, as a result, form a
        single concentration for the purposes of Article 3 of the EUMR.
(8)     First, both transactions have as their common result the acquisition of ultimate
        exclusive control by Lov Group.
(9)     Second, the two transactions are linked by condition. [BUSINESS SECRET].5
(10)    Third, further proof of the interdependence between both transactions follows from
        the simultaneous conclusion of the relevant agreements. The SPA and the DeA MoU
        were both executed on 25 October 2019.
4   A format is the overall concept and branding of a copyrighted AV show. The most common type of
    formats are those in the TV genres of game shows and reality shows, many of which are remade in
    multiple markets with local contestants. Examples include “Who Wants to Be a Millionaire?” and “Big
    Brother”.
5   [BUSINESS SECRET].
                                                        2
 ---pagebreak--- (11)    Therefore, the Transaction constitutes a concentration within the meaning of Article
        3(1)(b) of the Merger Regulation.
3.      EU DIMENSION
(12)    The Transaction does not have EU dimension pursuant to Article 1(2) of the Merger
        Regulation. However, the undertakings concerned have a combined aggregate world-
        wide turnover of more than EUR 2 500 million (Lov Group: […]; Banijay: EUR
        […]; ESG: EUR […]). In each of at least three Member States, the combined
        aggregate turnover is more than EUR 100 million. In each of these Member States,
        the aggregate turnover of each of the undertaking concerned is more than EUR 25
        million (France: Lov Group: EUR […]; Banijay: EUR […]; ESG: EUR […];
        Germany: Lov Group: EUR […]; Banijay: EUR […]; ESG: EUR […]; Italy: Lov
        Group: EUR […]; Banijay: EUR […]; ESG: EUR […]). The aggregated EU-wide
        turnover of each of the undertakings concerned was more than EUR 100 million
        (Lov Group: EUR […]; Banijay: EUR […]; ESG: EUR […]), but they do not
        achieve more than two-thirds of their aggregate EU-wide turnover within one and
        the same Member State.
(13)    Therefore, the Transaction has an EU dimension pursuant to Article 1(3) of the
        Merger Regulation.
4.      MARKET DEFINITION
4.1.    Overview of the audiovisual value chain
(14)    The present case relates to the areas of (i) the production of AV content, (ii) the
        licensing of broadcasting rights for such content, and (iii) the wholesale supply of
        TV channels, where Banijay and ESG are active. Affected markets arise only with
        respect to area (i).
(15)    In its past decisional practice6, the Commission has distinguished the following
        levels in the value chain for AV-related content:
        (a) the production of AV content, i.e. the sourcing of AV content by broadcasters,
            streaming and channel operators on a “commissioned”/tailor-made basis (see
            Section 4.2 below);
        (b) the licensing of broadcasting rights relating to AV content, i.e. the acquisition of
            broadcasting rights by broadcasters, streaming and channel operators for pre-
            existing AV content or rights to formats (see Section 4.2 below);
        (c) the wholesale supply of TV channels by TV channel editors to TV channel
            retailers; and
        (d) the retail supply of AV services to end customers.
6   Commission decision of 7 April 2017, Case M.8354, Fox/Sky, para. 29; Commission decision of 16
    September 2014, Case M.7282, Liberty Global/Discovery/All3Media, para. 12; Commission decision of
    21 December 2010, Case M.5932, News Corp/BSkyB, para. 29.
                                                      3
 ---pagebreak--- (16)    TV production companies produce AV content either (i) for internal use on their own
        TV channels or video-on-demand services if they are vertically integrated
        broadcasters (i.e., captive TV production), or (ii) for supply to third-party customers
        (i.e., non-captive TV production). Third-party customers are typically broadcasters
        or, alternatively, non-traditional platforms, i.e. Over-The-Top ("OTT") platforms
        that order AV content from TV production companies. This level of the value chain
        concerns the licensing of broadcasting rights relating to pre-existing AV content, i.e.,
        AV content that has been previously produced and is subsequently made available
        "off-the-shelf" by the rights holder (so-called "pre-produced" AV content).
(17)    The Transaction relates to levels (a) and (b) identified above, since Banijay and ESG
        are mainly active in the production of AV content and in the distribution/licensing of
        AV content rights and not in the downstream levels of the AV content value chain.7
(18)    As indicated, only the horizontal overlaps at level (a) are assessed in the present as
        affected markets arise only in this respect
4.2.    Production of AV content and licensing of broadcasting rights for AV content
(19)    From a demand perspective, the production/commissioning of non-captive AV
        content and the licensing/acquisition of AV content rights relating to externally
        produced content represent alternative ways through which downstream operators
        (e.g., TV channels wholesalers, vertically integrated TV services retailers, OTT
        providers) may acquire AV content, and could, therefore, be considered
        substitutable.8
(20)    Moreover, the possible sub-segmentations of the market for the licensing of AV
        content rights adopted by the Commission in previous decisions are applicable to the
        production of AV content.
(21)    For these reasons, and in line with past decisional practice, the market definition for
        the production of non-captive AV content and the licensing of AV content rights is
        examined jointly in the present decision.
4.2.1. Product market definition
4.2.1.1. Commission’s decisional practice
(22)    In its past decisional practice, the Commission has assessed a potential segmentation
        of the markets for the production/commissioning of non-captive AV content and the
        licensing/acquisition of AV content rights according to both (a) the model for
        supplying/acquiring AV content and/or (b) the type of AV content being
        supplied/acquired.
(23)    With reference to the model for supplying/acquiring AV content, the Commission
        concluded that the production of AV content and the licensing of broadcasting rights
7   Banijay and ESG are also very marginally active in the production of films.
8   Commission decision of 9 October 2014, Case M.7360, 21st Century Fox/Apollo/JV, para 40;
    Commission decision of 16 September 2014, Case M.7282, Liberty Global/Discovery/All3Media, para.
    41; Commission decision of 22 September 2006, Case M.4353, Permira/All3Media Group, para. 9.
                                                         4
 ---pagebreak---         for AV content9 appear to belong to separate relevant product markets.10 However,
        the Commission left open the question whether the market for the production of AV
        content is to be further segmented between commissioned production and supply of
        production services. The Commission also found the market for the production of
        AV content to be limited to non-captive production (as opposed to captive
        production, i.e. AV content produced for captive or in-house use on the producer's
        own channels, which is therefore not offered on the merchant market).11
(24)    With reference to the type of AV content, in its past decisional practice, the
        Commission has identified separate markets for (i) films, (ii) sports and (iii) other
        AV content within the markets for both the production of AV content and the
        licensing of broadcasting rights.12
(25)    The Commission has also considered distinguishing the market for other AV content
        further according to whether it presents scripted and non-scripted content (with
        scripted AV content being produced on an existing script, story or character, while
        non-scripted AV content is content not based on a script, for example game shows,
        reality shows and talent shows). Within the scripted and non-scripted sub-segments,
        the Commission has already considered a further sub-segmentation according to
        genre (drama, comedy, documentaries, kids’ programs, reality shows, talk shows,
        talent shows, factual entertainment, etc.).13
(26)    The Commission has further considered further sub-dividing the market for the
        licensing of broadcasting rights for AV content by exhibition window: (i)
        subscription video on demand ("SVOD"); (ii) transactional video on demand
        ("TVOD"); (iii) pay-per-view ("PPV"); (iv) first pay-TV window; (v) second pay-
        TV window; and (vi) FTA, but left the market definition open.14
4.2.1.2. The Notifying Party’s views
(27)    In respect to the market for the production and commissioning of AV content and the
        licensing of broadcasting rights for AV content, the Notifying Party provides the
        following arguments.
9   A production company licenses to a distributor or TV channels supplier the broadcasting rights for ready-
    made AV content that it has produced previously.
10  Commission decision of 20 January 2016, Case M.7865, Lov Group Invest/De Agostini/JV, para. 30;
    Commission decision of 16 May 2014, Case M.7282, Liberty Global/Discovery/All3Media, para. 41.
11  Commission decision of 22 September 2006, Case M.4353, Permira/All3Media Group, para. 11;
    Commission decision of 11 July 2000, Case M.1943, Telefonica/Endemol, para 9.
12  Commission decision of 21 December 2011, Case M.6369, HBO/Ziggo/HBO Netherlands, para. 18;
    Commission decision of 15 April 2013, Case M.6880, Liberty Global/Virgin Media, para. 18-19;
    Commission decision of 16 May 2014, Case M.7282, Liberty Global/Discovery/All3Media, para. 42;
    Commission decision of 9 October 2014, Case M.7360, 21st Century Fox/Apollo/JV, para. 42;
    Commission decision of 20 January 2016, Case M.7865, Lov Group Invest/De Agostini/JV, para. 30 and
    37; Commission decision of 7 April 2017, Case M.8354, Fox/Sky, para. 63.
13  Case M.7282, Liberty Global/Discovery/All3Media, para. 45; Case M.7865, Lov Group Invest/De
    Agostini/JV, para. 31.
14  Commission decision of 15 June 2018, Case M.8861 Comcast/Sky, recitals 35, 39; Commission decision
    of 24 February 2015 in case M.7194 Liberty Global / Corelio / W&W / De Vijver Media, recital 69;
    Commission decision of 21 December 2011 in case M.6369 HBO/Ziggo/HBO Nederland, recital 18;
    Commission decision of 16 September 2014 in case M.7282 Liberty Global/Discovery/All3Media, recitals
    46–48; Commission decision of 9 October 2014 in case M.7360 21st Century Fox/Apollo/JV, recitals 45–
    47, Commission decision of 10 October 2014 in case M.7000 Liberty Global/Ziggo, recitals 38–44.
                                                        5
 ---pagebreak---       Captive vs. non-captive production
(28)  The Notifying Party argues that the Commission should assess the effects of the
      Transaction on a market for the production of TV content including both in-house
      and externally commissioned production. These two alternative sources of
      production are, according to the Notifying Party, perfectly substitutable for
      broadcasters. On this basis, the Notifying Party argues that broadcasters can, and do,
      easily switch between in-house and external production, in the same way as they can
      substitute one external producer for another based on the attractiveness of their
      respective formats and costs.15
      Tailormade vs. production for hire
(29)  The Notifying Party submits that a distinction between production-for-hire and
      tailormade production does not reflect the reality of the TV production in most EEA
      Member States as (i) it would be rare that broadcasters develop a format in-house
      and decide to outsource the production of the content, and (ii) it is rare for
      broadcasters to acquire a format from one production company and hire another
      production company to produce the content based on that format. Further, according
      to the Notifying Party, the typical case when the broadcaster can be said to “own”
      the format and outsource the production of the programs is when it has been granted
      a license to that format. According to the Notifying Party, even in these cases, the
      production companies’ services are never limited to providing purely technical
      support only, but they would be highly involved in the design and conception of the
      finished program, such as selecting the cast, or editing the content. Furthermore,
      production companies would be systematically called upon to submit suggestions as
      to how to improve and modernize the content of the program. Given this lack of
      difference in the services provided by the production company depending on
      whether it or the TV channels suppliers or content platform operators owns the rights
      to the format produced, these two situations do, in the notifying Party’s view, not
      form distinct relevant product markets.16
      Segmentation by type of content (within scripted and non-scripted content)
(30)  The Notifying Party considers that segmenting the market for the production of
      general entertainment TV content and the licensing of broadcasting rights – first
      segmented by scripted and non-scripted content, which the Notifying Party does not
      contest – according to genre (drama, comedy, documentaries, kids’ programs, reality
      shows, talk shows, talent shows, factual entertainment, etc.) is not appropriate. The
      Notifying Party contends that (i) there is no recognised standard for segmenting
      between the genres, (ii) some programs have a hybrid nature, (iii) broadcasters
      decide on the basis of a number of factors which content they chose (budget,
      attractiveness, etc.), and that (iv) even if different genres can be identified they are
      largely substitutable as long as they meet the broadcasters budgetary requirements.
      This is, according to the Notifying Party, demonstrated by the fact that broadcasters
      may even leave open the genre of a program as long as a given time slot can be
      occupied, so that time slots used for one type of program may be used for another
      type of program in the next period. From the supply-side perspective, the Notifying
15 Form CO, paragraphs 149 to 157.
16 Form CO, paragraphs 158 to 166.
                                                  6
 ---pagebreak---         Party argues that there are no significant barriers to switching between genre, as (i)
        some genres such as factual entertainment and talk shows do not follow any specific
        format and may be produced at little cost, and (ii) producers can easily rely on hired
        talents who can easily switch between genres.17
        Segmentation by exhibition window (licensing of broadcasting rights)
(31)    The Notifying Party considers that the market for the production of TV content
        should not be segmented according to the exhibition window as it would not be
        relevant as regards the market for production of TV content. It considers that there is
        no intrinsic difference between the type of non-film, non-sport content that a TV
        broadcaster, a TV retailer and/or an OTT platform would source or commission from
        a TV production company, depending on the exhibition window in which it intends
        to broadcast such content on Pay TV or on FTA TV. Moreover, after the relevant TV
        content is produced, the licensor would typically be free to decide to whom to
        license such content and for what exhibition window and may actually license the
        same content for different exhibition windows in different territories (or even in the
        same territory).18
4.2.1.3. Commission’s assessment
        (A)        Production of tailormade AV content vs. licensing of broadcasting rights for
                   pre-produced AV content19
(32)    In the framework of the market investigation the Commission verified the
        appropriateness of a distinction between the production of tailormade AV content on
        the one hand and the licencing of broadcasting rights for pre-produced AV content
        on the other hand, as explained at para. 15 above (points (a) and (b), in terms of
        relevant product market definition. The results of the market investigation indicate
        that the production of tailormade AV content and the licensing of broadcasting rights
        for pre-produced AV content belong to separate relevant product markets.
(33)    First, most of the respondents to the market investigation indicate that there are
        significant differences in terms of costs between (i) producing tailormade AV
        content and (ii) producing AV content and subsequent licensing broadcasting rights
        for such pre-produced content ("pre-produced").20
(34)    Second, only a minority of the respondents to the market investigation indicated that
        companies active in the licencing of broadcasting rights for pre-produced AV
        content (films, sport content and other TV programmes (e.g. documentaries, soap
17  Form CO, paragraphs 167 to 195.
18  Form CO, paragraphs 196, 197.
19 See paragraph 15, points (a) and (b) above.
20 Replies to questionnaire Q1 to Producers – Denmark, question 4; questionnaire Q2 to Broadcasters –
    Denmark, question 4; questionnaire Q3 to Producers – Finland, question 4; questionnaire Q4 to
    Broadcasters – Finland, question 4; questionnaire Q5 to Producers – France, question 4; questionnaire Q6
    to Broadcasters – France, question 4; questionnaire Q7 to Producers – Italy, question 4; questionnaire Q8
    to Broadcasters – Italy, question 4; questionnaire Q9 to Producers – the Netherlands, question 4;
    questionnaire Q10 to Broadcasters – the Netherlands, question 4; questionnaire Q11 to Producers – Spain,
    question 4; questionnaire Q12 to Broadcasters – Spain, question 4; questionnaire Q13 to Producers –
    Sweden, question 4; questionnaire Q14 to Broadcasters – Finland, question 4; questionnaire Q15 to
    Producers – Sweden, question 4; questionnaire Q16 to Broadcasters – Finland, question 4.
                                                         7
 ---pagebreak---         operas)) would be able to start AV content production activities21 within a short
        timeframe and without incurring significant additional costs and vice-versa. The
        replies to the market investigation also indicate that such a change of activity is
        unlikely even if a producer owns the format or IPR required.22
(35)    Third, the majority of respondents to the market investigation indicated that
        production houses that are specialised in tailormade production would commonly not
        be active in the licensing of AV content pre-produced by themselves.23 By contrast,
        there was no majority amongst market participants regarding the question whether
        production houses that are specialised in the production of AV content and
        subsequent licensing of AV content would or would not commonly be active in the
        tailormade production.24 This is a strong indication that the production of tailormade
        AV content on the one hand and the licensing of pre-produced AV content on the
        other hand are not regarded as substitutes from the supply-side perspective.
(36)    On the basis of these findings, the Commission concludes that for the purposes of
        the present case, pre-produced TV content and tailor-made TV content are
21  Including “commissioned production" or "production for hire", as further explained in Section 4.2.1.3 (B)
   below.
22 Replies to questionnaire Q1 to Producers – Denmark, question 5; questionnaire Q2 to Broadcasters –
   Denmark, question 5; questionnaire Q3 to Producers – Finland, question 5; questionnaire Q4 to
   Broadcasters – Finland, question 5; questionnaire Q5 to Producers – France, question 5; questionnaire Q6
   to Broadcasters – France, question 5; questionnaire Q7 to Producers – Italy, question 5; questionnaire Q8
   to Broadcasters – Italy, question 5; questionnaire Q9 to Producers – the Netherlands, question 5;
   questionnaire Q10 to Broadcasters – the Netherlands, question 5; questionnaire Q11 to Producers – Spain,
   question 5; questionnaire Q12 to Broadcasters – Spain, question 5; questionnaire Q13 to Producers –
   Sweden, question 5; questionnaire Q14 to Broadcasters – Finland, question 5; questionnaire Q15 to
   Producers – Sweden, question 5; questionnaire Q16 to Broadcasters – Finland, question 5.Replies to
   questionnaire Q1 to Producers – Denmark, question 6; questionnaire Q2 to Broadcasters – Denmark,
   question 6; questionnaire Q3 to Producers – Finland, question 6; questionnaire Q4 to Broadcasters –
   Finland, question 6; questionnaire Q5 to Producers – France, question 6; questionnaire Q6 to Broadcasters
   – France, question 6; questionnaire Q7 to Producers – Italy, question 6; questionnaire Q8 to Broadcasters
   – Italy, question 6; questionnaire Q9 to Producers – the Netherlands, question 6; questionnaire Q10 to
   Broadcasters – the Netherlands, question 6; questionnaire Q11 to Producers – Spain, question 6;
   questionnaire Q12 to Broadcasters – Spain, question 6; questionnaire Q13 to Producers – Sweden,
   question 6; questionnaire Q14 to Broadcasters – Finland, question 6; questionnaire Q15 to Producers –
   Sweden, question 6; questionnaire Q16 to Broadcasters – Finland, question 6.
23 Replies to questionnaire Q1 to Producers – Denmark, question 7; questionnaire Q2 to Broadcasters –
   Denmark, question 7; questionnaire Q3 to Producers – Finland, question 7; questionnaire Q4 to
   Broadcasters – Finland, question 7; questionnaire Q5 to Producers – France, question 7; questionnaire Q6
   to Broadcasters – France, question 7; questionnaire Q7 to Producers – Italy, question 7; questionnaire Q8
   to Broadcasters – Italy, question 7; questionnaire Q9 to Producers – the Netherlands, question 7;
   questionnaire Q10 to Broadcasters – the Netherlands, question 7; questionnaire Q11 to Producers – Spain,
   question 7; questionnaire Q12 to Broadcasters – Spain, question 7; questionnaire Q13 to Producers –
   Sweden, question 7; questionnaire Q14 to Broadcasters – Finland, question 7; questionnaire Q15 to
   Producers – Sweden, question 7; questionnaire Q16 to Broadcasters – Finland, question 7.
24 Replies to questionnaire Q1 to Producers – Denmark, question 8; questionnaire Q2 to Broadcasters –
   Denmark, question 8; questionnaire Q3 to Producers – Finland, question 8; questionnaire Q4 to
   Broadcasters – Finland, question 8; questionnaire Q5 to Producers – France, question 8; questionnaire Q6
   to Broadcasters – France, question 8; questionnaire Q7 to Producers – Italy, question 8; questionnaire Q8
   to Broadcasters – Italy, question 8; questionnaire Q9 to Producers – the Netherlands, question 8;
   questionnaire Q10 to Broadcasters – the Netherlands, question 8; questionnaire Q11 to Producers – Spain,
   question 8; questionnaire Q12 to Broadcasters – Spain, question 8; questionnaire Q13 to Producers –
   Sweden, question 8; questionnaire Q14 to Broadcasters – Finland, question 8; questionnaire Q15 to
   Producers – Sweden, question 8; questionnaire Q16 to Broadcasters – Finland, question 8.
                                                        8
 ---pagebreak---        complementary products rather than substitutes from most broadcasters' perspective
       and therefore belong to separate relevant product markets.
       (B)        Model for supply/acquisition of AV content
(37)   Production companies can supply tailor-made AV content to downstream players in
       several ways: 25
                –        Full production/commissioning of AV content (i.e., a TV channels
                         commissions a production company to produce a TV programme,
                         based on a format owned by, or available to, the production
                         company);
                –        Supply/acquisition of pure TV production services, or "production for
                         hire" (i.e., TV channels hire a production company to provide the
                         technical means and deliver the finished TV programme based on a
                         format owned by, or available to, the TV channel supplier/TV
                         services retailer/broadcaster itself);
                –        In-house production of AV content within the organisation of a
                         vertically integrated supplier of TV channels based on a format owned
                         by, or available to, the supplier itself.
(38)   In the following paragraphs the Commission assesses, on the one hand, whether full
       production/commissioning of AV content and production for hire form part of the
       same product market and, on the other hand, whether in-house production of AV
       content and the production of tailormade AV content form part of the same product
       market.
(39)   With regard to a potential segmentation between commissioned production and the
       supply of production for hired services, the Commission considers that these are two
       complementary supply/acquisition models and therefore belong to different relevant
       product markets, for the following reasons.
(40)   First, a majority of the respondents to the market investigation indicates that there
       are significant differences in terms of costs between commissioned production or
       production for hire.26
(41)   Second, while most of the respondents to the market investigation indicate that
       companies active in the commissioned production would be able to start offering
       "production for hire" services within a short timeframe and without incurring
25 See Section 4.2.2.1 above.
26 Replies to questionnaire Q1 to Producers – Denmark, question 9; questionnaire Q2 to Broadcasters –
   Denmark, question 9; questionnaire Q3 to Producers – Finland, question 9; questionnaire Q4 to
   Broadcasters – Finland, question 9; questionnaire Q5 to Producers – France, question 9; questionnaire Q6
   to Broadcasters – France, question 9; questionnaire Q7 to Producers – Italy, question 9; questionnaire Q8
   to Broadcasters – Italy, question 9; questionnaire Q9 to Producers – the Netherlands, question 9;
   questionnaire Q10 to Broadcasters – the Netherlands, question 9; questionnaire Q11 to Producers – Spain,
   question 9; questionnaire Q12 to Broadcasters – Spain, question 9; questionnaire Q13 to Producers –
   Sweden, question 9; questionnaire Q14 to Broadcasters – Finland, question 9; questionnaire Q15 to
   Producers – Sweden, question 9; questionnaire Q16 to Broadcasters – Finland, question 9.
                                                        9
 ---pagebreak---        significant additional costs,27 no such majority exists for the question whether
       companies could change activities the opposite way.28
(42)   With regard to the question whether in-house production of AV content and the
       external production of tailormade AV content form part of the same product market,
       the Commission considers that those are two distinct complementary models for the
       following reasons.
(43)   First, most of the respondents to the market investigation indicate that here are
       significant differences in terms of costs between tailormade and in-house
       production.29
(44)   Second, most of the respondents to the market investigation consider, from a
       broadcaster’s point of view, AV content (i) purchased from producers of
       commissioned AV content (i.e., including commissioned production and production
       for hire) and (ii) in-house produced content as complementary. Only a small
       minority of respondents regarded the two options as substitutes.30
27 Replies to questionnaire Q1 to Producers – Denmark, question 10; questionnaire Q2 to Broadcasters –
   Denmark, question 10; questionnaire Q3 to Producers – Finland, question 10; questionnaire Q4 to
   Broadcasters – Finland, question 10; questionnaire Q5 to Producers – France, question 10; questionnaire
   Q6 to Broadcasters – France, question 10; questionnaire Q7 to Producers – Italy, question 10;
   questionnaire Q8 to Broadcasters – Italy, question 10; questionnaire Q9 to Producers – the Netherlands,
   question 10; questionnaire Q10 to Broadcasters – the Netherlands, question 10; questionnaire Q11 to
   Producers – Spain, question 10; questionnaire Q12 to Broadcasters – Spain, question 10; questionnaire
   Q13 to Producers – Sweden, question 10; questionnaire Q14 to Broadcasters – Finland, question 10;
   questionnaire Q15 to Producers – Sweden, question 10; questionnaire Q16 to Broadcasters – Finland,
   question 10.
28 Replies to questionnaire Q1 to Producers – Denmark, question 11; questionnaire Q2 to Broadcasters –
   Denmark, question 11; questionnaire Q3 to Producers – Finland, question 11; questionnaire Q4 to
   Broadcasters – Finland, question 11; questionnaire Q5 to Producers – France, question 11; questionnaire
   Q6 to Broadcasters – France, question 11; questionnaire Q7 to Producers – Italy, question 11;
   questionnaire Q8 to Broadcasters – Italy, question 11; questionnaire Q9 to Producers – the Netherlands,
   question 11; questionnaire Q10 to Broadcasters – the Netherlands, question 11; questionnaire Q11 to
   Producers – Spain, question 11; questionnaire Q12 to Broadcasters – Spain, question 11; questionnaire
   Q13 to Producers – Sweden, question 11; questionnaire Q14 to Broadcasters – Finland, question 11;
   questionnaire Q15 to Producers – Sweden, question 11; questionnaire Q16 to Broadcasters – Finland,
   question 11.
29 Replies to questionnaire Q1 to Producers – Denmark, question 16; questionnaire Q2 to Broadcasters –
   Denmark, question 16; questionnaire Q3 to Producers – Finland, question 16; questionnaire Q4 to
   Broadcasters – Finland, question 16; questionnaire Q5 to Producers – France, question 16; questionnaire
   Q6 to Broadcasters – France, question 16; questionnaire Q7 to Producers – Italy, question 16;
   questionnaire Q8 to Broadcasters – Italy, question 16; questionnaire Q9 to Producers – the Netherlands,
   question 16; questionnaire Q10 to Broadcasters – the Netherlands, question 16; questionnaire Q11 to
   Producers – Spain, question 16; questionnaire Q12 to Broadcasters – Spain, question 16; questionnaire
   Q13 to Producers – Sweden, question 16; questionnaire Q14 to Broadcasters – Finland, question 16;
   questionnaire Q15 to Producers – Sweden, question 16; questionnaire Q16 to Broadcasters – Finland,
   question 16.
30 Replies to questionnaire Q1 to Producers – Denmark, question 18; questionnaire Q2 to Broadcasters –
   Denmark, question 18; questionnaire Q3 to Producers – Finland, question 18; questionnaire Q4 to
   Broadcasters – Finland, question 18; questionnaire Q5 to Producers – France, question 18; questionnaire
   Q6 to Broadcasters – France, question 18; questionnaire Q7 to Producers – Italy, question 18;
   questionnaire Q8 to Broadcasters – Italy, question 18; questionnaire Q9 to Producers – the Netherlands,
   question 18; questionnaire Q10 to Broadcasters – the Netherlands, question 18; questionnaire Q11 to
   Producers – Spain, question 18; questionnaire Q12 to Broadcasters – Spain, question 18; questionnaire
   Q13 to Producers – Sweden, question 18; questionnaire Q14 to Broadcasters – Finland, question 18;
                                                       10
 ---pagebreak--- (45)   However, the market investigation provided mixed results regarding the question
       whether the availability of IPR plays a particular relevance on the decision of
       broadcasters to produce content in-house,31 indicating that the availability of IPR is
       not the decisive factor when deciding to produce in-house or not. The Commission
       also notes that most broadcasters contacted in the market investigation indicated that
       they have in-house production capabilities.32
       (C)        Type of AV content supplied/acquired
(46)   Distinctions can be made based on a variety of parameters relating to the type of AV
       content that is being supplied/acquired, including, for example33:
                –        Films, sports and other AV content;
                –        Scripted AV content vs. non-scripted other AV content;
                –        Potential sub-genres of the “non-scripted other AV content” category,
                         such as documentaries or other informational programmes, news,
                         reality shows, comedy, drama, talk shows, children/youth programs,
                         game shows or other entertainment programmes.
                –        Potential sub-genres of the “scripted AV content” category, such as
                         drama, kids, documentaries, comedy and other scripted AV content.
(47)   The Commission, in its past decisional practice34, has also assessed potential
       segmentation of licensing of broadcasting rights for AV content, including SVOD,
       TVOD, PPV, first pay-TV window, second pay-TV window and FTA.
(48)   The results of the market investigation regarding the definition of the relevant
       product market based on the above-mentioned content-related parameters are set out
       in the following paragraphs.
   questionnaire Q15 to Producers – Sweden, question 18; questionnaire Q16 to Broadcasters – Finland,
   question 18.
31 Replies to questionnaire Q1 to Producers – Denmark, question 15; questionnaire Q2 to Broadcasters –
   Denmark, question 15; questionnaire Q3 to Producers – Finland, question 15; questionnaire Q4 to
   Broadcasters – Finland, question 15; questionnaire Q5 to Producers – France, question 15; questionnaire
   Q6 to Broadcasters – France, question 15; questionnaire Q7 to Producers – Italy, question 15;
   questionnaire Q8 to Broadcasters – Italy, question 15; questionnaire Q9 to Producers – the Netherlands,
   question 15; questionnaire Q10 to Broadcasters – the Netherlands, question 15; questionnaire Q11 to
   Producers – Spain, question 15; questionnaire Q12 to Broadcasters – Spain, question 15; questionnaire
   Q13 to Producers – Sweden, question 15; questionnaire Q14 to Broadcasters – Finland, question 15;
   questionnaire Q15 to Producers – Sweden, question 15; questionnaire Q16 to Broadcasters – Finland,
   question 15.
32 Replies to questionnaire Q2 to Broadcasters – Denmark, question 14; questionnaire Q4 to Broadcasters –
   Finland, question 14; questionnaire Q6 to Broadcasters – France, question 14; questionnaire Q8 to
   Broadcasters – Italy, question 14; questionnaire Q10 to Broadcasters – the Netherlands, question 14;
   questionnaire Q12 to Broadcasters – Spain, question 14; questionnaire Q14 to Broadcasters – Finland,
   question 14; questionnaire Q16 to Broadcasters – Sweden, question 14;;.
33 See Section 4.2.2.1 above
34 See Section 4.2.2.1 above, including for the definitions.
                                                          11
 ---pagebreak---        Films, sports, other AV content
(49)   Regarding possible distinction between films, sports and other AV content, the
       market investigation in the present case has confirmed that the broad distinction
       between the licensing of TV broadcasting rights (and, similarly, the production of
       TV content) for each of these categories is appropriate as both broadcasters and
       producers support such a distinction.35
       Scripted vs. non-scripted other AV content
(50)   The Commission assessed a possible sub-segmentation of "other AV content" into (i)
       scripted AV content and (ii) non-scripted content in the framework of the market
       investigation.
(51)   Based on the results of the market investigation, the Commission considers the
       production of scripted AV content on the one hand and non-scripted AV content on
       the other hand to be complementary rather than substitutable for the following
       reasons.
(52)   First, most of the respondents to market investigation consider scripted and non-
       scripted AV content as complementary products.36
(53)   Second, AV content production houses are usually specialised in the production of
       only scripted or only non-scripted AV content.37
35 Replies to questionnaire Q1 to Producers – Denmark, question 20; questionnaire Q2 to Broadcasters –
   Denmark, question 20; questionnaire Q3 to Producers – Finland, question 20; questionnaire Q4 to
   Broadcasters – Finland, question 20; questionnaire Q5 to Producers – France, question 20; questionnaire
   Q6 to Broadcasters – France, question 20; questionnaire Q7 to Producers – Italy, question 20;
   questionnaire Q8 to Broadcasters – Italy, question 20; questionnaire Q9 to Producers – the Netherlands,
   question 20; questionnaire Q10 to Broadcasters – the Netherlands, question 20; questionnaire Q11 to
   Producers – Spain, question 20; questionnaire Q12 to Broadcasters – Spain, question 20; questionnaire
   Q13 to Producers – Sweden, question 20; questionnaire Q14 to Broadcasters – Finland, question 20;
   questionnaire Q15 to Producers – Sweden, question 17; questionnaire Q16 to Broadcasters – Finland,
   question 20.
36 Replies to questionnaire Q1 to Producers – Denmark, question 22; questionnaire Q2 to Broadcasters –
   Denmark, question 22; questionnaire Q3 to Producers – Finland, question 22; questionnaire Q4 to
   Broadcasters – Finland, question 22; questionnaire Q5 to Producers – France, question 22; questionnaire
   Q6 to Broadcasters – France, question 22; questionnaire Q7 to Producers – Italy, question 22;
   questionnaire Q8 to Broadcasters – Italy, question 22; questionnaire Q9 to Producers – the Netherlands,
   question 22; questionnaire Q10 to Broadcasters – the Netherlands, question 22; questionnaire Q11 to
   Producers – Spain, question 22; questionnaire Q12 to Broadcasters – Spain, question 22; questionnaire
   Q13 to Producers – Sweden, question 22; questionnaire Q14 to Broadcasters – Finland, question 22;
   questionnaire Q15 to Producers – Sweden, question 22; questionnaire Q16 to Broadcasters – Finland,
   question 22.
37 Replies to questionnaire Q1 to Producers – Denmark, question 24; questionnaire Q2 to Broadcasters –
   Denmark, question 24; questionnaire Q3 to Producers – Finland, question 24; questionnaire Q4 to
   Broadcasters – Finland, question 24; questionnaire Q5 to Producers – France, question 24; questionnaire
   Q6 to Broadcasters – France, question 24; questionnaire Q7 to Producers – Italy, question 24;
   questionnaire Q8 to Broadcasters – Italy, question 24; questionnaire Q9 to Producers – the Netherlands,
   question 24; questionnaire Q10 to Broadcasters – the Netherlands, question 24; questionnaire Q11 to
   Producers – Spain, question 24; questionnaire Q12 to Broadcasters – Spain, question 24; questionnaire
   Q13 to Producers – Sweden, question 24; questionnaire Q14 to Broadcasters – Finland, question 24;
   questionnaire Q15 to Producers – Sweden, question 24; questionnaire Q16 to Broadcasters – Finland,
   question 24.
                                                       12
 ---pagebreak--- (54)   Third, most of the respondents to the market investigation indicate that companies
       active in the production of scripted AV content would not be able to start producing
       non-scripted AV content within a short timeframe and without incurring significant
       additional costs and vice-versa.38
(55)   Fourth, most of the respondents to the market investigation consider a TV
       broadcaster supplying general entertainment channels would not be able to offer its
       channels without offering non-scripted AV content and relying solely on scripted
       AV content.39
(56)   Fifth, most of the respondents to the market investigation do not consider non-
       scripted and scripted AV content to be similar in terms of cost (i.e., average EUR
       spent per broadcasting hour).40
(57)   Lastly, most of the broadcasters that replied to the market investigation indicated that
       non-scripted content is essential for the profitability of their channels, because
       without it the channels could not be profitable,41 so that this type of content is
       distinguishable from others from a profitability perspective.
38 Replies to questionnaire Q1 to Producers – Denmark, question 24; questionnaire Q2 to Broadcasters –
   Denmark, question 23; questionnaire Q3 to Producers – Finland, question 23; questionnaire Q4 to
   Broadcasters – Finland, question 23; questionnaire Q5 to Producers – France, question 23; questionnaire
   Q6 to Broadcasters – France, question 23; questionnaire Q7 to Producers – Italy, question 23;
   questionnaire Q8 to Broadcasters – Italy, question 23; questionnaire Q9 to Producers – the Netherlands,
   question 23; questionnaire Q10 to Broadcasters – the Netherlands, question 23; questionnaire Q11 to
   Producers – Spain, question 23; questionnaire Q12 to Broadcasters – Spain, question 23; questionnaire
   Q13 to Producers – Sweden, question 23; questionnaire Q14 to Broadcasters – Finland, question 23;
   questionnaire Q15 to Producers – Sweden, question 23; questionnaire Q16 to Broadcasters – Finland,
   question 23.
39 Replies to questionnaire Q1 to Producers – Denmark, question 25; questionnaire Q2 to Broadcasters –
   Denmark, question 25; questionnaire Q3 to Producers – Finland, question 25; questionnaire Q4 to
   Broadcasters – Finland, question 25; questionnaire Q5 to Producers – France, question 25; questionnaire
   Q6 to Broadcasters – France, question 25; questionnaire Q7 to Producers – Italy, question 25;
   questionnaire Q8 to Broadcasters – Italy, question 25; questionnaire Q9 to Producers – the Netherlands,
   question 25; questionnaire Q10 to Broadcasters – the Netherlands, question 25; questionnaire Q11 to
   Producers – Spain, question 25; questionnaire Q12 to Broadcasters – Spain, question 25; questionnaire
   Q13 to Producers – Sweden, question 25; questionnaire Q14 to Broadcasters – Finland, question 25;
   questionnaire Q15 to Producers – Sweden, question 25; questionnaire Q16 to Broadcasters – Finland,
   question 25.
40 Replies to questionnaire Q1 to Producers – Denmark, question 26; questionnaire Q2 to Broadcasters –
   Denmark, question 26; questionnaire Q3 to Producers – Finland, question 26; questionnaire Q4 to
   Broadcasters – Finland, question 26; questionnaire Q5 to Producers – France, question 26; questionnaire
   Q6 to Broadcasters – France, question 26; questionnaire Q7 to Producers – Italy, question 26;
   questionnaire Q8 to Broadcasters – Italy, question 26; questionnaire Q9 to Producers – the Netherlands,
   question 26; questionnaire Q10 to Broadcasters – the Netherlands, question 26; questionnaire Q11 to
   Producers – Spain, question 26; questionnaire Q12 to Broadcasters – Spain, question 26; questionnaire
   Q13 to Producers – Sweden, question 26; questionnaire Q14 to Broadcasters – Finland, question 26;
   questionnaire Q15 to Producers – Sweden, question 26; questionnaire Q16 to Broadcasters – Finland,
   question 26.
41 Replies to questionnaire Q2 to Broadcasters – Denmark, question 27; questionnaire Q4 to Broadcasters –
   Finland, question 27; questionnaire Q6 to Broadcasters – France, question 27; questionnaire Q7 to
   Producers – Italy, question 27; questionnaire Q8 to Broadcasters – Italy, question 27; questionnaire Q10 to
   Broadcasters – the Netherlands, question 27; questionnaire Q12 to Broadcasters – Spain, question 27;
   questionnaire Q14 to Broadcasters – Finland, question 27; questionnaire Q16 to Broadcasters – Finland,
   question 27.
                                                        13
 ---pagebreak---        Segmentation of other non-scripted AV content by genre
(58)   In the present case it was of particular importance to determine whether the segment
       “other AV content, non-scripted” has to be sub-segmented on the basis of genres, as
       the Notifying Party relied on substitutability between genres to argue that the
       Transaction would not raise competition concerns. The Commission’s market
       investigation focused on the substitutability between the following genres (by
       program type) of non-scripted content: programs for children, reality show, quiz
       show, talent/game show, documentaries/factual entertainment, general
       entertainment, other non-scripted content.
(59)   Based on the results of the market investigation, the Commission considers that,
       within non-scripted content, the following genres are substitutable: general
       entertainment, reality shows, quiz shows, talent/games shows, documentaries/factual
       entertainment and other non-scripted content; by contrast to programs for children,
       as further explained in the following paragraphs.
(60)   A majority of the respondents to the market investigation indicated that they
       consider the genres general entertainment, reality shows, quiz shows, talent/games
       shows, other non-scripted, documentaries/factual entertainment, talkshows and
       reality show to be substitutable with each other.42 Conversely, the respondents
       indicated that they do not consider that programs made for children (“kids
       programs”) are substitutable with any of these genres. Only some respondents
       consider that - if at all - kids programs could be regarded as potentially substitutable
       with quiz shows or talent/game shows, but this was clearly not the view of the
       majority of the respondents.43
       Segmentation of scripted AV content by genre
(61)   The Commission also assessed substitutability of genres within scripted content
       namely drama, kids, documentaries, comedy and other scripted AV content. The
       results of the market investigation indicate that these genres are substitutable with
42 Replies to questionnaire Q1 to Producers – Denmark, question 28; questionnaire Q2 to Broadcasters –
   Denmark, question 28; questionnaire Q3 to Producers – Finland, question 28; questionnaire Q4 to
   Broadcasters – Finland, question 28; questionnaire Q5 to Producers – France, question 28; questionnaire
   Q6 to Broadcasters – France, question 28; questionnaire Q7 to Producers – Italy, question 28;
   questionnaire Q8 to Broadcasters – Italy, question 28; questionnaire Q9 to Producers – the Netherlands,
   question 28; questionnaire Q10 to Broadcasters – the Netherlands, question 28; questionnaire Q11 to
   Producers – Spain, question 28; questionnaire Q12 to Broadcasters – Spain, question 28; questionnaire
   Q13 to Producers – Sweden, question 28; questionnaire Q14 to Broadcasters – Finland, question 28;
   questionnaire Q15 to Producers – Sweden, question 28; questionnaire Q16 to Broadcasters – Finland,
   question 28.
43 Replies to questionnaire Q1 to Producers – Denmark, question 28; questionnaire Q2 to Broadcasters –
   Denmark, question 28; questionnaire Q3 to Producers – Finland, question 28; questionnaire Q4 to
   Broadcasters – Finland, question 28; questionnaire Q5 to Producers – France, question 28; questionnaire
   Q6 to Broadcasters – France, question 28; questionnaire Q7 to Producers – Italy, question 28;
   questionnaire Q8 to Broadcasters – Italy, question 28; questionnaire Q9 to Producers – the Netherlands,
   question 28; questionnaire Q10 to Broadcasters – the Netherlands, question 28; questionnaire Q11 to
   Producers – Spain, question 28; questionnaire Q12 to Broadcasters – Spain, question 28; questionnaire
   Q13 to Producers – Sweden, question 28; questionnaire Q14 to Broadcasters – Finland, question 28;
   questionnaire Q15 to Producers – Sweden, question 28; questionnaire Q16 to Broadcasters – Finland,
   question 28.
                                                       14
 ---pagebreak---         each other, including programs for children as this is supported by a majority of the
        respondents.44
4.2.1.4. Conclusion
(62)    For the purpose of the present decision, the Commission considers that the relevant
        product markets for the purposes of the present case are:
            production of tailormade scripted AV content including all genres. The question
             whether captive/in-house productions should be excluded or whether this product
             market should be further segmented into commissioned production or production
             for hire 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;
            production of tailormade non-scripted AV content including all genres except
             kids. The question whether captive/in-house productions should be excluded or
             whether this product market should be further segmented into commissioned
             production or production for hire can be left open as the Transaction does not
             raise serious doubts as to its compatibility with the internal market or the
             functioning of the EEA Agreement under any plausible product market
             definition.
4.2.2. Geographic market definition
4.2.2.1. Commission’s decisional practice
(63)    In its past decisional practice, the Commission has found the market for both
        production of AV content and licensing of AV content rights to be national in scope
        or broader, i.e., comprising a particular language region.45
4.2.2.2. The Notifying Party’s view
(64)    The Notifying Party submits that these markets tend to become increasingly
        international notably due to the expansion of global and regional SVOD players,
        such as Netflix and Amazon Prime Video. The Notifying Party considers that such
        international contracts cannot be allocated to a specific national market given that
        this would lead to highly disproportionate results which would not reflect the local
        entity’s market position.
44 Replies to questionnaire Q1 to Producers – Denmark, question 29; questionnaire Q2 to Broadcasters –
    Denmark, question 29; questionnaire Q3 to Producers – Finland, question 29; questionnaire Q4 to
    Broadcasters – Finland, question 29; questionnaire Q5 to Producers – France, question 29; questionnaire
    Q6 to Broadcasters – France, question 29; questionnaire Q7 to Producers – Italy, question 29;
    questionnaire Q8 to Broadcasters – Italy, question 29; questionnaire Q9 to Producers – the Netherlands,
    question 29; questionnaire Q10 to Broadcasters – the Netherlands, question 29; questionnaire Q11 to
    Producers – Spain, question 29; questionnaire Q12 to Broadcasters – Spain, question 29; questionnaire
    Q13 to Producers – Sweden, question 29; questionnaire Q14 to Broadcasters – Finland, question 29;
    questionnaire Q15 to Producers – Sweden, question 29; questionnaire Q16 to Broadcasters – Finland,
    question 29.
45 Commission decision of 16 September 2014, Case M.7282, Liberty Global/Discovery/All3Media, para.
    51; Commission decision of 9 October 2014, Case M.7360, 21st Century Fox/Apollo/JV, para. 49;
    Commission decision of 20 January 2016, Case M.7865, Lov Group Invest/De Agostini/JV, para. 23 and
    44.
                                                        15
 ---pagebreak--- 4.2.2.3. Commission’s assessment
(65)    The market investigation conducted in the present case indicates that the majority of
        the respondents replied that the geographic scope of the contracts for the production
        of TV content and for the licensing of broadcasting rights for TV content
        corresponds to the relevant national territories. A minority of respondents indicated
        that the scope would be world-wide or cover a specific linguistic region.46
(66)    In light of the above, the Commission concludes that there are no indications of any
        need to depart from the geographic markets defined in previous decisions, namely
        that the scope of the relevant geographic market for the production and the licensing
        of AV content is national in scope.
5.      COMPETITIVE ASSESSMENT
5.1.    Introduction
(67)    The Transaction gives rise to horizontally affected markets concerning the
        production of tailormade AV content or certain submarkets thereof in Denmark,
        Finland, France, Italy, the Netherlands, Norway, Spain and Sweden.
(68)    The relevant product markets and their sub-segmentations amounting to affected
        markets are set out in the overview table below.
46  Replies to questionnaire Q1 to Producers – Denmark, question 31; questionnaire Q2 to Broadcasters –
    Denmark, question 31; questionnaire Q3 to Producers – Finland, question 31; questionnaire Q4 to
    Broadcasters – Finland, question 31; questionnaire Q5 to Producers – France, question 31; questionnaire
    Q6 to Broadcasters – France, question 31; questionnaire Q7 to Producers – Italy, question 31;
    questionnaire Q8 to Broadcasters – Italy, question 31; questionnaire Q9 to Producers – the Netherlands,
    question 31; questionnaire Q10 to Broadcasters – the Netherlands, question 31; questionnaire Q11 to
    Producers – Spain, question 31; questionnaire Q12 to Broadcasters – Spain, question 31; questionnaire
    Q13 to Producers – Sweden, question 31; questionnaire Q14 to Broadcasters – Finland, question 31;
    questionnaire Q15 to Producers – Sweden, question 31; questionnaire Q16 to Broadcasters – Finland,
    question 31.
                                                        16
 ---pagebreak---  ---pagebreak--- (72)    The Transaction gives rise to (i) horizontally affected markets for the production of
        externally tailormade (i.e., excluding captive/in-house content) non-scripted AV
        content , for the production of externally tailormade production for hire (i.e.,
        excluding captive/in-house content) non-scripted AV content, and for the production
        of externally tailormade commissioned (i.e., excluding captive/in-house content)
        non-scripted AV content, (ii) non-horizontally affected market in relation to the
        neighbouring markets for the production of externally tailormade (i.e., excluding
        captive/in-house content) scripted and non-scripted AV content in Denmark.
5.2.2. Notifying Party’s view
(73)    The Notifying Party considers that the Transaction will not raise horizontal
        competition concerns in Denmark where the Parties’ production activities overlap,
        for the following reasons.
(74)    First, the Notifying Party argues that market shares, especially those excluding in-
        house production, are inadequate to measure competitive strength and overstate the
        Parties’ market position in the affected markets and segments.47
(75)    Second, the Notifying Party emphasises that the merged entity will continue to face
        competition from a significant number of credible competitors that will continue to
        exert significant competitive constraints on the merged entity. In addition, the
        Notifying Party argues that broadcasters have in-house capabilities and, should the
        merged entity try to impose unfavourable conditions, they would be able to expand
        self-supply, which further acts as a constraint on the merged entity.
(76)    The Notifying Party further contends that barriers to entry in the market are very low
        and that therefore the merged entity would be faced with new entry in the event that
        the merged entity were to increase prices or degrade the quality of its services.
(77)    Finally, the merged entity will face highly sophisticated and concentrated customers
        holding significant bargaining power. In particular, the Notifying Party considers
        that broadcasters are capable of imposing strict budget limitations on producers,
        continuously renegotiate financial conditions throughout the performance of the
        contract and try to impose unfavourable conditions on the producers of scripted and
        non-scripted AV content.
5.2.3. Commission’s assessment
5.2.3.1. Market structure
(78)    The Parties’ market shares in the production of tailormade AV content in Denmark
        are set out in the table below.
(79)    These shares include the following potential segmentations: (i) including and
        excluding captive/in-house production from vertically integrated broadcasters, (ii)
        segmented between “production for hire” and “commissioned production”.
47  The Notifying Party indicates that market shares by value are more appropriate than market share by
    volume in the AV industry. The Parties were not able to provide market share data on the basis of volume
    and only provided value-based market share information.
                                                        18
 ---pagebreak---  ---pagebreak---        impact on the market. While the bargaining power of the two companies will
       increase, broadcasters have alternative producers from which they could source
       content.
(84)   However, there are several reasons why the Commission considers that, despite these
       views, the Transaction will not raise serious doubts as to its compatibility with the
       internal market in Denmark.
(85)   First, the Commission notes that the merged entity’s relevant combined market share
       in the relevant segments in Denmark are moderate: [30-40]% in the production of
       non-scripted AV content excluding captive and in-house production overall, of [30-
       40]% in the tailormade production for hire and [30-40]% in commissioned
       production (both excluding captive and in-house production). The markets would not
       even be affected if captive/in-house production were to be included.
(86)   Second, a number of alternative providers, of which some are global players active
       in several countries in the EEA, would remain in the market for the production of
       tailormade non-scripted AV content, excluding captive/in-house production and its
       sub-segments, post-Transaction, namely Fremantle, ITV, Warner and Monday with
       market shares of respectively, [10-20]%, [5-10]%, [5-10]% and [10-20]%.
(87)   Third, the results of the market investigation show that the Parties do not represent a
       significant share of the broadcasters’ individual spent in non-scripted AV content by
       value and volume.50 Based on the data submitted by customers, the purchasing
       shares show that, first, those data are not significantly different compared to the
       market shares estimates submitted by the Parties, which confirms that the market
       shares submitted by the Parties reflect the market reality, and, second, that none of
       the broadcasters is entirely dependent on Banijay and/or ESG.51
(88)   Fourth, respondents to the market investigation indicate that the main parameters
       that they consider relevant when procuring or supplying tailormade non-scripted AV
       content are the price, access to the IPR and access to the creative talent.52 When
       considering such parameters, respondents indicate that other producers in Denmark
       would have a similar position to Banijay and ESG.53 One respondent considers that
       other producers, NENT, Monday, Fremantle are equally competitive on price which
       is driven by market forces. Other respondents indicate that talent is not locked into
       specific companies and can move around. With respect to access to IPR to
       significant formats, several respondents indicate that the Parties are significant
       players. However, respondents indicate that Fremantle also has access to significant
       content.
(89)   Moreover, respondents to the market investigation indicate that other producers of
       non-scripted AV content compete closely with Banijay and ESG.54 Some
50 Annex I to questionnaire Q2 to Broadcasters – Denmark.
51 Annex I to questionnaire Q8 to Broadcasters – Italy.
52 Replies to questionnaire Q2 to Broadcasters – Denmark, question 37; questionnaire Q1 to Producers –
   Denmark, question 34.
53 Replies to questionnaire Q2 to Broadcasters – Denmark, question 38; questionnaire Q1 to Producers –
   Denmark, question 35.
54 Replies to questionnaire Q2 to Broadcasters – Denmark, questions 42 and 43; questionnaire Q1 to
   Producers – Denmark, questions 39 and 40.
                                                        20
 ---pagebreak---         respondents indicate that Monday, Fremantle and ITV are closer competitors to each
        of the Parties than the Parties to each other. For example, one respondent notes that
        Endemol, Fremantle and ITV Studios are the main players commanding similar
        scale, expertise/skill, talent-base and IPR in the Danish market.
(90)    Fifth, most of the respondents consider likely that a new entrant will start producing
        non-scripted AV content in Denmark.55 One respondent notes that senior production
        people start up small production entities on a regular basis. Another considers that
        barriers to entry are extremely low and the entry of new players is likely. Another
        respondent considers that some big groups such as All3Media or MGM may likely
        enter in the Nordic market in the next years. One respondent also make the example
        of a successful entrant United which has been successively bought by the
        international player ITV.
(91)    Sixth, producers responding to the market investigation indicate that broadcasters
        have relatively strong bargaining power.56 One producer notes that in the market for
        the production of audio-visual content the broadcaster has a stronger bargaining
        power than the supplier and that this will remain unchanged post-Transaction.
        Another producer notes that the Danish production market is a “buyer market”.
(92)    Finally, most of the respondents to the market investigation consider that
        broadcasters would have counterstrategies should the merged entity worsen the
        terms and conditions at which it produces tailormade non-scripted AV content, for
        example by bundling the sale of non-scripted tailormade AV content or increasing
        prices.57 Several respondents indicate that broadcasters would still have the
        possibility to source from alternative producers and that vertically integrated
        producers would also have the option to produce content in-house. One respondent
        indicates that it expects broadcasters to buy more from the remaining companies.
        However, some respondents indicate that counterstrategies would not be viable. For
        example, expanding in-house productions could be limited by the availability of
        talent or relevant IPR.
(93)    The ability of broadcasters to rely on in-house production is further supported from
        an analysis of the market shares including in-house productions. TV2 and DR in-
        house productions accounted for respectively [10-20]% and [20-30]% of the non-
        scripted productions in Denmark in 2018.58
(94)    In light of the above, the Commission concludes that the Transaction does not raise
        serious doubts as to its compatibility with the internal market in Denmark as a result
        of horizontal unilateral effects in the market for the production of tailormade non-
        scripted AV content (both excluding captive and in-house production), including the
55 Replies to questionnaire Q2 to Broadcasters – Denmark, question 51; questionnaire Q1 to Producers –
   Denmark, question 48.
56 Replies to questionnaire Q1 to Producers – Denmark, question 41.
57 Replies to questionnaire Q2 to Broadcasters – Denmark, question 49; questionnaire Q1 to Producers –
   Denmark, question 46.
58 The data would not significantly change when assessing previous years. In 2017, TV2 and DR in-house
   productions accounted for respectively [10-20]% and [20-30]% of the non-scripted productions in
   Denmark. In 2016, TV2 and DR in-house productions accounted for respectively [10-20]% and [20-30]%
   of the non-scripted productions in Denmark.
                                                      21
 ---pagebreak---         narrower market segments for the tailormade production for hire and commissioned
        production (both excluding captive and in-house production).
5.2.3.3. Non-horizontal non-coordinated effects in Denmark
(95)    The Non-Horizontal Guidelines59 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 or the Parties 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.
(96)    In Denmark, Banijay and ESG are also active in the market for the production of
        tailormade scripted content with market shares of respectively [5-10]% and [0-5]%
        by value in 2018 in the market for the production of tailormade scripted content
        excluding captive/in-house production. The merged entity would have a market
        share of [5-10]% in the production of scripted AV content excluding captive/in-
        house production and [30-40]% in the production of non-scripted AV content
        excluding captive/in-house production.
(97)    The Commission has therefore assessed the risk of foreclosure of competing
        producers of tailormade scripted content by tying or bundling the production of
        tailormade non-scripted content in Denmark.
(98)    The Commission considers that the merged entity would lack the ability to foreclose
        competing producers of tailormade scripted content by tying or bundling it to the
        production of tailormade non-scripted content in Denmark for the following reasons.
(99)    First, as indicated in paragraph (85), the market shares of the merged entity on the
        market for the production of tailormade non-scripted excluding captive/in-house
        production content are moderate.
(100) Second, as indicated in paragraph (86), alternative producers of non-scripted content
        excluding captive/in-house production would remain available in the market,
        including international producers as Fremantle.
(101) Third, as indicated in paragraph (92), should the merged entity worsen the terms and
        conditions at which it produces tailormade non-scripted AV content, for example by
        bundling the sale of non-scripted tailormade AV content with scripted tailormade
        AV content, most of the respondents consider that broadcasters would have
        counterstrategies.
(102) The Commission considers that due to the lack of ability to engage in a foreclosing
        strategy, it is not needed to assess whether the merged entity would have any
        incentive or whether any foreclosure strategy would have a negative impact on
        effective competition.
59  Non-Horizontal Merger Guidelines, Section V.A.
                                                   22
 ---pagebreak--- (103) In light of the foregoing, the Commission concludes that the Transaction would not
        raise serious doubts as to its compatibility with the internal market as a result of the
        conglomerate relationships between the merged entity’s activities as producer of
        scripted and non-scripted AV content in Denmark.
5.3.    Finland
5.3.1. Introduction
(104) Banjay is active in the market for the production of scripted and non-scripted AV
        content in Finland through Banijay Finland and Zodiak Finland. It produces
        entertainment programs for the main Finnish networks. Banijay’s flagship shows
        include the factual entertainment show “The Best Singer” (Nelonen), the reality
        show “Temptation Island” (Nelonen) and the comedy game “Have I Got News For
        You” (MTV3) as well as “Presidents First” (Elisa), “Jari and Kari” (YLE) and
        “Solsidan” (Cmore).
(105) ESG operates in Finland through Endemol Shine Finland, exclusively in the non-
        scripted segment. Endemol Shine Finland is active in the Finnish market since 2000
        and produces content for several TV channels and brands. Its best known programs
        include the reality show “Big Brother” (Nelonen), the game show “The Wall
        Finland”, the reality show “The Biggest Loser” (Nelonen), the factual entertainment
        “Kotoisa – Cosy Homes” (MTV 3), the reality show “Sohvaperunat – Gogglebox”
        (YLE TV2) and the game show “Hyvat katsojat – Good Evening” (YLE TV2).
(106) The Transaction gives rise to (i) horizontally affected markets for the production of
        externally tailormade (i.e., excluding captive/in-house content) non-scripted AV
        content and for the production of externally tailormade commissioned (i.e.,
        excluding captive/in-house content) non-scripted AV content, (ii) non-horizontally
        affected market in relation to the neighbouring markets for the production of
        externally tailormade (i.e., excluding captive/in-house content) scripted and non-
        scripted AV content in Finland.
5.3.2. Notifying Party’s view
(107) The Notifying Party considers that the Transaction will not raise horizontal
        competition concerns in Finland where the Parties’ production activities overlap, for
        the following reasons.
(108) First, the Notifying Party argues that market shares, especially those excluding in-
        house production, are inadequate to measure competitive strength and overstate the
        Parties’ market position in the affected markets and segments.60
(109) Second, the Notifying Party emphasises that the merged entity will continue to face
        competition from a significant number of credible competitors that will continue to
        exert significant competitive constraints on the merged entity. In addition, the
        Notifying Party argues that broadcasters have in-house capabilities and, should the
60  The Notifying Party further indicates that market shares by value are more appropriate than market share
    by volume in the AV industry. The Parties were not able to provide market share data on the basis of
    volume and only provided value-based market share information.
                                                         23
 ---pagebreak---  ---pagebreak---  ---pagebreak---        content are the price and access to prime-time content, followed by access to IPR.64
       When considering such parameters, respondents indicate that other producers in
       Finland would have a similar position to Banijay and ESG.65 One producer indicate
       that its strength in Finland is on prime-time programming. Another producers notes
       that all producers in the Finnish market are equally competitive. Sanoma notes that
       also local producers are strong in terms of pricing and talent.
(122) Moreover, respondents to the market investigation indicate that other producers of
       non-scripted AV content compete closely with Banijay and ESG.66 Respondents
       indicate that Fremantle, ITV and Warner Bros also have a significant catalogue of
       globally recognized IPR.
(123) Sixth, most of the respondents consider likely that a new entrant will start producing
       non-scripted AV content in Finland.67 One respondent indicates that barriers to entry
       are low and it is likely that small independent companies would enter the market but
       that it is not sure whether they would be competitive vis-à-vis the Parties. Another
       respondent considers that entry is likely also for international players. In particular, it
       is likely that a new entrant with a good format with international sales/production
       history could start producing non-scripted AV content.
(124) In addition, respondents to the market investigation indicate that broadcasters have
       relatively strong bargaining power.68 One respondent notes that Telia is active across
       several Scandinavian countries and it has a strong bargaining power. Another
       respondent notes that Sanoma, by leveraging its position in the television, film,
       radios, print, music industry and digital media sectors, has a significant bargaining
       power.
(125) Finally, most of the respondents to the market investigation consider that
       broadcasters would have counterstrategies should the merged entity worsen the
       terms and conditions at which it produces tailormade non-scripted AV content, for
       example by bundling the sale of non-scripted tailormade AV content or increasing
       prices.69 Sanoma and Yle indicate that they are able to work with different producers
       and the situation would remain unchanged post-Transaction. Similarly, among
       producers, respondents do not consider the Transaction would have an impact on the
       Finnish production market.
(126) In light of the above, the Commission concludes that the Transaction does not raise
       serious doubts as to its compatibility with the internal market in Finland as a result
       of horizontal unilateral effects in the market for the production of . tailormade non-
       scripted AV content (both excluding captive and in-house production), including the
64 Replies to questionnaire Q4 to Broadcasters – Finland, question 37; questionnaire Q3 to Producers –
   Finland, question 34.
65 Replies to questionnaire Q4 to Broadcasters – Finland, question 38; questionnaire Q3 to Producers –
   Finland, question 35.
66 Replies to questionnaire Q4 to Broadcasters – Finland, questions 42 and 43; questionnaire Q3 to
   Producers – Finland, questions 39 and 40.
67 Replies to questionnaire Q4 to Broadcasters – Finland, question 51; questionnaire Q3 to Producers –
   Finland, question 48.
68 Replies to questionnaire Q4 to Broadcasters – Finland, question 44; questionnaire Q3 to Producers –
   Finland, question 41.
69 Replies to questionnaire Q4 to Broadcasters – Finland, question 49; questionnaire Q3 to Producers –
   Finland, question 46.
                                                     26
 ---pagebreak---         narrower market segments for the tailormade production for hire and commissioned
        production (both excluding captive and in-house production)
5.3.3.3. Non-horizontal non-coordinated effects in Finland
(127) In Finland, Banijay and ESG are also active in the market for the production of
        tailormade scripted content with market shares of respectively [5-10]% and [0-5]%
        by value in 2018 in the market for the production of tailormade scripted content
        excluding captive/in-house production. The merged entity would have a market
        share of [5-10]% in the production of scripted AV content excluding captive/in-
        house production and [30-40]% in the production of non-scripted AV content
        excluding captive/in-house production.
(128) The Commission has therefore assessed the risk of foreclosure of competing
        producers of tailormade scripted content by tying or bundling the production of
        tailormade non-scripted content in Finland.
(129) The Commission considers that the merged entity would lack the ability to foreclose
        competing producers of tailormade scripted content by tying or bundling it to the
        production of tailormade non-scripted content in Finland for the following reasons.
(130) First, as indicated in paragraph (118), the market shares of the merged entity on the
        market for the production of tailormade non-scripted content excluding captive/in-
        house production are moderate.
(131) Second, as indicated in paragraph (119), alternative producers of non-scripted
        content would remain available in the market, including international producers as
        Fremantle.
(132) Third, as indicated in paragraph (125), should the merged entity worsen the terms
        and conditions at which it produces tailormade non-scripted AV content, for
        example by bundling the sale of non-scripted tailormade AV content with scripted
        tailormade AV content, most of the respondents consider that broadcasters would
        have counterstrategies.
(133) The Commission also considers that due to the lack of ability to engage in a
        foreclosing strategy, it is not needed to assess whether the merged entity would have
        any incentive or whether any foreclosure strategy would have a negative impact on
        effective competition.
(134) In light of the foregoing, the Commission concludes that the Transaction would not
        raise serious doubts as to its compatibility with the internal market as a result of the
        conglomerate relationships between the merged entity’s activities as producer of
        scripted and non-scripted AV content in Finland.
5.4.    France
5.4.1. Introduction
(135) Banijay is present in the market for the production of scripted and non-scripted AV
        content in France through Adventure Line Productions, Banijay Production Media,
        Banijay Productions, Banijay Studios France, GéTéVé, H2O Productions, KM and
        Terence Films. It produces content based on original formats and adapts
                                                   27
 ---pagebreak---         international formats to the French market. Its flagship programs include "Les
        Marseillais”, known internationally as “Party workers”, “Touche pas á mon poste”,
        known internationally as “It’s only TV”, “Temptation Island” as well as “28
        minutes”.
(136) ESG operates in France through Endemol Shine France. It produces a range of
        scripted and non-scripted AV content. Its flagship programs include “Les 12 coups
        de Midi”, “La meilleure boulangerie de France”, “Les enfants de la télé” and
        “Personne n’y avait pensé”. In addition, up until 2018 ESG produced the two highly
        successful shows “the Voice” and “Secret Story” for TF1.
(137) The Transaction gives rise to horizontally affected markets for the production of
        externally tailormade commissioned (i.e., excluding captive/in-house content) non-
        scripted AV content in France.
5.4.2. Notifying Party’s view
(138) The Notifying Party considers that the Transaction will not raise horizontal
        competition concerns in France where the Parties’ production activities overlap, for
        the following reasons.
(139) First, the Notifying Party argues that market shares, especially those excluding in-
        house production, are inadequate to measure competitive strength and overstate the
        Parties’ market position in the affected markets and segments.70
(140) Second, the Notifying Party emphasises that the merged entity will continue to face
        competition from a significant number of credible competitors that will continue to
        exert significant competitive constraints on the merged entity. In addition, the
        Notifying Party argues that broadcasters have in-house capabilities and, should the
        merged entity try to impose unfavourable conditions, they would be able to expand
        self-supply, which further acts as a constraint on the merged entity.
(141) The Notifying Party further contends that barriers to entry in the market are very low
        and that therefore the merged entity would be faced with new entry in the event that
        the merged entity were to increase prices or degrade the quality of its services.
(142) Finally, the merged entity will face highly sophisticated and concentrated customers
        holding significant bargaining power. In particular, the Notifying Party considers
        that broadcasters are capable of imposing strict budget limitations on producers,
        continuously renegotiate financial conditions throughout the performance of the
        contract and try to impose unfavourable conditions on the producers of scripted and
        non-scripted AV content.
70  The Notifying Party further indicates that market shares by value more appropriate than market share by
    volume in the AV industry. The Parties were not able to provide market share data on the basis of volume
    and only provided value-based market share information.
                                                         28
 ---pagebreak---  ---pagebreak--- (148) The results of the market investigation provided conflicting views on whether the
       Transaction would have a negative or neutral impact on the respondents71 and the
       market for the production of tailormade non-scripted AV content72 with a minority
       of respondents indicating that it could be negative.
(149) However, there are several reasons why the Commission considers that, despite these
       views, the Transaction will not raise serious doubts as to its compatibility with the
       internal market in France.
(150) First, the Commission notes that the merged entity’s combined market share in the
       production of tailormade non-scripted AV content in France is moderate ([10-20]%
       and just at the threshold to constitute an affected market), the market share for
       tailormade production non-scripted (excluding captive) – commissioned production
       is [20-30]%. The markets would not even be affected if captive/in-house production
       were to be included and the Transaction-specific market share increment is low.
(151) Second, the combined entity will be exposed to competition from important players
       in the French market for the production of tailormade non-scripted AV content,
       excluding captive/in-house production and its sub-segments post-Transaction, such
       as Bangumi, Troisième Œil, Coyote, SBS Productions with market shares of
       respectively [10-20]%, [5-10]%, [5-10]%, and a number of other players, many of
       them having a higher market share than the Transaction-specific market share
       increment.
(152) Third the majority of customers consulted in the framework of the market
       investigation indicates that the Parties do not represent a significant share of the
       broadcasters’ spent in non-scripted AV content.73
(153) Fourth, the market investigation has shown that, for broadcasters, the most important
       parameter of competition is the price,74 followed by access to IPR and talent, which
       indicates that access to IP as such is not driving competition, but rather its price,
       indicating that IPR is generally available in the market. In addition, one customer
       indicated that [t]he availability of significant IPR for formats to produce non-
       scripted AV content is dynamic. While high quality ideas and execution are typically
       necessary to produce successful content, there is continuous effort to develop new
       content. Therefore the marketplace [in France] is quite fluid and constantly
       evolving.75
(154) Moreover, respondents to the market investigation indicate that other producers of
       non-scripted AV content compete closely with Banijay and ESG.76
71 Replies to questionnaire Q6 to Broadcasters – France, question 53; questionnaire Q5 to Producers –
   France, question 50.
72 Replies to questionnaire Q6 to Broadcasters – France, question 54; questionnaire Q5 to Producers –
   France, question 51.
73 Annex I to questionnaire Q6 to Broadcasters – France.
74 Replies to questionnaire Q6 to Broadcasters – France, question 37; questionnaire Q5 to Producers –
   France, question 34.
75 Replies to questionnaire Q6 to Broadcasters – France, question 41.1.
76 Replies to questionnaire Q6 to Broadcasters – France, questions 42 and 43; questionnaire Q5 to Producers
   – France, questions 39 and 40.
                                                        30
 ---pagebreak--- (155) Fifth, most of the respondents consider it that a new entrant will likely start
        producing non-scripted AV content in France in the next 5 years.77
(156) Sixth, respondents to the market investigation indicate that broadcasters have
        relatively strong bargaining power in France.78
(157) Finally, taking into account the results of the market investigation, the Commission
        considers that the merged entity is unlikely to start engaging into practices that could
        limit effective competition by either negatively affecting customers or limiting
        expansion of competitors in the market for the production of tailormade non-scripted
        AV content in France by increasing prices, requiring a higher number of hours of
        AV content to be purchased or by bundling the sale of non-scripted tailormade AV
        content to other content not necessarily desired by the broadcasters post-
        Transaction.79
(158) The market investigation has also shown that if the merged entity should attempt to
        worsen the terms and conditions at which it produces tailormade non-scripted AV
        content, broadcasters would have appropriate counterstrategies (including to expand
        production in-house) to overcome such strategies, which is likely to have a
        significant constraining effect with regard to such strategies.80
5.4.3.3. Conclusion
(159) In light of the above, the Commission concludes that the Transaction does not raise
        serious doubts as to its compatibility with the internal market in France as a result of
        horizontal unilateral effects in the market for the production of tailormade non-
        scripted AV content (both excluding captive and in-house production), including the
        narrower market segments for the tailormade production for hire and commissioned
        production (both excluding captive and in-house production).
5.5.    Italy
5.5.1. Introduction
(160) Banijay is active in the market for the production of scripted and non-scripted AV
        content in Italy through Aurora TV, Banijay Studios Italy, Banijay Italia, Nonpanic,
        L’Officina, and ITV Movie. Banijay creates both original formats and adapt
        internationally successful formats for the Italian market . Successful programs
        include the cooking competition “4 Restaurants” (on Sky Uno) or the factual
        entertainment series “4 Hotels” (on Sky), as well as the reality show “Hell’s
        Kitchen”.
77  Replies to questionnaire Q6 to Broadcasters – France, question 51; questionnaire Q5 to Producers –
    France, question 48.
78 Replies to questionnaire Q6 to Broadcasters – France, question 44; questionnaire Q5 to Producers –
    France, question 41.
79 Replies to questionnaire Q6 to Broadcasters – France, question 46; questionnaire Q5 to Producers –
    France, question 43 ; Replies to questionnaire Q6 to Broadcasters – France, question 47; questionnaire Q5
    to Producers – France, question 44; Replies to questionnaire Q6 to Broadcasters – France, question 48;
    questionnaire Q5 to Producers – France, question 45.
80 Replies to questionnaire Q6 to Broadcasters – France, question 49; questionnaire Q5 to Producers –
    France, question 46.
                                                         31
 ---pagebreak--- (161) ESG operates in Italy through Endemol Shine Italy. It produces a range of AV
        content including original formats or the local adaptation of foreign titles for both
        scripted and non-scripted AV content. Its flagship programs include the reality show
        “Big Brother”, the cooking shows “MasterChef” and “Ready Steady Cook”, the
        drama series “L’Allieva”, the game shows “Identity”, “Still Standing”, and “Next
        One!”, as well as the talent show “Your Face sounds familiar”.
(162) The Transaction gives rise to (i) horizontally affected markets for the production of
        externally tailormade (i.e., excluding captive/in-house content) non-scripted AV
        content and for the production of externally tailormade commissioned (i.e.,
        excluding captive/in-house content) non-scripted AV content, (ii) non-horizontally
        affected market in relation to the neighbouring markets for the production of
        externally tailormade (i.e., excluding captive/in-house content) scripted and non-
        scripted AV content in Italy.
5.5.2. Notifying Party’s view
(163) The Notifying Party considers that the Transaction will not raise horizontal
        competition concerns in Italy where the Parties’ production activities overlap, for the
        following reasons.
(164) The Notifying Party considers that the Transaction will not raise horizontal
        competition concerns in France where the Parties’ production activities overlap, for
        the following reasons.
(165) First, the Notifying Party argues that market shares, especially those excluding in-
        house production, are inadequate to measure competitive strength and overstate the
        Parties’ market position in the affected markets and segments.81
(166) Second, the Notifying Party emphasises that the merged entity will continue to face
        competition from a significant number of credible competitors that will continue to
        exert significant competitive constraints on the merged entity. In addition, the
        Notifying Party argues that broadcasters have in-house capabilities and, should the
        merged entity try to impose unfavourable conditions, they would be able to expand
        self-supply, which further acts as a constraint on the merged entity.
(167) The Notifying Party further contends that barriers to entry in the market are very low
        and that therefore the merged entity would be faced with new entry in the event that
        the merged entity were to increase prices or degrade the quality of its services.
(168) Finally, the merged entity will face highly sophisticated and concentrated customers
        holding significant bargaining power. In particular, the Notifying Party considers
        that broadcasters are capable of imposing strict budget limitations on producers,
        continuously renegotiate financial conditions throughout the performance of the
        contract and try to impose unfavourable conditions on the producers of scripted and
        non-scripted AV content. (for example, by trying to limit the role of the producer to
        a role of mere « line producer », where the producer is supposed to act as a simple
        service provider, by giving up any exploitation right on the programs).
81  The Notifying Party further indicates that market shares by value are more appropriate than market share
    by volume in the AV industry. The Parties were not able to provide market share data on the basis of
    volume and only provided value-based market share information.
                                                         32
 ---pagebreak---  ---pagebreak--- (174) The results of the market investigation provided conflicting views on whether the
       Transaction would have a would have a negative or neutral impact on the
       respondents83 and the market for the production of tailormade non-scripted AV
       content.84 On the one hand, most of the producers note that the merged entity will
       increase control of the market and through the increased bargaining power, it would
       be able to source IPR for significant formats and creative talent. On the other hand,
       most of the broadcasters indicate that the Transaction would not have any impact. In
       particular, such respondents consider that they could either start producing in-house
       or source from competing providers.
(175) However, overall, the Commission considers that, despite these views, the
       Transaction will not raise serious doubts as to its compatibility with the internal
       market in Italy for the following reasons.
(176) First, the Commission notes that the merged entity’s relevant combined market share
       in the relevant segments in Italy are moderate: [30-40]% in the production of non-
       scripted AV content excluding captive and in-house production overall, of [5-10]%
       in the tailormade production for hire and [40-50]% in commissioned production
       (both excluding captive and in-house production). The markets would not even be
       affected if captive/in-house production were to be included.
(177) Second, alternative providers would remain in the market for the production of
       tailormade non-scripted AV content, excluding captive/in-house production and its
       sub-segments post-Transaction, including the international producer Fremantle and
       other producers as Fascino and Ballandi with market shares of respectively, [10-
       20]%, [10-20]% and [5-10]%.
(178) Third, the results of the market investigation show that the Parties does not represent
       a significant share of the broadcasters’ spent in non-scripted AV content by value
       and volume. Based on the data submitted by customers, the purchasing shares show
       that, first, those data are not significantly different compared to the market shares
       estimates submitted by the Parties, which confirms that the market shares submitted
       by the Parties reflect the market reality, and, second, that none of the broadcasters is
       entirely dependent on Banijay and/or ESG.85
(179) Fourth, respondents to the market investigation indicate that the main parameters
       they consider relevant when procuring or supplying tailormade non-scripted AV
       content are the price, access to the IPR and to the creative talent. 86 When considering
       such parameters, respondents indicate that other producers, including Fremantle, in
       Italy would have a similar position to Banijay and ESG. 87 For example, one
       respondent notes that Fascino is owned by one of the most important talents, Ms
83 Replies to questionnaire Q8 to Broadcasters – Italy,  question 53; questionnaire Q7 to Producers – Italy,
   question 50.
84 Replies to questionnaire Q8 to Broadcasters – Italy,  question 54; questionnaire Q7 to Producers – Italy,
   question 51.
85 Annex I to questionnaire Q8 to Broadcasters – Italy.
86 Replies to questionnaire Q8 to Broadcasters – Italy,  question 37; questionnaire Q7 to Producers – Italy,
   question 34.
87 Replies to questionnaire Q8 to Broadcasters – Italy,  question 38; questionnaire Q7 to Producers – Italy,
   question 35.
                                                        34
 ---pagebreak---         Maria De Filippi. Another respondent indicate that Ballandi, while it mainly relies
        on IPR licensed from third parties, is competitive in terms of price and access.
(180) Moreover, respondents to the market investigation indicate that other producers of
        non-scripted AV content compete closely with Banijay and ESG. Several
        respondents indicate that Fremantle is the closest competitor to each of Banijay and
        ESG.88
(181) Fifth, producers responding to the market investigation indicate that broadcasters
        have relatively strong bargaining power in Italy.89
(182) Finally, most of the respondents to the market investigation consider that
        broadcasters would have counterstrategies should the merged entity worsen the
        terms and conditions at which it produces tailormade non-scripted AV content, for
        example by bundling the sale of non-scripted tailormade AV content or increasing
        prices.90 Lux, Fremantle and most broadcasters indicate that broadcasters could
        increase in-house productions. Only a limited number of respondents indicate that a
        possible counterstrategy while virtually possible is unrealistic in practice. One
        broadcaster notes that it would require a substantial business reconversion, higher
        costs in order to compete and several risks in terms of the return on investments.
(183) Moreover, the Commission notes that, in the current market practice, broadcasters
        tend to switch to competing providers or to in-house productions. [BUSINESS
        STRATEGY].91 Similarly, Mediaset was able to produce talent and entertainment
        shows such as “Uomini e Donne” and “Amici” aired in prime time slots through
        Fascino without sourcing production from global production companies to fill those
        slots. Mediaset also filled a programming slot originally agreed to be used for a
        show co-produced with Banijay “Music Farm” with a show produced by Fascino
        “Amici Vip”.92
(184) Furthermore, the Commission notes that, in the event Banijay and ESG, entered into
        multi-annual agreements, those are usually conditioned to minimum audience rates.
        Minimum audience rates requirements are set forth in performance provisions
        whereby the commissioning of additional seasons by broadcasters is conditioned on
        the show generating certain target audience rates: if the audience rates of a season
        are lower than what the renewal condition requires, broadcasters have the right to
        cancel the show without prior notice and without being liable in any way towards the
        producer.93
(185) The ability of broadcasters to rely on in-house production is further supported from
        an analysis of the market shares including in-house productions. Mediaset and RAI’s
88 Replies to questionnaire Q8 to Broadcasters – Italy, questions 42 and 43; questionnaire Q7 to Producers –
   Italy, questions 39 and 40.
89 Replies to questionnaire Q7 to Producers – Italy, question 41.
90 Replies to questionnaire Q8 to Broadcasters – Italy, question 49; questionnaire Q7 to Producers – Italy,
   question 46.
91 Parties’ memorandum on broadcasters’ lack of dependency, paragraph 15.
92 Parties’ submission on broadcasters’ bargaining power, paragraph 10.
93 Parties’ submission on broadcasters’ bargaining power, paragraph 20.
                                                         35
 ---pagebreak---          in-house productions accounted for respectively [20-30]% and [20-30]% of the non-
         scripted productions in Italy in 2018.94
(186) In light of the above, the Commission concludes that the Transaction does not raise
         serious doubts as to its compatibility with the internal market in Italy as a result of
         horizontal unilateral effects in the market for the production of tailormade non-
         scripted AV content (both excluding captive and in-house production), including the
         narrower market segments for the tailormade production for hire and commissioned
         production (both excluding captive and in-house production).
5.5.3.3. Non-horizontal non-coordinated effects in Italy
(187) In Italy, Banijay and ESG are also active in the market for the production of
         tailormade scripted content with market shares of respectively [0-5]% and [0-5]% by
         value in 2018 in the market for the production of tailormade scripted content
         excluding captive/in-house production. The merged entity would have a market
         share of [5-10]% in the production of scripted AV content excluding captive/in-
         house production and [30-40]% in the production of non-scripted AV content
         excluding captive/in-house production.
(188) In the course of the market investigation, one respondent indicated that, after the
         Transaction, the merged entity could leverage its increased position in the market for
         the production of tailormade non-scripted AV content to increase its presence in the
         market for the production of tailormade scripted AV content.
(189) The Commission has therefore assessed the risk of foreclosure of competing
         producers of tailormade scripted content by tying or bundling the production of
         tailormade non-scripted content in Italy.
(190) The Commission considers that the merged entity would lack the ability to foreclose
         competing producers of tailormade scripted content by tying or bundling the
         production of tailormade non-scripted content in Italy for the following reasons.
(191) First, as indicated in paragraph (176), the market shares of the merged entity are
         moderate in the market for the production of tailormade non-scripted content
         excluding captive/in-house production.
(192) Second, as indicated in paragraph (177), alternative producers of non-scripted
         content would remain available in the market for the production of tailormade non-
         scripted content excluding captive/in-house production, including international
         producers as Fremantle.
(193) Third, as indicated in paragraph (182), should the merged entity worsen the terms
         and conditions at which it produces tailormade non-scripted AV content, for
         example by bundling the sale of non-scripted tailormade AV content with scripted
         tailormade AV content, most of the respondents consider that broadcasters would
         have counterstrategies.
94  The data would not significantly change when assessing previous years. In 2017, Mediaset and RAI’s in-
    house productions accounted for respectively [20-30]% and [30-40]% of the non-scripted productions in
    Italy. In 2016, Mediaset and RAI’s in-house productions accounted for respectively [20-30]% and [30-
    40]% of the non-scripted productions in Italy.
                                                       36
 ---pagebreak--- (194) The Commission considers that due to the lack of ability to engage in a foreclosing
        strategy, it is not needed to assess whether the merged entity would have any
        incentive or whether any foreclosure strategy would have a negative impact on
        effective competition.
(195) In light of the foregoing, the Commission concludes that the Transaction would not
        raise serious doubts as to its compatibility with the internal market as a result of the
        conglomerate relationships between the merged entity’s activities as producer of
        scripted and non-scripted AV content in Italy.
5.6.    Netherlands
5.6.1. Introduction
(196) Banijay is marginally active in the market for the production of general
        entertainment TV content in the Netherlands through Zodiak Netherlands, in the
        non-scripted segment only. It produces a limited number of non-scripted shows and
        specializes in factual entertainment, reality content and game shows. Its flagship
        programs include “Temptation Island VIPS” available on the OTT platform
        Videoland, “Flat Hunters”, aired on RTL4 and “Wife Swap”, aired on SBS6.
(197) ESG is present in the market for the production of general entertainment TV content
        in the Netherlands through Endemol Shine Nederland BV (including its TVBV
        label), Simpel Media, NL Film & TV, Human Factor BV. Its flagship programs
        include the daily soap “Good Times Bad Times”, aired on RTL4, the game show
        “Deal or no deal”, aired on SBS6, “1 vs 100”, a game show aired on RTL4, the
        entertainment show “All you need is love” aired on RTL4, factual entertainment
        programs “Mooiste Meisje”, “Hunted” and “I’m leaving”, all aired on NPO1 as well
        as drama programs “SpangaS” and “Mother, I Want to Join the Cabaret”, aired on
        NPO1.
(198) The Transaction gives rise to horizontally affected markets for the production of
        externally tailormade (i.e., excluding captive/in-house content) non-scripted AV
        content and for the production of externally tailormade commissioned (i.e.,
        excluding captive/in-house content) non-scripted AV content in the Netherlands.
5.6.2. Notifying Party’s view
(199) The Notifying Party considers that the Transaction will not raise horizontal
        competition concerns in the Netherlands where the Parties’ production activities
        overlap, for the following reasons.
(200) First, the Notifying Party argues that market shares, especially those excluding in-
        house production, are inadequate to measure competitive strength and overstate the
        Parties’ market position in the affected markets and segments.95
(201) Second, the Notifying Party emphasises that the merged entity will continue to face
        competition from a significant number of credible competitors that will continue to
95  The Notifying Party further indicates that market shares by value are more appropriate than market share
    by volume in the AV industry. The Parties were not able to provide market share data on the basis of
    volume and only provided value-based market share information.
                                                         37
 ---pagebreak---  ---pagebreak---  ---pagebreak--- (214) Fourth, the results of the market investigation suggest that the Parties are not each
        others’ closest competitors in the Dutch market for the production of non-scripted
        AV content.99
(215) Fifth, the Commission also notes that, as set out in Table 8 above, the market share
        increment attributable to the Transaction in the affected markets is low ([0-5]%).
(216) Sixth, the market investigation has shown that, for broadcasters, the most important
        parameter of competition is the price,100 followed by access to IP and talent, which
        indicates that access to IP as such is not driving competition, but rather its price,
        indicating that IPR is generally available in the market.
(217) Seventh, most of the respondents to the market investigation consider that
        broadcasters would have counterstrategies should the merged entity worsen the
        terms and conditions at which it produces tailormade non-scripted AV content, for
        example by bundling the sale of non-scripted tailormade AV content or increasing
        prices.101
(218) Moreover, it has to be taken into account that broadcasters are of the view that in-
        house production by broadcasters is likely to as a significant constraint on the
        merged entity should it decide to significantly worsen the conditions under which
        content produced by it is sold. 102
(219) In addition, most of the respondents consider it likely that a new entrant will start
        producing non-scripted AV content in the Netherlands.103
(220) Market participants in the Netherlands, also indicate that broadcasters have some
        level of bargaining when negotiating contracts with producers.104
5.6.3.3. Conclusion
(221) In light of the above, the Commission concludes that the Transaction does not raise
        serious doubts as to its compatibility with the internal market in the Netherlands as a
        result of horizontal unilateral effects in the market for the production of tailormade
        non-scripted AV content (both excluding captive and in-house production),
        including the narrower market segments for the tailormade production for hire and
        commissioned production (both excluding captive and in-house production).
98  Annex I to questionnaire Q10 to Broadcasters – Netherlands.
99  Replies to questionnaire Q10 to Broadcasters – Netherlands, questions 42 and 43; questionnaire Q5 to
    Producers – France, questions 39 and 40.
100 Replies to questionnaire Q10 to Broadcasters – France, question 37; questionnaire Q9 to Producers –
    France, question 34.
101 Replies to questionnaire Q10 to Broadcasters – Netherlands, question 48; questionnaire Q9 to Producers –
    Netherlands, question 45.
102 Replies to questionnaire Q10 to Broadcasters – Netherlands, question 19, 49; questionnaire Q9 to
    Producers – Netherlands, question 46.
103 Replies to questionnaire Q10 to Broadcasters – Netherlands, question 51; questionnaire Q9 to Producers –
    Netherlands, question 48.
104 Replies to questionnaire Q10 to Broadcasters – Netherlands, question 44; questionnaire Q9 to Producers –
    Netherlands, question 41.
                                                        40
 ---pagebreak--- 5.7.    Norway
5.7.1. Introduction
(222) Banijay is active in the market for the production of scripted and non-scripted AV
        content in Norway through Mastiff Norway, Nordisk Film TV Norway and Screen
        Media. It produces content based on own formats as well as international and third
        party formats for the main channels in Norway. Its flagship programs include the
        reality shows “Paradise Hotel” (TV3) and “71 degrees North” (TV3/Discovery), the
        factual entertainment show “Crime Scene” (TV4), the talk show “Good Morning
        Norway” and “Good Evening Norway” (TV2), the factual entertainment programs
        “The Best Singers” (TV2) and “TV2 Helps you out” (TV2).
(223) ESG operates in Norway through Rubicon TV. It produces a range of scripted and
        non-scripted AV content including the drama series “Beforeigners” (HBO Nordics),
        the reality show “Ex on The Beach” (Discovery), the entertainment show “Luxury
        Trap” (TV3) and the game show “Eternal Glory” (NRK).
(224) The Transaction gives rise to horizontally affected markets for the production of
        externally tailormade (i.e., excluding captive/in-house content) non-scripted AV
        content and for the production of externally tailormade commissioned (i.e.,
        excluding captive/in-house content) non-scripted AV content.in Norway.
5.7.2. Notifying Party’s view
(225) The Notifying Party considers that the Transaction will not raise horizontal
        competition concerns in Norway where the Parties’ production activities overlap, for
        the following reasons.
(226) First, the Notifying Party argues that market shares, especially those excluding in-
        house production, are inadequate to measure competitive strength and overstate the
        Parties’ market position in the affected markets and segments.105
(227) Second, the Notifying Party emphasises that the merged entity will continue to face
        competition from a significant number of credible competitors that will continue to
        exert significant competitive constraints on the merged entity. In addition, the
        Notifying Party argues that broadcasters have in-house capabilities and, should the
        merged entity try to impose unfavourable conditions, they would be able to expand
        self-supply, which further acts as a constraint on the merged entity.
(228) The Notifying Party further contends that barriers to entry in the market are very low
        and that therefore the merged entity would be faced with new entry in the event that
        the merged entity were to increase prices or degrade the quality of its services.
(229) Finally, the merged entity will face highly sophisticated and concentrated customers
        holding significant bargaining power. In particular, the Notifying Party considers
        that broadcasters are capable of imposing strict budget limitations on producers,
        continuously renegotiate financial conditions throughout the performance of the
105 The Notifying Party further indicates that market shares by value are more appropriate than market share
    by volume in the AV industry. The Parties were not able to provide market share data on the basis of
    volume and only provided value-based market share information.
                                                         41
 ---pagebreak---  ---pagebreak--- (235) First, most of the respondents to the market investigation consider that the
        Transaction would have a neutral impact on their company106 on the market for the
        production of tailormade non-scripted AV content.107 One competing producer notes
        that, notwithstanding the bargaining power and large catalogue of the merged
        entities, this will not overly hinder the ability of other companies in continuing to
        secure tailormade commissioned production and production for-hire from customers
        in the market.
(236) Second, the Commission notes that the merged entity’s relevant combined market
        share in the relevant segments in Norway are moderate: [20-30]% in the production
        of non-scripted AV content excluding captive and in-house production overall, of
        [10-20]% in the tailormade production for hire and [20-30]% in commissioned
        production (both excluding captive and in-house production). The markets would not
        even be affected if captive/in-house production were to be included.
(237) Third, alternative providers, of which some are global players active in several
        countries in the EEA, including NENT, Monday, ITV and Fremantle would remain
        in the market for the production of tailormade non-scripted AV content, excluding
        captive/in-house production and its sub-segments post-Transaction, with market
        shares of respectively, [30-40]%, [10-20]%, [0-5]% and [5-10]%. In particular, post-
        Transaction NENT’s position will be larger than the merged entity.
(238) Fourth, the market investigation shows that the Parties do not represent a significant
        share of the broadcasters’ spent in non-scripted AV content by value and volume.108
        Based on the data submitted by customers, the purchasing shares show that, first,
        those data are not significantly different compared to the market shares estimates
        submitted by the Parties, which confirms that the market shares submitted by the
        Parties reflect the market reality and, second, that none of the broadcasters is entirely
        dependent on Banijay and/or ESG.
(239) Fifth, respondents to the market investigation indicate that the main parameters they
        consider relevant when procuring or supplying tailormade non-scripted AV content
        are the price, the IPR and talent.109 When considering such parameters, respondents
        indicate that other producers in Norway would have a similar position to Banijay and
        ESG.110 In particular, NENT and Monday are perceived as similar in terms of talent
        and price. Respondents consider also that ITV has a similar position compared to the
        Parties in terms of access to IPR for significant formats.
106 Replies to questionnaire Q12 to Broadcasters – Norway, question 53; questionnaire Q11 to Producers –
    Norway, question 50.
107 Replies to questionnaire Q12 to Broadcasters – Norway, question 54; questionnaire Q11 to Producers –
    Norway, question 51.
108 Annex I to questionnaire Q12 to Broadcasters – Norway.
109 Replies to questionnaire Q12 to Broadcasters – Norway, question 37; questionnaire Q11 to Producers –
    Norway, question 34.
110 Replies to questionnaire Q12 to Broadcasters – Norway, question 38; questionnaire Q11 to Producers –
    Norway, question 35.
                                                       43
 ---pagebreak--- (240) Sixth, producers responding to the market investigation indicates that other
        producers also closely compete with Banijay and ESG.111 For example, several
        respondents indicate NENT, ITV and Fremantle also closely compete.
(241) Moreover, most of the respondents consider likely that a new entrant will start
        producing non-scripted AV content in Norway.112 Respondents indicate that the
        Norwegian market is competitive and there are still international players not present
        that could decide to enter. Moreover, respondents also highlight that there are new
        companies starting up on a regular basis and indicate Monday, Oslo Company, Plan
        B and Fremantle as example of successful new entrants in the last years.
(242) In addition, respondents to the market investigation indicate that broadcasters have
        relatively a strong bargaining power.113 One respondent notes that the bargaining
        power is function of the volume of the content being tailormade and, therefore,
        larger broadcasters have higher power to exert pressure on price and other
        commercial conditions.
(243) Finally, most of the respondents to the market investigation consider that
        broadcasters would have counterstrategies should the merged entity worsen the
        terms and conditions at which it produces commissioned non-scripted AV content,
        for example by bundling the sale of non-scripted commissioned AV content or
        increasing prices.114 For example, one of the main broadcaster in Norway, notes that
        such moves would immediately punish the merged entity since they could expand
        their in-house productions.
5.7.3.3. Conclusion
(244) In light of the above, the Commission concludes that the Transaction does not raise
        serious doubts as to its compatibility with the internal market in Norway as a result
        of horizontal unilateral effects in the market for the production of tailormade non-
        scripted AV content (both excluding captive and in-house production), including the
        narrower market segments for the tailormade production for hire and commissioned
        production (both excluding captive and in-house production).
5.8.    Spain
5.8.1. Introduction
(245) Banijay is active in the market for the production of scripted and non-scripted AV
        content in Spain through Cuarzo Producciones, DLO / Magnolia and Portocabo. It
        produces non-scripted content, including entertainment programs, factual television,
        talk shows, docu-reality show as well as scripted content, including crime thrillers,
        comedy, historic drama, family comedy series and miniseries. Its flagship programs
        include “Viva la vida”, an entertainment program broadcast on Telecinco, and
111 Replies to questionnaire Q11 to Producers – Norway, questions 39 and 40.
112 Replies to questionnaire Q12 to Broadcasters – Norway, question 51; questionnaire Q11 to Producers –
    Norway, question 48.
113 Replies to questionnaire Q12 to Broadcasters – Norway, question 44; questionnaire Q11 to Producers –
    Norway, question 41.
114 Replies to questionnaire Q12 to Broadcasters – Norway, question 47; questionnaire Q11 to Producers –
    Norway, question 44.
                                                       44
 ---pagebreak---         “Madrid Directo”, a talk show broadcast on TeleMadrid as well as “Hierro”,
        broadcast on Movistar+.
(246) ESG is present in the market for the production of scripted and non-scripted AV
        content in Spain through Shine Iberia, Zeppelin, Gestmusic and Diagonal TV. ESG
        produces original TV content and format adaptations on the basis of its own formats
        as well as third party formats. Its flagship programs include the local adaptation of
        “MasterChef” (and its spin off “MasterChef Celebrity”), broadcast on TVE 1 as well
        as the local adaptation of “Big Brother”, broadcast on Telecinco. Its original flagship
        programs include “La Catedral del Mar”, aired on Antena 3, and “Amar en tiempos
        revueltos” aired on TVE 1.
(247) The Transaction gives rise to horizontally affected markets (i) for the production of
        externally tailormade AV non-scripted AV content , for the production of externally
        tailormade production for hire (i.e., excluding captive/in-house content) non-scripted
        AV content, and for the production of externally tailormade commissioned (i.e.,
        excluding captive/in-house content) non-scripted AV content; (ii) for the production
        of externally tailormade AV scripted AV content , for the production of externally
        tailormade production for hire (i.e., excluding captive/in-house content) scripted AV
        content, and for the production of externally tailormade commissioned (i.e.,
        excluding captive/in-house content) scripted AV content in Spain.
5.8.2. Notifying Party’s view
(248) The Notifying Party considers that the Transaction will not raise horizontal
        competition concerns in Spain where the Parties’ production activities overlap, for
        the following reasons.
(249) First, the Notifying Party argues that market shares, especially those excluding in-
        house production, are inadequate to measure competitive strength and overstate the
        Parties’ market position in the affected markets and segments.115
(250) Second, the Notifying Party emphasises that the merged entity will continue to face
        competition from a significant number of credible competitors that will continue to
        exert significant competitive constraints on the merged entity. In addition, the
        Notifying Party argues that broadcasters have in-house capabilities and, should the
        merged entity try to impose unfavourable conditions, they would be able to expand
        self-supply, which further acts as a constraint on the merged entity.
(251) The Notifying Party further contends that barriers to entry in the market are very low
        and that therefore the merged entity would be faced with new entry in the event that
        the merged entity were to increase prices or degrade the quality of its services.
(252) Finally, the merged entity will face highly sophisticated and concentrated customers
        holding significant bargaining power. In particular, the Notifying Party considers
        that broadcasters are capable of imposing strict budget limitations on producers,
        continuously renegotiate financial conditions throughout the performance of the
115 The Notifying Party further indicates that market shares by value are more appropriate than market share
    by volume in the AV industry. The Parties were not able to provide market share data on the basis of
    volume and only provided value-based market share information.
                                                         45
 ---pagebreak---  ---pagebreak---  ---pagebreak---          production and its sub-segments post-Transaction, namely Mediaset (Including
         Bulldog TV [5-10]% and La fábrica de la tele [5-10]%) , Imagina ([10-20]%), 7 y
         Acción ([5-10]%) and Fremantle ([5-10]%).
(262) Third, the majority of customers consulted in the framework of the market
         investigation indicates that the Parties do not represent a significant share of the
         broadcasters’ spent in non-scripted AV content.118
(263) Fourth, although the market investigation indicated the important role of IPR and
         talent in the negotiations between non-scripted content producers and broadcasters,
         the market investigation results also show that the also the price is a very central
         parameter in the negotiations.119
(264) Fifth, the results of the market investigation indicate that the Parties are not each
         others’ closest competitors in the Spanish market for the production of non-scripted
         AV content.120
(265) Sixth, most of the respondents consider it likely that a new entrant will start
         producing non-scripted AV content in Spain.121
(266) Moreover, participants in Spain, also indicate that broadcasters have some level of
         bargaining when negotiating contracts with producers.122
(267) In addition, based on the results of the market investigation, the Commission
         considers that the merged entity is unlikely to start engaging into practices that could
         limit effective competition by either negatively affecting customers or limiting
         expansion of competitors in the market for the production of tailormade non-scripted
         AV content in Spain by increasing prices, requiring a higher number of hours of AV
         content to be purchased or by bundling the sale of non-scripted tailormade AV
         content to other content not necessarily desired by the broadcasters post-
         Transaction.123
(268) Finally, the market investigation also indicates that, if the merged entity should
         attempt to worsen the terms and conditions at which it produces tailormade non-
         scripted AV content, broadcasters are likely to have counterstrategies available. Part
118 Annex I to questionnaire Q14 to Broadcasters – Spain.
119 Replies to questionnaire Q14 to Broadcasters – Spain, question 37; questionnaire Q13 to Producers –Spain,
    question 34.
120 Replies to questionnaire Q14 to Broadcasters – Spain, questions 42 and 43; questionnaire Q13 to
    Producers – Spain, questions 39 and 40.
121 Replies to questionnaire Q14 to Broadcasters – Spain, question 51; questionnaire Q13 to Producers –
    Spain, question 48.
122 Replies to questionnaire Q14 to Broadcasters – Spain, question 44; questionnaire Q13 to Producers –
    Spain, question 41.
123 Replies to questionnaire Q14 to Broadcasters – Spain, question 46; questionnaire Q9 to Producers – Spain,
    question 43; Replies to questionnaire Q14 to Broadcasters – Spain, question 47; questionnaire Q9 to
    Producers – Spain, question 44; Replies to questionnaire Q14 to Broadcasters – Spain, question 48;
    questionnaire Q9 to Producers – Spain, question 45.
                                                         48
 ---pagebreak---         of this could be to expand in-house production, which may have a constraining effect
        on the combined entity.124
5.8.3.3. Scripted AV content – horizontal non-coordinated effects in Spain
(269) The Commission considers that, for the reasons set out below, the Transaction does
        not raise serious doubts as to its compatibility with the internal market in relation to
        horizontal non-coordinated effects in the market for the production of non-scripted
        AV content and its sub-segments in Spain.
(270) First, most of the respondents to the market investigation consider that the
        Transaction would not have a negative impact on the market for the production of
        tailormade scripted AV content.125
(271) Second, the Commission notes that the merged entity’s combined market share in
        the production of tailormade scripted AV content in Spain is moderate ([20-30]%).
(272) Third, the combined entity will be exposed to competition from important players in
        the Spanish market for the production of tailormade non-scripted AV content,
        excluding captive/in-house production and its sub-segments post-Transaction, in
        particular Lagardère (Boomerang) with an almost equal market share of [20-30]%,
        Plano a Plano with a share of [20-30]%, Grupo Ganga with [10-20]% and several
        smaller players.
(273) Moreover, the majority of customers consulted in the framework of the market
        investigation indicates that the Parties do not represent a significant share of the
        broadcasters’ spent in non-scripted AV content.126
(274) Fourth, the market investigation has shown that Banijay and ESG’s portfolios are not
        particularly relevant for broadcasters to offer attractive scripted programs.127
(275) Fifth, taking into account the results of the market investigation, the Commission
        considers that the merged entity is unlikely to start engaging into practices that could
        limit effective competition by either negatively affecting customers or limiting
        expansion of competitors in the market for the production of tailormade non-scripted
        AV content in Spain by increasing prices, requiring a higher number of hours of AV
        content to be purchased. As regards the possibility of bundling the sale of scripted
        tailormade AV content to other content not necessarily desired by the broadcasters
        post-Transaction the producers are however less optimistic than the producers (ie a
        slight majority of broadcaster believes that this may be the case). 128
124 Replies to questionnaire Q14 to Broadcasters – Spain, question 49; questionnaire Q13 to Producers –
    Spain question 46.
125 Replies to questionnaire Q14 to Broadcasters – Spain, question 74; questionnaire Q13 to Producers –
    Spain, question 69.
126 Annex I to questionnaire Q14 to Broadcasters – Spain.
127 Replies to questionnaire Q14 to Broadcasters – Spain, question 64; questionnaire Q13 to Producers –
    Spain, question 59.
128 Replies to questionnaire Q14 to Broadcasters – Spain, questions 65 to 67; questionnaire Q9 to Producers –
    Spain, questions 60 to 62.
                                                        49
 ---pagebreak--- (276) However, in this respect the results of the market investigation clearly show that
        broadcasters would have strategies to counter such behaviour on the supplier side,
        for example by moving production in-house. 129
(277) Sixth, market participants in Spain also indicate that broadcasters have considerable
        bargaining when negotiating contracts with producers.130
(278) Finally, both broadcasters and producers of scripted content in Spain expect new
        entry in the market, which can be considered to have a significant constraining effect
        on the combined entity. 131
5.8.3.4. Conclusion
(279) In light of the above, the Commission concludes that the Transaction does not raise
        serious doubts as to its compatibility with the internal market in Spain as a result of
        horizontal unilateral effects in the market for the production of tailormade non-
        scripted AV content, (both excluding captive and in-house production), nor as a
        result of horizontal unilateral effects in the market for the production of tailormade
        scripted AV content, (both excluding captive and in-house production), including
        the narrower market segments for the tailormade production for hire and
        commissioned production (both excluding captive and in-house production).
5.9.    Sweden
5.9.1. Introduction
(280) Banijay is active in the market for the production of scripted and non-scripted AV
        content in Sweden through Jarowskij, Mastiff Sweden, Nordisk Film Television
        Sweden and Yellow Bird. It produces its own formats, as well as international and
        third-part formats. Its best-known programs include “Solsidan”, which has been
        adapted in Finland and France, the drama series “The Truth Will Out” (Discovery)
        and “Hidden” (TV4). Its adaptations of third party formats include the entertainment
        show “Strictly Come Dancing” (TV4), the reality show “Paradise Hotel” (TV3) and
        the entertainment show “The Best Singers” (TV4).
(281) ESG operates in Sweden through Filmlance, Mag5, Meter and Sto-Cph. It produces
        various scripted and non-scripted programs for TV channels and digital platforms. It
        successful productions include the drama series “Bron/Broen” (SVT), “The
        Sandhamn Murders” (C More/TV4) and “Beck” (TV4) as well as the reality show
        “Luxury Trap” (TV3), the entertainment show “MasterChef” (TV4), the reality show
        “Ex on the beach” (Discovery) and “Bake Off Sweden” (TV4).
(282) The Transaction gives rise to horizontally affected markets (i) for the production of
        externally tailormade AV non-scripted AV content , for the production of externally
        tailormade production for hire (i.e., excluding captive/in-house content) non-scripted
129 Replies to questionnaire Q14 to Broadcasters – Spain, questions 68; questionnaire Q9 to Producers –
    Spain, questions 63.
130 Replies to questionnaire Q14 to Broadcasters – Spain, question 63; questionnaire Q13 to Producers –
    Spain, question 58.
131 Replies to questionnaire Q14 to Broadcasters – Spain, question 70; questionnaire Q13 to Producers –
    Spain, question 65.
                                                     50
 ---pagebreak---         AV content, and for the production of externally tailormade commissioned (i.e.,
        excluding captive/in-house content) non-scripted AV content; (ii) for the production
        of externally tailormade AV scripted AV content and for the production of externally
        tailormade commissioned (i.e., excluding captive/in-house content) scripted AV
        content in Sweden.
5.9.2. Notifying Party’s view
(283) The Notifying Party considers that the Transaction will not raise horizontal
        competition concerns in Sweden where the Parties’ production activities overlap, for
        the following reasons.
(284) First, the Notifying Party argues that market shares, especially those excluding in-
        house production, are inadequate to measure competitive strength and overstate the
        Parties’ market position in the affected markets and segments.132
(285) Second, the Notifying Party emphasises that the merged entity will continue to face
        competition from a significant number of credible competitors that will continue to
        exert significant competitive constraints on the merged entity. In addition, the
        Notifying Party argues that broadcasters have in-house capabilities and, should the
        merged entity try to impose unfavourable conditions, they would be able to expand
        self-supply, which further acts as a constraint on the merged entity.
(286) The Notifying Party further contends that barriers to entry in the market are very low
        and that therefore the merged entity would be faced with new entry in the event that
        the merged entity were to increase prices or degrade the quality of its services.
(287) Finally, the merged entity will face highly sophisticated and concentrated customers
        holding significant bargaining power. In particular, the Notifying Party considers
        that broadcasters are capable of imposing strict budget limitations on producers,
        continuously renegotiate financial conditions throughout the performance of the
        contract and try to impose unfavourable conditions on the producers of scripted and
        non-scripted AV content.
5.9.3. Commission’s assessment
5.9.3.1. Market structure
(288) The Parties’ market share in the production of tailormade AV content in Sweden are
        set out in the table below.
(289) These shares include the following potential segmentations: (i) including and
        excluding captive/in-house production from vertically integrated broadcasters, (ii)
        segmented between “production for hire” and “commissioned production”.
132 The Notifying Party further indicates that market shares by value are more appropriate than market share
    by volume in the AV industry. The Parties were not able to provide market share data on the basis of
    volume and only provided value-based market share information.
                                                         51
 ---pagebreak---  ---pagebreak---  ---pagebreak--- (298) Fifth, respondents to the market investigation indicate that the main parameters that
         they consider relevant when procuring or supplying tailormade non-scripted AV
         content are the price, IPR for significant formats and talent.136 When considering
         such parameters, respondents indicate that other producers, including NENT, ITV
         and Fremantle, in Sweden would have a similar position to Banijay and ESG.137 For
         example, one respondent notes that the producers listed above are equally
         competitive on price which is largely driven by market forces and the negotiating
         strength of broadcasters. Another notes that, similarly to the Parties, ITV, Fremantle
         also have international catalogues with internationally successful titles. The same
         respondent also note that ESG used to be real good at developing own formats but
         that development department moved to Elk which is part of ITV.
(299) Moreover, respondents to the market investigation indicate that other producers of
         non-scripted AV content compete closely with Banijay and ESG. For example, one
         respondent indicates that Fremantle also has a significant catalogue of globally
         recognized IPR. Another highlighted that ITV has creative talent similar to the
         Parties.138
(300) With regard to the possibility to enter the market within a short timeframe and
         without incurring significant additional costs, the Commission considers that there
         are conflicting indications provided by market respondents.
(301) Sixth, respondents to the market investigation indicate that broadcasters have
         relatively strong bargaining power.139 One producer notes that, in the market for the
         production of audio-visual content, the broadcaster often has a stronger bargaining
         power than the supplier, and that this will remain unchanged post-Transaction.
         Another producer notes that this is a “buyer market” since there are only 4 customers
         and more than 50 producers.
(302) Finally, most of the respondents to the market investigation consider that
         broadcasters would have counterstrategies should the merged entity worsen the
         terms and conditions at which it produces tailormade non-scripted AV content, for
         example by bundling the sale of non-scripted tailormade AV content or increasing
         prices.140 For example, one respondent notes that broadcasters could rely on other
         international production companies, ITV and Freemantle, as well as expanding in-
         house productions.
(303) The ability of broadcasters to rely on in-house production is further supported from
         an analysis of the market shares including in-house productions. NENT, SVT and
136 Replies to questionnaire Q16 to Broadcasters – Sweden, question 37; questionnaire Q15 to Producers –
    Sweden, question 34.
137 Replies to questionnaire Q16 to Broadcasters – Sweden, question 38; questionnaire Q15 to Producers –
    Sweden, question 35.
138 Replies to questionnaire Q8 to Broadcasters – Italy, questions 42 and 43; questionnaire Q7 to Producers –
    Italy, questions 39 and 40.
139 Replies to questionnaire Q16 to Broadcasters – Sweden, question 44; questionnaire Q15 to Producers –
    Sweden, question 41.
140 Replies to questionnaire Q8 to Broadcasters – Italy, question 49; questionnaire Q7 to Producers – Italy,
    question 46.
                                                          54
 ---pagebreak---          Bonnier in-house productions accounted for respectively [10-20]%, [20-30]% and
         [5-10]% of the non-scripted productions in Sweden in 2018.141
5.9.3.3. Scripted AV content – horizontal non-coordinated effects in Sweden
(304) The Commission considers that, for the reasons set out below, the Transaction does
         not raise serious doubts as to its compatibility with the internal market in relation to
         horizontal non-coordinated effects in the market for the production of tailormade
         non-scripted AV content and its sub-segments in Sweden.
(305) The results of the market investigation provided conflicting views on whether the
         Transaction would have a negative or neutral impact on the respondents142 and the
         market for the production of tailormade scripted AV content.143
(306) However, there are several reasons why the Commission considers that, despite these
         views, the Transaction will not raise serious doubts as to its compatibility with the
         internal market in Sweden.
(307) First, the merged entity’s combined market share in the Swedish production of
         tailormade scripted AV content, excluding captive/in-house production, is moderate
         ([20-30]%).
(308) First, the Commission notes that the merged entity’s relevant combined market share
         in the relevant segments in Sweden are moderate: [20-30]% in the production of
         scripted AV content excluding captive and in-house production overall, of [0-5]% in
         the tailormade production for hire and [20-30]% in commissioned production (both
         excluding captive and in-house production). The markets would not even be affected
         if captive/in-house production were to be included.
(309) Second, alternative providers would remain in the market for the production of
         tailormade non-scripted AV content, excluding captive/in-house production and its
         sub-segments post-Transaction, including the international producer NENT,
         Anagram and Art&Bob with market shares of respectively, [10-20]%, [10-20]% and
         [10-20]%.
(310) Third, the market investigation show that the Parties do not represent a significant
         share of the broadcasters’ spent in scripted AV content by value and volume.144
         Based on the data submitted by customers, the purchasing shares show that, first,
         those data are not significantly different compared to the market shares estimates
         submitted by the Parties, which confirms that the market shares submitted by the
         Parties reflect the market reality, and, second, that none of the broadcasters is
         entirely dependent on Banijay and/or ESG.
141 The data would not significantly change when assessing previous years. In 2017, NENT, SVT and
    Bonnier in-house productions accounted for respectively [10-20]%, [20-30]% and [5-10]% of the non-
    scripted productions in Italy. In 2016, NENT, SVT and Bonnier in-house productions accounted for
    respectively [10-20]%, [20-30]% and [5-10]% of the non-scripted productions in Sweden.
142 Replies to questionnaire Q16 to Broadcasters – Sweden, question 72; questionnaire Q15 to Producers –
    Sweden, question 67.
143 Replies to questionnaire Q16 to Broadcasters – Sweden, question 74; questionnaire Q15 to Producers –
    Sweden, question 69.
144 Annex I to questionnaire Q7 to Broadcasters – Italy.
                                                         55
 ---pagebreak--- (311) Fourth, respondents to the market investigation indicate that the main parameters
         that they consider relevant when procuring or supplying tailormade scripted AV
         content are the price and talent.145 When considering such parameters, respondents
         indicate that other producers in Sweden would have a similar position to Banijay and
         ESG.146 One respondent notes that Art and Bob, Anagram and TV4 are competing
         on a more similar basis. Another respondent indicate that also ITV, FLX and Nexico
         have similar capabilities, in particular in terms of talent. Moreover, respondents to
         the market investigation indicate that other producers of non-scripted AV content
         compete closely with Banijay and ESG.147
(312) Fifth, most of the respondents consider likely that a new entrant will start producing
         scripted AV content in Sweden.148 Fremantle considers that there is a high demand
         for scripted content thus it must be considered likely that new entrants will try to
         develop and produce scripted content. Another respondent notes that the market is
         still growing and the appetite from the commissioners remain strong.
(313) Sixth, most of the respondents to the market investigation indicate that broadcasters
         have relatively a strong bargaining power.149 One producer notes that in the market
         for the production of audio-visual content the broadcaster often has a stronger
         bargaining power than the supplier, and that this will remain unchanged post-
         Transaction. Another producer notes that this is a “buyer market” since there are
         only 4 customers and more than 50 producers.
(314) Finally, most of the respondents to the market investigation consider that
         broadcasters would have counterstrategies should the merged entity worsen the
         terms and conditions at which it produces commissioned non-scripted AV content,
         for example by bundling the sale of non-scripted commissioned AV content or
         increasing prices.150 For example, one competing producers notes that broadcasters
         are unlikely to buy content that does not fit their needs. Two broadcasters consider
         that they could partner with local producers or expand in-house productions.
(315) The ability of broadcasters to rely on in-house production is further supported from
         an analysis of the market shares including in-house productions. NENT, SVT and
         Bonnier in-house productions accounted for respectively [10-20]%, [10-20]% and
         [10-20]% of the non-scripted productions in Sweden in 2018.151
145 Replies to questionnaire Q16 to Broadcasters – Sweden, question 56; questionnaire Q15 to Producers –
    Sweden, question 51.
146 Replies to questionnaire Q16 to Broadcasters – Sweden, question 57; questionnaire Q15 to Producers –
    Sweden, question 52.
147 Replies to questionnaire Q16 to Broadcasters – Sweden, questions 61 and 62; questionnaire Q15 to
    Producers – Sweden, questions 56 and 57.
148 Replies to questionnaire Q16 to Broadcasters – Sweden, question 70; questionnaire Q15 to Producers –
    Sweden, question 65.
149 Replies to questionnaire Q16 to Broadcasters – Sweden, question 63; questionnaire Q15 to Producers –
    Sweden, question 58.
150 Replies to questionnaire Q16 to Broadcasters – Sweden, question 68; questionnaire Q15 to Producers –
    Sweden, question 63.
151 The data would not significantly change when assessing previous years. In 2017, NENT, SVT and
    Bonnier in-house productions accounted for respectively [5-10]%, [10-20]% and [10-20]% of the non-
    scripted productions in Italy. In 2016, NENT, SVT and Bonnier in-house productions accounted for
    respectively [10-20]%, [10-20]% and [5-10]% of the non-scripted productions in Sweden.
                                                       56
 ---pagebreak--- 5.9.3.4. Conclusion
(316) In light of the above, the Commission concludes that the Transaction does not raise
        serious doubts as to its compatibility with the internal market in Sweden as a result
        of horizontal unilateral effects in the market for the production of tailormade non-
        scripted AV content, (both excluding captive and in-house production), nor as a
        result of horizontal unilateral effects in the market for the production of tailormade
        scripted AV content, (both excluding captive and in-house production), including
        the narrower market segments for the tailormade production for hire and
        commissioned production (both excluding captive and in-house production).
6.      CONCLUSION
(317) For the above reasons, the 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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