CELEX: 32019M9416
Language: en
Date: 2019-09-05 00:00:00
Title: Commission Decision of 05/09/2019 declaring a concentration to be compatible with the common market (Case No COMP/M.9416 - BOLLORE GROUP / M7 GROUP) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                Brussels, 5.9.2019
                                                                C(2019) 6475 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                                                                  information omitted has been replaced by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.9416 – Bolloré Group/M7 Group
                    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 31 July 2019, the European Commission received notification of a proposed
          concentration pursuant to Article 4 of the Merger Regulation by which Groupe
          Canal + SA (“Canal +” or the “Notifying Party”, France) acquires within the
          meaning of Article 3(1)(b) of the Merger Regulation sole control of the whole of
          M7 Group SA (“M7”, Luxembourg) (the "Transaction"). Canal + and M7 are
          collectively referred to as the "Parties".3
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 265, 07.08.2019, p. 6.
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)   Canal + is a wholly-owned subsidiary of Vivendi SA and an indirectly solely
      controlled subsidiary of the Bolloré Group.4 Canal + offers pay-TV subscriptions
      in a number of countries worldwide, including France and Poland within the
      EEA, produces and distributes audio-visual content, broadcasts over 60 channels
      worldwide, some of which are broadcast within the EEA in France, Belgium and
      Poland, and is active in selling online and offline advertising space on its channels
      and digital pay-TV offers. Through its subsidiary Thema, Canal + is active as a
      wholesaler of TV channels across the EEA and worldwide. Canal + also provides
      fixed internet and telephone access to residential customers in the French
      overseas territories and in Poland.
(3)   M7 is a pay-TV retailer and has eleven pay-TV brands in eight EU Member
      States, namely in Austria, Belgium, Czechia, Germany, Hungary, the
      Netherlands, Romania and Slovakia. M7 is also active as a broadcaster of a TV
      channel in Czechia, Slovakia and Romania. M7 is also active as a wholesaler of
      TV channels in Germany. In addition, M7 resells some of the satellite transponder
      capacity that it purchases to TV broadcasters, the majority of which are suppliers
      of TV channels to M7. In Belgium, Hungary and the Netherlands, M7 also offers
      telephony and internet services alongside its retail pay-TV offering. M7 is solely
      controlled, through the holding company CDS Topco B.V., by the fund FPCI
      Astorg V, which is the indirect majority shareholder of M7.
2.    THE CONCENTRATION
(4)   On 7 June 2019, Canal + International SAS, a wholly owned subsidiary of
      Canal +, on one side, and FPCI Astorg V and the other indirect shareholders of
      M7, on the other side, entered into a Sale and Purchase Agreement pursuant to
      which Canal + International SAS will indirectly acquire 100% of the share capital
      of M7.
(5)   The Transaction therefore constitutes a concentration pursuant to Article 3(1)(b)
      of the Merger Regulation.
3.    EU DIMENSION
(6)   The undertakings concerned have a combined aggregate world-wide turnover of
      more than EUR 5 000 million5 (Canal + EUR […], M7 EUR […]). Each of them
      has an EU-wide turnover in excess of EUR 250 million (Canal + EUR […], M7
      EUR […]), but they do not achieve more than two-thirds of their aggregate EU-
      wide turnover within one and the same Member State. The notified operation
      therefore has an EU dimension pursuant to Article 1(2) of the Merger Regulation.
4   As determined by the Commission in 2017 in case Bolloré/Vivendi, Vivendi is solely controlled by
    its minority shareholder Bolloré (Commission decision of 24 April 2017 in case M.8392 –
    Bolloré/Vivendi). Since the Commission’s 2017 decision, there have been no significant changes in
    Vivendi’s shareholder structure or shareholders’ voting patterns. Therefore, the Commission’s 2017
    analysis remains valid (Form CO, paragraph 26).
5   Turnover calculated in accordance with Article 5 of the Merger Regulation and the Commission
    Consolidated Jurisdictional Notice (OJ C 95, 16.4.2008, p. 1).
                                                     2
 ---pagebreak--- 4.       RELEVANT MARKETS
(7)      The Transaction relates to all the levels of the TV value chain. Section 4.1
         provides an overview of the TV value chain and the Parties' activities at each
         level of the value chain. The relevant product and geographic market definitions
         for each level of the TV value chain are subsequently discussed in Sections 4.2-
         4.4.
  4.1. Introduction: the TV value chain and the Parties’ activities
(8)      Audiovisual content for television (“TV content”) comprises all products (films,
         sports, series, shows, live events, documentaries, etc.) that are broadcast via TV.6
         In previous decisions, the Commission has identified different activities in the TV
         value chain, namely: (i) the production, licensing and acquisition of TV content
         (including the supply of pre-produced TV content and commissioned TV
         content); (ii) the wholesale supply and acquisition of TV channels; and (iii) the
         retail provision of TV services to end customers.7
(9)      Sections 4.1.1 to 4.1.3 further describe these levels of the TV value chain as well
         as provide an overview of the Parties' activities at each level in the EEA countries
         where they are active.
4.1.1. Production, licensing and acquisition of TV content
(10)     This upstream level of the value chain comprises the production of new TV
         content as well as the licensing of broadcasting rights relating to pre-existing TV
         content. TV content is either (i) used internally on own TV channels or retail TV
         services if TV content suppliers are vertically integrated and also active in the
         wholesale supply of TV channels and/or in the retail provision of TV services
         (that is to say, captive TV production); or (ii) licensed to third-party customers
         (that is to say, non-captive TV production).
(11)     Third-party customers are typically: (i) TV channel suppliers (TV broadcasters),
         which incorporate the TV content into linear TV channels, or (ii) content platform
         operators, which offer the TV content to end users on a non-linear basis (that is to
         say, Pay-Per-View ("PPV") or video on demand ("VOD")), including via non-
         traditional platforms, that is to say via internet or so-called Over-The-Top
         ("OTT") platforms.8
6     Commission decision of 25 June 2008 in case M.5121 News Corp/Premiere, recital 28.
7     Commission decision of 25 June 2008 in case M.5121 News Corp/Premiere, recital 28; Commission
      decision of 7 April 2017 in case M.8354 – Fox/Sky, recital 29.
8     VOD services can be further differentiated into three types. First, Subscription VOD ("SVOD")
      designates a service whereby the end user obtains the right to watch multiple titles during a
      designated time period, for instance one month, through a single payment. Second, Transactional
      VOD ("TVOD") designates a service whereby the end user obtains the right to watch a single
      selected title within a designated time frame, for instance within 24 hours, through a single
      payment. Third, PPV designates a service whereby the end user makes a payment to watch a single
      title that is being broadcast at a specific time, which is the same for all viewers. In the case of
      TVOD and SVOD, viewers can select, purchase and view the titles at times of their own preference,
      whereas in the case of a title available for PPV, viewers purchase the right to watch that title at the
      given time it is broadcast, which is the same for everyone (for instance, the right to watch the live
      broadcast of a football match can be purchased for PPV).
                                                         3
 ---pagebreak--- (12)  TV broadcasters and TV distributors who source TV content for their TV
      channels or retail TV services generally have a choice between a number of
      sourcing models, which can be broadly categorised as follows:
      a.   Obtaining TV content produced on an ‘ad hoc’ basis (that is to say tailor-
           made), by:
            i.       Commissioning TV content from a TV production company (which
                     owns the relevant TV format);
            ii.      Hiring a TV production company to provide the technical means and
                     deliver the finished TV content based on a format owned by the
                     broadcaster; or
            iii.     Producing the content themselves by relying on their in-house
                     facilities (captive TV production); or
      b.   Acquiring broadcasting rights from TV production companies for pre-
           produced TV content (pre-produced TV content, sometimes referred to as
           off-the-shelf or tape sales).
(13)  As regards commissioned TV content, in most cases, TV production companies
      produce TV content tailored to the needs of their customers on the basis of
      original TV formats9 that they develop themselves or that they acquire from right
      holders (commissioned production). However, in some instances, TV production
      companies are hired by TV broadcasters or content platform operators to simply
      provide the technical production means and deliver the finished programme based
      on a TV format owned or acquired by the hiring company (production-for-hire or
      supply of TV production services).
(14)  The production costs are usually borne entirely or almost entirely by the TV
      broadcasters or content platform operators. As regards ownership of the various
      rights relating to the TV content (for example, primary TV broadcast rights,
      ‘catch-up’, VOD, etc.), the extent to which those rights are retained by the
      production company – as opposed to the acquirer of TV content – may vary based
      on a number of factors, such as national regulation in the country concerned, the
      type of broadcasting, the outcome of the commercial negotiations between the
      parties, etc. Producers or the acquirers of TV content may then achieve secondary
      revenues by further licensing/distributing the TV content or the TV format to
      third parties.10
(15)  As regards pre-produced TV content, this upstream level of the value chain
      concerns the licensing of broadcasting rights relating to pre-existing TV content –
      that is to say TV content that has been previously produced and is subsequently
      made available ‘off-the-shelf’ by the rights holder (so-called pre-produced TV
      content) – and broadcasting rights relating to sports events.11
9    Commission decision of 25 June 2008 in case M.5121 News Corp/Premiere, recital 28.
10   Commission decision of 15 June 2018 in case M.8861 Comcast/Sky, recital 15.
11   Commission decision of 15 June 2018 in case M.8861 Comcast/Sky, recital 16.
                                                   4
 ---pagebreak--- (16)   The broadcasting rights relating to TV content can belong to one or more of the
       following: (i) the holder of the rights to the TV format; (ii) the production
       company that produced the TV content; and (iii) the company that commissioned
       the production of the TV content. In addition, the broadcasting rights can belong
       to a third-party distributor, to which they were licensed by the original owner,
       with a right to sub-license.12
(17)   As regards the supply-side of the market:
       a.   Canal +, mostly through its subsidiary StudioCanal, produces French and
            international movies and co-produces French and international TV series, as
            well as other TV content for the channels that it broadcasts. In addition,
            Canal + owns, through StudioCanal, the distribution rights for over 5 500
            films and TV series, including French and international TV series, recent
            French and international motion pictures, as well as catalogue French and
            international motion pictures. These distribution rights vary in terms of their
            geographic scope;
       b.   M7 is not active in the supply-side of this market.13
(18)   As regards the demand-side of the market:
       a.   Canal + acquires TV content from third party content owners and distributors
            to include in its own channels and for its content platforms;
       b.   M7 has a minor presence in the acquisition of TV content in the EEA to
            include in its own non-linear VOD offerings.14
4.1.2. Wholesale supply and acquisition of TV channels
(19)   TV broadcasters use the TV content that they have acquired or produced in-house
       in order to package it into linear TV channels. (Linear) TV channels are broadcast
       to end users either on a free-to-air ("FTA") basis or on a pay-TV basis.
(20)   At a very general level, FTA channels are TV channels that are available to
       viewers free of charge. Pay-TV channels are channels for which the viewer must
       pay a subscription fee in order to watch. Traditionally, FTA channels finance their
       operations via advertising revenues (with the exception of the publicly-owned TV
       channels in a number of Member States which are subject to advertising
       limitations), while pay-TV channels generate revenues through subscription fees.
(21)   The Commission notes that TV broadcasters are increasingly complementing
       their traditional linear TV channel offering with non-linear services such as VOD
       services.
(22)   Some TV broadcasters are vertically integrated as they are also active as retail TV
       operators (TV distributors) in the market for the retail provision of TV services to
       end users. Other TV broadcasters are not vertically integrated and rely on third
       party TV distributors to distribute their TV channels at the retail level.
12    Commission decision of 15 June 2018 in case M.8861 Comcast/Sky, recital 17.
13    Form CO, paragraphs 2, 83 and 306.
14    Form CO, paragraphs 91-95.
                                                    5
 ---pagebreak--- (23)    As regards the supply-side of the market:
        a.    Canal + is active as TV broadcaster in Belgium, France and Poland and,
              through its subsidiary, Thema, as a wholesale distributor of TV channels
              worldwide;15
        b.    M7 is present as a TV broadcaster, to [Information related to the extent of
              M7’s market presence], in Czechia, Romania and Slovakia and as a
              wholesale distributor of TV channels in Germany.16
(24)    As regards the demand-side of the market:
        a.    Canal + enters into agreements with TV broadcasters for the distribution of
              TV channels in France and Poland;
        b.    M7 enters into agreements with TV broadcasters for the distribution of TV
              channels in Austria, Belgium, Czechia, Germany, Hungary, the Netherlands,
              Romania, and Slovakia.17
4.1.3. Retail provision of TV services to end users
(25)    TV distributors either limit themselves to carrying TV channels and making them
        available to end users, or also act as channel aggregators, which ‘package’ TV
        channels. The TV services supplied by TV distributors to end users consist of: (i)
        packages of linear TV channels (which they have either acquired or produced
        themselves); and (ii) content aggregated in non-linear services, such as VOD,
        SVOD, TVOD and PPV. TV content can be delivered to end users through a
        number of technical means including cable, satellite and IPTV.18 OTT players
        deliver channels and content in both a linear and non-linear fashion through the
        use of the internet.
(26)    The content offered by a TV distributor is presented in an electronic programme
        guide ("EPG"), which is an application used on television sets to list current and
        scheduled programmes that are or will be available on each channel and a short
        summary or commentary for each programme. Each channel broadcast on the TV
        platform receives an EPG position, which is usually agreed between the TV
        broadcaster and the TV distributor. Traditional EPGs are not always used with
        regard to online content platforms and other non-linear methods of supplying
        content, or may form only part of a TV distributor's customer interface.
(27)    In the retail provision of TV services to end users:
        a.    Canal + is active as a retail pay-TV services provider in France and Poland;
15    Thema is active worldwide and typically distributes TV channels outside their home market as well
      as [Information related to Canal + business strategy] thematic channels, allowing the broadcasters of
      the TV channel to sell their channels in countries where they do not have their own sales force.
      Thema offers TV channels to pay-TV operators either on an individual (channel-by-channel) basis,
      or as part of a package of TV channels, depending on the pay-TV operators’ choice.
16    Form CO, paragraph 110.
17    Form CO, paragraph 110.
18    IPTV is the abbreviation for Internet Protocol TV; it is a system through which television services
      are delivered using the internet protocol over a packet-switched network such as the internet, instead
      of being delivered through traditional terrestrial, satellite signal and cable television formats.
                                                           6
 ---pagebreak---         b.    M7 is active as a retail pay-TV services provider in Austria, Belgium,
              Czechia, Germany, Hungary, the Netherlands, Romania and Slovakia.19
 4.2. Production, licensing and acquisition of TV content
4.2.1. Product market definition
4.2.1.1. Commission precedents
(28)    With regard to the production, licensing and acquisition of TV content, in
        previous decisions the Commission has concluded that there are separate markets
        for the: (i) production and supply of commissioned TV content; and (ii) licencing
        of pre-produced TV content.20
(29)    With regard to the market for licencing of TV content, the Commission has
        considered that it could be subdivided by content type, in particular: (i) films; (ii)
        sports; and (iii) other TV content (i.e. all non-sport, non-film content); and
        potential sub-segments within these content types. Ultimately, the Commission
        left the exact scope of the product market open.21
(30)    The Commission has also considered further sub-dividing the market for the
        licensing of TV content by exhibition window: (i) SVOD; (ii) TVOD; (iii) PPV;
        (iv) first pay-TV window; (v) second pay-TV window; and (vi) FTA; but left the
        market definition open.22
4.2.1.2. Notifying Party’s view
(31)    The Notifying Party submits that it is not necessary to define the relevant market
        for the production, licensing and acquisition of TV content to assess the
        Transaction, as only Canal + is a supplier of both commissioned and original
        content, while the Target is not active at this level of the television value chain.
19    Form CO, paragraph 161.
20    Commission decision of 24 February 2015 in case M.7194 Liberty Global / Corelio / W&W / De
      Vijver Media, recital 69. See also Commission decision of 16 September 2014 in case M.7282
      Liberty Global/Discovery/All3Media, recital 41 and Commission decision of 9 October 2014 in case
      M.7360 21st Century Fox/Apollo/JV, recital 40.
21    Commission decision of 15 June 2018 in case M.8861 – Comcast/Sky, recitals 38-39; Commission
      decision of 7 April 2017 in case M.8354 – Fox/Sky, recital 67; Commission decision of 21
      December 2011 in case M.6369 HBO/Ziggo/HBO Nederland and 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, recitals
      18–20; Commission decision of 15 April 2013 in case M.6880 Liberty Global/Virgin Media, recital
      19. Moreover, as regards sports, the Commission has also previously considered a distinction
      between football and other sports and further distinctions within football, for example between
      regular football events and football events that are played more intermittently (Commission decision
      of 18 January 2007 in case M.4519 Lagardère/Sportfive, recital 10). As regards films, the
      Commission has considered distinguishing between US-produced films and other films
      (Commission decision of 2 April 2003 in case M.2876 News Corp/Telepiù, recitals 58 and 61).
22    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 30 May
      2018 in case M.7000 Liberty Global/Ziggo, recital 79.
                                                          7
 ---pagebreak---         Therefore, irrespective of the precise market definition, the Transaction would not
        give rise to any horizontal overlap between the Parties. As for the assessment of
        the vertical relationships, the Transaction would not give rise to any competition
        concerns, irrespective of the precise market definition adopted.23
4.2.1.3. The Commission’s assessment
(32)    The results of the market investigation indicate that segmentations adopted in
        prior Commission decisions (by content type and exhibition window as indicated
        above) remain relevant.24
(33)    In any event, for the purpose of this decision, the exact product market definition
        for the production, licensing and acquisition of TV content can be left open, as the
        Transaction does not raise serious doubts as to its compatibility with the internal
        market regardless of whether the market is segmented on the basis of content type
        or exhibition window.
4.2.2. Geographic market definition
4.2.2.1. Commission precedents
(34)    In past decisions, the Commission has defined the possible markets for the
        production, licensing and acquisition of TV content to be either national or
        regional, based on linguistically homogeneous areas.25
4.2.2.2. Notifying Party’s view
(35)    The Notifying Party submits that it is not necessary to define the relevant
        geographic market for the production, licensing and acquisition of TV content to
        assess the Transaction, as irrespective of the precise market definition, the
        Transaction would not give rise to competition concerns.26
4.2.2.3. The Commission’s assessment
(36)    The results of the market investigation confirm that market definitions considered
        in prior Commission decisions, which delineate the markets for the production,
        licensing and acquisition of TV content as either national in scope or as
        potentially broader (or narrower) linguistically homogeneous area, remain
        relevant.27
(37)    In any event, for the purpose of this decision, the exact geographic market
        definition for the production, licensing and acquisition of TV content can be left
23    Form CO, paragraphs 80 and 81.
24    Replies to Questionnaire of 31 July 2019 to TV content providers, TV broadcasters and wholesale
      providers of TV channels as well as providers of retail TV services (“Questionnaire”), questions 3
      and 4.
25    Commission decision of 15 June 2018 in case M.8861 – Comcast/Sky, recitals 42-43; Commission
      decision of 7 April 2017 in case M.8354 – Fox/Sky, recital 74; Commission decision of 21
      December 2010 in case M.5932 News Corp/BSkyB, recitals 73–75; Commission decision of 15
      April 2013 in case M.6880 Liberty Global/Virgin Media, recital 24. Commission decision of 24
      February 2015 in case M.7194 Liberty Global / Corelio / W&W / De Vijver Media, recitals 73-76.
26    Form CO, paragraphs 80 and 81.
27    Replies to Questionnaire, question 9.1.
                                                      8
 ---pagebreak---         open, as the Transaction does not raise serious doubts as to its compatibility with
        the internal market regardless of whether the market is considered to be national
        or by linguistic region.
 4.3. Wholesale supply and acquisition of TV channels
(38)    TV broadcasters package the TV content that they have acquired or produced in-
        house into linear TV channels. Linear TV channels are broadcast to end users
        either on a FTA basis or on a pay-TV basis. This wholesale level is an
        intermediate activity between upstream production, licensing and acquisition of
        TV content, and the downstream retail provision of TV services to customers.
4.3.1. Product market definition
4.3.1.1. Commission precedents
(39)    In previous decisions, the Commission has identified a wholesale market for the
        supply of TV channels. Within that market, the Commission has further identified
        two separate product markets for: (i) FTA TV channels; and (ii) pay-TV
        channels.28 The Commission has further concluded that within the pay-TV
        channel market, there are separate markets for: (i) premium pay-TV channels; and
        (ii) basic pay-TV channels. For the purposes of its assessment, the Commission
        has considered FTA channels to be in the market for basic pay-TV channels.29
(40)    In previous decisions, the Commission also examined a number of other potential
        segmentations, including: (i) genre or thematic content (such as films, sports,
        general entertainment, news, youth, and others);30 (ii) linear channels vs non-
        linear services (VOD, PPV);31 and (iii) the different means of infrastructure used
28    Commission decision of 24 February 2015 in case M.7194 - Liberty Global / Corelio / W&W / De
      Vijver Media, recital 91; Commission decision of 18 July 2007 in case M.4504 - SFR/Télé 2 France,
      recitals 37–40; Commission decision of 21 December 2010 in case M.5932 - News Corp/BskyB,
      recitals 80, 83 and 85; Commission decision of 21 December 2011 in case M.6369 -
      HBO/Ziggo/HBO Nederland, recital 24; Commission decision of 15 April 2013 in case M.6880 -
      Liberty Global/Virgin Media, recital 37.
29    Commission decision of 24 February 2015 in case M.7194 - Liberty Global / Corelio / W&W / De
      Vijver Media, recital 101.
30    Commission decision of 24 February 2015 in case M.7194 - Liberty Global / Corelio / W&W / De
      Vijver Media, recital 92; Commission decision of 2 April 2003 in case M.2876 - Newscorp/Telepiù,
      2 April 2003, recital 76; Commission decision of 18 July 2007 in case M.4504 - SFR/Télé 2 France,
      recitals 41–42; Commission decision of 26 august 2008 in case M.5121 - News Corp/Premiere,
      recital 35; Commission decision of 21 December 2010 in case M.5932 - News Corp/BskyB, recital
      81; Commission decision of 30 May 2018 in case M.7000 - Liberty Global/Ziggo, recital 112.
31    Commission decision of 24 February 2015 in case M.7194 - Liberty Global / Corelio / W&W / De
      Vijver Media, recital 94. Commission decision of 18 July 2007 in case M.4504 - SFR/Télé 2 France,
      recital 43; Commission decision of 26 August 2008 in case M.5121 - News Corp/Premiere, recital
      21.
                                                       9
 ---pagebreak---         for the delivery to the viewer (cable, satellite, terrestrial TV and IPTV). 32 It has
        usually left the market definition open in all these regards.33
4.3.1.2. Notifying Party’s view
(41)    The Notifying Party submits that, for the assessment of the Transaction, it is not
        necessary to adopt a precise definition for the relevant market at the wholesale
        level of the television value chain, as the Transaction would give rise to no or
        minimal horizontal overlaps in the different Member States where the Parties are
        active, irrespective of the precise market definition adopted. Furthermore, no
        vertical concerns could arise from the Transaction, considering also the
        [Information related to Canal + business strategy] relevance of the Parties’
        activity at the wholesale level in the Member States where they are active at the
        retail level, irrespective of any market definition.34
4.3.1.3. The Commission’s assessment
(42)    Most respondents to the market investigation confirm that segmentations
        considered in prior Commission decisions (by FTA as well as basic and premium
        pay-TV, content type and distribution technology as indicated above) remain
        appropriate.35 However, several respondents explain that such delineations are
        becoming increasingly blurred and hard to distinguish in practice as a wide
        variety of operating models are used in the market. A few respondents also point
        to country-specific peculiarities, such as the limited relevance of FTA TV in
        Belgium and the Netherlands.
(43)    In any event, for the purpose of this decision, the exact product market definition
        in relation of the wholesale supply of TV channels can be left open, as the
        Transaction does not raise serious doubts as to its compatibility with the internal
        market regardless of whether the market is segmented on the basis of channel
        type, content, linearity or transmission infrastructure.
32    Commission decision of 24 February 2015 in case M.7194 - Liberty Global / Corelio / W&W / De
      Vijver Media, recital 98; Commission decision of 18 July 2007 in case M.4504 - SFR/Télé 2 France,
      recital 44; Commission decision of 26 August 2008 in case M.5121 - News Corp/Premiere, recital
      22.
33    In Commission decision of 30 May 2018 in case M.7000 Liberty/Ziggo, the Commission concluded
      that, for the purposes of that decision, the market could be segmented in (i) Basic and Premium Pay
      TV channels, and, within the latter, between (ii) Premium Pay TV film channels and Premium Pay
      TV sports channels. Moreover, at least cable, IPTV over DSL, fiber and possibly satellite (DTH)
      were considered part of the same product market ).
34    Form CO, paragraphs 109 and 110.
35    Replies to Questionnaire, questions 5 and 6.
                                                         10
 ---pagebreak--- 4.3.2. Geographic market definition
4.3.2.1. Commission precedents
(44)    In previous decisions, the Commission found the market for the wholesale supply
        of TV channels to be either national in scope,36 sub-national,37 or to cover
        common linguistic regions encompassing more than one Member State.38
4.3.2.2. Notifying Party’s view
(45)    The Notifying Party submits that it is not necessary to determine whether the
        relevant geographic market is limited to each relevant Member States or to
        narrower/larger linguistically homogenous regions, as the Transaction would not
        give rise to competition concerns irrespective of the precise geographic
        definition.39
4.3.2.3. The Commission’s assessment
(46)    The results of the market investigation confirm that prior Commission decisions
        defining the market for the wholesale supply and acquisition of TV channels as
        either national in scope or to potentially comprise a broader (or narrower)
        linguistically homogeneous area remain relevant.40
(47)    In any event, for the purpose of this decision, the exact geographic market
        definition for wholesale supply of TV channels can be left open, as the
        Transaction does not raise serious doubts as to its compatibility with the internal
        market regardless of whether the market is considered as national, sub-national or
        by linguistic region.
 4.4. Retail provision of TV services
4.4.1. Product market definition
4.4.1.1. Commission precedents
(48)    In previous cases the Commission split the retail supply of television services in
        two separate markets: (i) FTA and pay-TV.41 The Commission also considered
        whether pay-TV can be segmented further according to: (ii) linear vs non-linear
36    Commission decision of 21 December 2011 in case M.6369 - HBO/Ziggo/HBO Nederland, recital
      39; Commission decision of 15 April 2013 in case M.6880 - Liberty Global/Virgin Media, recital
      41.
37    Commission decision of 24 February 2015 in case M.7194 Liberty Global / Corelio / W&W / De
      Vijver Media.
38    Commission decision of 15 June 2018 in case M.8861 – Comcast/Sky, recitals 53-54; Commission
      decision of 21 December 2010 in case M.5932 - News Corp/BskyB, recitals 86–88; Commission
      decision of 15 April 2013 in case M.6880 - Liberty Global/Virgin Media.
39    Form CO, paragraphs 109 and 110.
40    Replies to Questionnaire, question 9.2.
41    See for instance the Commission decisions of 18 July 2007 in case M.4504 - SFR/Télé 2 France,
      recital 40, and of 25 June 2008 in case M.5121 - News Corp / Premiere, recital 20. In other cases
      this question has instead been left open (see for instance the Commission decisions of 24 February
      2015 in case M.7194 - Liberty Global / Corelio / W&W / De Vijver Media, recital 119-120, of 25
      June 2008 in case M.5121 - News Corp/Premiere, recitals 15 and 21, and of 30 May 2018 in case
      M.7000 - Liberty Global/Ziggo, recital 135.
                                                        11
 ---pagebreak---         pay-TV services;42 (iii) according to distribution technologies (e.g. cable, satellite,
        or terrestrial);43 and (iv) premium vs basic pay-TV services.44 In recent cases, the
        Commission has left open the market definition with regard to each of these
        potential sub-segments.45
4.4.1.2. Notifying Party’s view
(49)    The Notifying Party submits that, for the assessment of the Transaction, the
        precise product market definition can be left open, as there are no Member States
        where both Parties are active at the retail level. The Notifying Party also submits
        that the question whether the various infrastructures through which pay-TV
        services are delivered are substitutable from the end-consumers’ or pay-TV
        suppliers’ perspective can be left open for the assessment of the Transaction. As
        for the assessment of the vertical relationships, the Transaction would not give
        rise to any competition concerns, irrespective of the precise market definition
        adopted.46
4.4.1.3. The Commission’s assessment
(50)    Most respondents to the market investigation have indicated that the main
        segmentations considered in prior Commission decisions (by FTA and basic and
        premium pay-TV and linear and non-linear distribution as indicated above)
        remain appropriate.47 Nevertheless, several respondents also explain that such
        distinctions have become blurred in practice. Most respondents do not consider
        that it would be relevant to distinguish markets by distribution technology
        because different infrastructures used for the access to retail TV services are
        substitutable.48 A few respondents also point to country-specific peculiarities,
        such as the limited relevance of FTA TV in Belgium and the Netherlands.
(51)    In any event, for the purpose of this decision, the exact product market definition
        in relation of the retail supply of TV services can be left open, as the Transaction
        does not raise serious doubts as to its compatibility with the internal market
        regardless of whether the market is further segmented or not.
42    Commission decision of 24 February 2015 in case M.7194 - Liberty Global / Corelio / W&W / De
      Vijver Media, reictal 124. Commission decision of 25 June 2008 in case M.5121 - News
      Corp/Premiere, recital 21. Commission decision of 30 May 2018 in case M.7000 - Liberty
      Global/Ziggo, recital 135.
43    Commission decision of 24 February 2015 in case M.7194 - Liberty Global / Corelio / W&W / De
      Vijver Media, recital 127. Commission decision of 25 June 2008 in case M.5121 - News
      Corp/Premiere, recital 22; Commission decision of 21 December 2010 in case M.5932 - News
      Corp/BskyB, recital 105. Commission decision of 30 May 2018 in case M.7000 - Liberty
      Global/Ziggo, recital 136.
44    Commission decision of 24 February 2015 in case M.7194 - Liberty Global / Corelio / W&W / De
      Vijver Media, recital 119.
45    Commission decision of 15 June 2018 in case M.8861 – Comcast/Sky, recitals 57-59; Commission
      decision of 7 April 2017 in case M.8354 – Fox/Sky.
46    Form CO, paragraph 161.
47    Replies to Questionnaire, question 7.
48    Replies to Questionnaire, question 8.
                                                     12
 ---pagebreak--- 4.4.2. Geographic market definition
4.4.2.1. Commission precedents
(52)    The Commission has previously considered that the market for the retail
        provision of TV services is either national, or limited to the geographic coverage
        of a supplier's cable network.49
4.4.2.2. Notifying Party’s view
(53)    The Notifying Party submits that, for the assessment of the Transaction, the
        precise geographic market definition can be left open, as there are no Member
        States or narrower regions where both Parties are active at the retail level. As
        regard vertical relationships, the market definition could be left open, as
        irrespective of the precise geographic market definition adopted, the Transaction
        would not give rise to any competition concerns.50
4.4.2.3. The Commission’s assessment
(54)    The results of the market investigation are consistent with the Commission's
        previous findings that the market is either national, or limited to the geographic
        coverage of a supplier's cable network.51
(55)    Therefore, for the purpose of this decision, the Commission considers that the
        relevant market for the retail provision of TV services is either national, or limited
        to the geographic coverage of a supplier's cable network.
5.      COMPETITIVE ASSESSMENT
5.1.    Affected Markets
(56)    According to the information submitted by the Notifying Party, the
        Transaction does not give rise to any horizontally affected markets:52
        (a) in the production, licensing and acquisition of TV content, only Canal + is
              active;
49    Commission decision of 24 February 2015 in case M.7194 - Liberty Global / Corelio / W&W / De
      Vijver Media.
50    Form CO, paragraph 161.
51    Replies to Questionnaire, question 9.3.
52    Where this Decision makes reference to "affected markets", it refers to instances where: for
      horizontal overlaps, both Parties are engaged in business activities in the same relevant market and
      where the concentration will lead to a combined market share of 20% or more; for vertical
      relationships, where one or more of the Parties are engaged in business activities in a relevant
      market, which is upstream or downstream of a relevant market in which any other party to the
      concentration is engaged, and any of their individual or combined market shares at either level is
      30% or more, regardless of whether there is any existing supplier/customer relationship between the
      Parties. See section 6.3. of Annex I (Form CO relating to the notification of a concentration
      pursuant to regulation (EC) No 139/2004) of Commission Implementing Regulation (EU) No
      1269/2013 of 5 December 2013 amending Commission Regulation (EC) No 802/2004
      implementing Council Regulation (EC) No 139/2004 on the control of concentrations between
      undertakings (OJ L 336, 14.12.2013, p. 1-36).
                                                       13
 ---pagebreak---        (b) in the wholesale supply and acquisition of TV channels, the only national
            markets or linguistic regions where both Parties are present are Czechia,
            Romania and Slovakia. However, M7’s activity in those countries is limited
            to the broadcasting of two channels aimed at promoting M7’s retail pay-TV
            offer.53 Canal + is active in those countries as a wholesale distributor of TV
            channels through its subsidiary, Thema, but its market shares remain well
            below 20% in each possible sub-segmentation of the relevant product market
            in each of these Member States;54
       (c) in the retail provision of TV services, there is no horizontal overlap as the
            Parties are active in different geographic markets: Canal + is active in France
            and Poland; M7 is active in Austria, Belgium, Czechia, Germany, Hungary,
            the Netherlands, Romania and Slovakia.55
(57)   The Transaction results in a number of vertical relationships in connection with:
       (a)      Canal +’s activities in (i) the production, licensing and acquisition of TV
                content and (ii) the wholesale supply and acquisition of TV channels, and
       (b)      M7’s activities on the markets for the retail supply of pay-TV services.
(58)   The following tables provide M7’s market shares56 in the retail pay-TV markets,
       in value and volume, in the different national markets in the EEA where the
       Target is active:
53   M7 offers a single channel in Czechia (Skylink 7), Slovakia (Skylink 7) and Romania (Info Focus
     Sat). The sole purpose of these two channels is to promote the premium channels available in M7’s
     local offering. M7 does not purchase any TV content in order to broadcast these channels. It
     displays the content that is available in the TV channels that it wants to promote (Form CO,
     paragraphs 22 and 86).
54   Form CO, paragraphs 130, 150 and 156.
55   In the course of the market investigation, a few respondents expressed concerns regarding the
     possible strengthening of the merged entity’s bargaining position vis-à-vis TV content providers and
     TV broadcasters stemming from its increased geographic footprint in the EEA (replies to
     Questionnaire, question 11). The Commission does not consider that any competition concern can
     arise in this respect. First, M7’s activities with regard to the acquisition of TV content are
     [Information related to the extent of M7’s market presence] limited (as further explained in
     paragraph (81)). Second, with regard to the acquisition of TV channels, the Transaction leads to a
     moderate increase in the Parties’ EEA-wide footprint as Canal + is active in France and Poland
     while M7 is active in Austria, Belgium, Czechia, Germany, Hungary, the Netherlands, Romania and
     Slovakia. However, the fact that the merged entity will acquire TV channels in neighbouring
     geographic markets is unlikely to increase its bargaining power for several reasons: (i) FTA TV
     channels are typically only broadcast on a national basis and not typically broadcast in neighbouring
     markets, (ii) the majority TV channels that are broadcast to audiences in several Member States are
     supplied by large international TV broadcasters, (iii) most TV broadcasters negotiate at the national
     level, which makes it impossible for the merged entity to leverage its presence as a buyer of TV
     channels in neighbouring Member States. With regard to Belgium and France specifically, some of
     the TV channels, which are broadcast for a French audience are typically also available in the
     offering of Belgian retail pay-TV operators (but not vice versa). However, it is highly implausible
     that the addition of M7’s subscriber base of [Information related to the size of M7’s subscribers
     base] subscribers in Belgium to Canal +’ subscriber base of several million in France would have an
     appreciable impact on the merged entity’s bargaining power vis-à-vis the broadcasters of the
     channels in question (Form CO, paragraphs 297-302).
56   The Notifying Party submitted a comprehensive set of M7’s market share estimates for the retail
     supply of pay-TV (including its possible segments) for the last three business years (both by value
     and volume), including the market size, M7’s sales and estimated shares, as well as its competitor’s
                                                      14
 ---pagebreak---          Table 1: Market shares for retail TV services by value (2018)
                    Product
                                   Austria    Belgium    Czechia    Germany     Hungary     Nether.   Romania     Slovakia
                   segments
                   Pay-TV          [0-5]%     [0-5]%    [20-30]%     [0-5]%     [5-10]%    [0-5]%      [0-5]%    [20-30]%
                       Linear      [0-5]%     [0-5]%    [20-30]%     [0-5]%     [5-10]%    [0-5]%      [0-5]%    [20-30]%
Linearity            Non-linear      n/a        n/a        n/a           n/a      n/a        n/a         n/a          n/a
                       Cable          -          -          -             -        -           -          -            -
                      Satellite    [5-10]%     [90-     [70-80]%     [0-5]%    [20-30]%      [90-     [10-20]%   [50-60]%
Transmission
                                              100]%                                         100]%
                     Terrestrial      -        [90-         -             -        -           -          -            -
                                              100]%
                       IPTV           -          -          -        [0-5]%        -       [0-5]%         -            -
                      Premium        n/a        n/a     [10-20]%     [0-5]%       n/a      [0-5]%        n/a     [10-20]%
Content                Basic       [0-5]%     [0-5]%    [20-30]%     [0-5]%     [5-10]%    [5-10]%     [0-5]%    [20-30]%
                        Source: Form CO
         Table 2: Market shares for retail TV services by volume (subscribers) (2018)
                    Product
                                   Austria    Belgium    Czechia    Germany     Hungary     Nether.   Romania     Slovakia
                   segments
                    Pay-TV         [0-5]%     [0-5]%    [30-40]%     [0-5]%     [5-10]%    [0-5]%      [0-5]%    [30-40]%
                       Linear      [0-5]%     [0-5]%    [30-40]%     [0-5]%     [5-10]%    [0-5]%      [0-5]%    [30-40]%
    Linearity        Non-linear      n/a        n/a        n/a           n/a      n/a        n/a         n/a          n/a
                       Cable          -          -          -             -        -           -          -            -
                      Satellite    [5-10]%     [90-     [80-90]%     [0-5]%    [20-30]%      [90-     [10-20]%   [60-70]%
    Transmission
                                              100]%                                         100]%
                     Terrestrial      -        [90-         -             -        -           -          -            -
                                              100]%
                       IPTV           -          -          -        [0-5]%        -       [0-5]%         -            -
                      Premium        n/a        n/a     [10-20]%     [0-5]%       n/a      [0-5]%        n/a     [10-20]%
    Content            Basic       [0-5]%     [0-5]%    [40-50]%     [0-5]%     [5-10]%    [5-10]%     [0-5]%     35.1%
                        Source: Form CO
                       estimated shares. The market shares correspond to M7’s internal estimates based on available
                       market surveys and studies as well as competitors’ financial reports.
                                                                    15
 ---pagebreak--- (59)   On the basis of this data, M7’s market share exceeds 30% in retail pay-TV
       services in Czechia and Slovakia, in volume terms.
(60)   Furthermore, M7’s market share exceeds 30% in the following segments of the
       retail pay-TV market:
       (a)       in Czechia and in Slovakia, in the possible segment of the provision of
                 basic pay-TV services, in volume terms;
       (b)       in Belgium, Czechia, the Netherlands and Slovakia, in the possible
                 segment of the retail provision of pay-TV services by satellite (in value
                 and volume);
       (c)       in Belgium, in the possible segment of the retail provision of pay-TV
                 services by terrestrial TV (in value and volume).
(61)   The vertical link between the licencing of TV content upstream and the wholesale
       supply of television channels downstream does not give rise to any affected
       markets.57 With regard to Canal +’s activities on the upstream market, the
       Notifying Party confirms that it has a market share [Information related to the
       extent of Canal+ market presence] below 30% in all plausible segments in all
       national markets or linguistic regions in which M7 is active on the downstream
       market. M7’s activities as a TV broadcaster in Czechia, Romania and Slovakia
       and as a wholesale distributor of TV channels in Germany are [Information
       related to the extent of M7’s market presence] limited and its market shares
       remain [Information related to the extent of M7’s market presence] below 20% in
       any plausible segments of these markets.58
(62)   Therefore, the only markets vertically affected by the Transaction are the
       following:
       (a)       the upstream markets for the production, licensing and acquisition of TV
                 content and the downstream markets for the retail provision of TV
                 services, in Belgium, Czechia, the Netherlands and Slovakia (and
                 corresponding linguistic regions);
       (b)       the upstream markets for the wholesale supply and acquisition of TV
                 channels and the downstream markets for the retail provision of TV
                 services, in Belgium, Czechia, the Netherlands and Slovakia (and
                 corresponding linguistic regions).
(63)   M7 is only active in the provision of retail pay-TV services. Moreover, in several
       of the relevant Member States, notably in Belgium and in the Netherlands, there
57   Form CO, paragraphs 209-215.
58   In the course of the market investigation, the Commission has received one complaint regarding the
     vertical link between the licencing of TV content by Canal + and the wholesale supply of TV
     channels in Belgium (reply to Questionnaire, question 11). However, the Transaction does not bring
     about such a vertical overlap with regard to Belgium (or the corresponding linguistic regions), as
     M7 is only active as provider of retail pay-TV services but is not active as wholesale distributor of
     TV channels. The potential concern mentioned in the market investigation will thus be addressed in
     Section 5.1.2 regarding M7’s TV content purchases as retail pay-TV provider in Belgium.
                                                      16
 ---pagebreak---         is in any case a limited offer of FTA TV services.59 Therefore, while the
        Transaction gives rise to an affected market for the retail provision of TV
        services, the Commission will assess the impact of the Transaction only on the
        narrower market for the retail provision of pay-TV services.
(64)    M7’s activities in the downstream market for the provision of retail pay-TV
        services relate to at most nationally defined markets. Therefore, the
        Commission’s assessment of vertical effects focusses on the relevant Member
        States. In particular, the Commission notes that M7 is not active as a TV retailer
        in France and the Commission’s assessment covers Belgium and the Netherlands
        in any case. Nevertheless, where relevant, the Commission’s assessment takes
        into account evidence in relation to the linguistically homogenous regions.
(65)    Where there are vertically affected markets, two possible forms of foreclosure
        may arise. The first is where the merger is likely to raise the costs of downstream
        rivals by restricting their access to an important input (input foreclosure). The
        second is where the merger is likely to foreclose upstream rivals by restricting
        their access to a sufficient customer base (customer foreclosure).60
(66)    Section 5.2 assesses the possible input foreclosure concerns and Section 5.3 the
        possible customer foreclosure concerns arising from the Transaction.
 5.2. Input foreclosure
5.2.1. Introduction
(67)    The Transaction will bring about a vertical relationship with regard to the
        production, licensing and acquisition of TV content and the wholesale supply and
        acquisition of TV channels. M7 operates as a purchaser of TV channels (which it
        integrates in its TV retail offers) and, more marginally, of TV content (to provide
        non-linear services to its retail customers) while Canal + is active on the supply-
        side as a producer/licensor of TV content and wholesale provider of TV channels.
(68)    In a merger between companies that operate at different levels of the supply
        chain, anti-competitive effects may arise when the merged entity’s behaviour
        could limit or eliminate competitor’s access to supplies – input foreclosure.
(69)    In assessing the likelihood of an anticompetitive input foreclosure scenario, the
        Commission examines: (i) whether the merged entity would have post-
        Transaction the ability to substantially foreclose access to input; (ii) whether the
        merged entity would have the incentive to do so; and (iii) whether a foreclosure
        strategy would have a significant detrimental impact on effective competition
        downstream.61
59    Commission decision of 30 May 2018 in case M.7000 Liberty Global/Ziggo, recital 135;
      Commission decision of 24 February 2015 in case M.8944 Liberty Global/Corelio/W&W/De Vijver
      Media, recital 117.
60    Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the
      control of concentrations between undertakings ("Non-Horizontal Merger Guidelines"), OJ C 265,
      18.10.2008, p. 11, paragraph 30.
61    See Non-Horizontal Merger Guidelines, paragraph 32.
                                                     17
 ---pagebreak--- 5.2.2. Production, licensing and acquisition of TV content
(70)    This section assesses the risk of input foreclosure with regard to TV content as a
        result of the Transaction, in the four affected national markets (Belgium, Czechia,
        the Netherlands and Slovakia) as well as the corresponding linguistic regions.
5.2.2.1. Notifying Party’s view
(71)    The Notifying Party submits that it would not have the ability to engage in input
        foreclosure post-Transaction vis-à-vis providers of retail pay-TV services as it
        would not be typical for these operators, such as M7, to purchase content directly
        from content producers. In fact, mainly TV broadcasters purchase content in order
        to package them into TV channels, while retail pay-TV operators purchase TV
        channels (and not “unpackaged” TV content), which they then supply to
        consumers. It is even less typical for retail pay-TV providers to commission TV
        content.62
(72)    Consistently, Canal +’s sales of TV content directly to the retail level of the
        television value chain are [Information related to Canal +’ content sales]. During
        the period 2016 to 2018 Canal + sold [Information related to Canal +’ content
        sales] to retail pay-TV operators in Czechia, the Netherlands and Slovakia, while
        Canal + sold [Information related to Canal +’ content sales and customers] in
        Belgium in [Information related to Canal +’ content sales].63 Canal+ also licenced
        [Information related to Canal +’ content sales and customers], for which the
        geographic scope of the licence covered some or all of the four Member States
        concerned.64
(73)    Therefore, in the absence of any significant sales to retail pay-TV operators, the
        merged entity could not be considered to have any means to engage in input
        foreclosure regarding TV content with respect to its downstream retail pay-TV
        competitors.65
5.2.2.2. Commission’s assessment
                                 (a) Ability to engage in input foreclosure
(74)    In the market for the production, licensing and acquisition of TV content, Canal +
        is active both as a producer of original content and as an acquirer of broadcasting
        rights from other studios. As regards the potential segmentation according to
        content type, Canal + is active in the film segment (both with produced and
        acquired films and TV series) and to a more limited extent in the segment of other
        TV content (with acquired content), mostly with documentaries. As regards the
        segmentation according to the exhibition window, Canal + is present in each of
        the following relevant segments: (i) SVOD; (ii) TVOD; (iii) PPV; (iv) first pay-
        TV window; (v) second pay-TV window; and (vi) free-to-air (“FTA”).66 In
        Belgium, Czechia, the Netherlands and Slovakia, Canal + licenses films
62    Form CO, paragraphs 84 and 313.
63    Form CO, paragraph 314.
64    Form CO, paragraph 318.
65    Form CO, paragraph 315.
66    Form CO, paragraphs 91 and 92.
                                                  18
 ---pagebreak---        [Information related to the modus operandi of Canal + with regard to content
       licensing] while it has generated [Information related to Canal +’ sales associated
       to the licensing of content] from other TV content in the period 2016-2018.67
(75)   The Commission notes that the Notifying Party has not provided specific market
       shares, as Canal + does not track its market share in this sector in any geographic
       area outside of France, its home market. However, on the basis of market
       intelligence and internal estimates, the Notifying Party estimates that its market
       shares are [Information related to the extent of Canal +’ market presence] below
       10% (in the last three calendar years of 2016, 2017 and 2018) in all plausible sub-
       segments in Belgium, Czechia, the Netherlands and Slovakia (including
       linguistically homogenous geographic areas encompassing several Member
       States, i.e., France and the French speaking parts of Belgium as well as the
       Netherlands and the Dutch speaking parts of Belgium).68
(76)   Canal +’s competitors in the film segment and in all of the exhibition window
       segments are mostly the same across all EU Member States. Indeed, in Czechia,
       the Netherlands and Slovakia, Canal +’s main competitors are Disney/Fox,
       Warner, Sony, Universal and Paramount/Viacom, while in Belgium, Canal +’s
       main competitors are Gaumont, Pathé, Disney/Fox, Universal and Warner.69,70
(77)   Consistent with the description of the TV value chain in Section 4.1, the vast
       majority of Canal +’s sales of TV content are made to TV broadcasters, which are
       active on the market for the wholesale supply and acquisition of TV channels,
       and not directly to retail providers of TV services, such as M7. In fact, Canal +’s
       sales of TV content directly to retail providers of TV services have been
       [Information related to Canal +’ TV content sales] in Belgium and [Information
       related to Canal +’ TV content sales] in Czechia, the Netherlands and Slovakia in
       the last three years. Canal +’s role as provider of TV content to M7’s competitors
       at the retail level is therefore marginal.
(78)   Finally, a large majority of respondents to the market investigation considers that
       the Transaction will have a neutral impact on competition in the TV value chain
       in Belgium, Czechia, the Netherlands and Slovakia.71
(79)   Given the merged entity’s limited market position with regard to the production,
       licensing and acquisition of TV content in Belgium, Czechia, the Netherlands and
       Slovakia and the corresponding linguistic areas, in particular with respect to retail
       TV operators, the Commission considers that the merged entity would not have
       the ability to foreclose its downstream rivals.
67   Notifying Party’s reply to RFI 3, question 3.
68   The Notifying Party has estimated its market shares in the affected markets mainly through a
     comparison with its market shares in its home country, France, and on the basis of third parties’ data
     on cinema viewing in other EU countries (Form CO, paragraphs 97-104). Even in France, where
     Canal +’s position would be the strongest, its market shares are well below 10% (in most segments).
69   Notifying Party’s reply to RFI 3, question 3.
70   The Notifying Party submits that it does not have more detailed information on competitors. In fact,
     as Canal + has no local distribution arm, its market intelligence regarding competitors is limited as
     well.
71   Replies to Questionnaire, question 11.
                                                       19
 ---pagebreak---                                    (b) Incentive to engage in input foreclosure
(80)  Very few respondents to the market investigation consider that the merged entity
      would have the incentive to exclusively supply some of its TV content to M7 and
      not to other providers of retail pay-TV services, or to otherwise degrade the terms
      and conditions on which it provides access.72 Specifically, these respondents fear
      that the merged entity may try to impose licensing agreements covering several
      Member States, such as Belgium and France.
(81)  The Commission notes that M7 plays a [Information related to M7’s business
      strategy] role as acquirer of TV content, limited to the acquisition of rights for
      catch-up services and VOD catalogues as add-ons to its linear pay-TV packages.
      M7’s VOD catalogue is not available to customers without a subscription to M7’s
      pay-TV service.73 Therefore, Canal + is likely to continue to rely on licensing
      revenues from acquirers other than M7.
(82)  Furthermore, considering the [Information related to Canal +’ business strategy]
      relevance of Canal +’s TV content offer in Belgium with a market share
      [Information related to the extent of Canal +’ market presence] below 10% in all
      plausible markets and segments and the significant position of alternative content
      suppliers (see paragraph (76)), foreclosing access to Canal +'s content would not
      significantly affect the merged entity's downstream revenues. Therefore, any
      additional retail revenues would not outweigh the likely upstream losses in the
      supply of TV content. Specifically with regard to France, the Commission notes
      that the merged entity's downstream footprint and thus incentives remain
      unchanged as M7 is not active as a retail provider of TV services in France.
(83)  The territorial scope of the licence for TV content is determined on a case-by-case
      basis and depends on the requirements of the licensees. Both TV broadcasters and
      distributors of TV channels (as well as TV retailers) will generally licence the TV
      content for the territories in which they are active.74 This is also evidenced by
      information provided by the Notifying Party which illustrates that licensing
      agreements can cover a single Member State, several Member states or can be
      worldwide in scope. In any event, the Transaction does not affect the merged
      entity's incentive to enter into single- or multi-territory licensing agreements with
      third parties in light of M7's marginal position as an acquirer of TV content. More
      generally, since Canal + does not generally sell TV content directly to TV
      retailers, whether for a single Member State or for several territories with the
      same agreement, the acquisition of M7’s retail TV operations will not have an
      impact on Canal + TV content licensing strategy.75
(84)  The merged entity is therefore unlikely to have the incentive to foreclose
      competing TV services retailers from its TV content in Belgium, Czechia, the
      Netherlands and Slovakia and in the corresponding linguistic regions.
72   Replies to Questionnaire, question 11.1.
73   Form CO, paragraph 230.
74   Notifying Party’s reply to RFI 3, question 1.
75   Notifying Party’s reply to RFI 3, question 4.
                                                   20
 ---pagebreak---                                  (c) Impact on effective competition
(85)   Regardless of whether the merged entity has either the ability or the incentive to
       foreclose competing downstream rivals with regard to the supply of TV content,
       such strategy would not have an appreciable impact on competition.
(86)   The role of Canal + as provider of TV content in each of Belgium, Czechia, the
       Netherlands and Slovakia is marginal, in particular with respect to sales to retail
       TV providers.
(87)   Moreover, many alternative providers of TV content would remain active in the
       markets concerned (see paragraph (76)). Competing providers of TV retail
       services would therefore continue to have access to a large variety of TV content.
                                 (d) Conclusion
(88)   In light of the above, the Commission considers that the Transaction does not give
       rise to serious doubts with regard to its compatibility with the internal market as a
       result of input foreclosure effects with regard to TV content to the detriment of
       competing providers of TV retail services in Belgium, Czechia, the Netherlands
       and Slovakia as well as in the corresponding linguistic regions.
5.2.3. Wholesale supply of TV channels
(89)   This section assesses the risk of input foreclosure with regard to TV channels as a
       result of the Transaction, in the four affected national markets (Belgium, Czechia,
       the Netherlands and Slovakia) as well as the corresponding linguistic regions.
                     5.2.3.1.   The Notifying Party's view
(90)   The Notifying Party submits that the merged entity would not have the ability to
       foreclose downstream retail pay-TV competitors. It argues that none of the
       channels produced or distributed by Canal + are indispensable and could therefore
       be considered to confer the ability on the merged entity to engage in a vertical
       input foreclosure strategy.76 As a TV broadcaster, Canal + sells only a limited
       number of its own pay-TV channels in Belgium.77 As a wholesale supplier of
       third-party TV channels, Canal + is active via its subsidiary Thema worldwide,
       including in Belgium, Czechia, the Netherlands and Slovakia. Thema typically
       distributes TV channels outside their home market as well as [Information related
       to Canal +’ business strategy] thematic channels.78
(91)   In addition, the merged entity would not have any incentive to engage in an input
       foreclosure strategy, as it would not be profitable for Canal + to refuse to supply
       its own channels to pay-TV retailers other than M7, because the potential increase
       in M7’s customer base could not compensate for the loss of actual or potential
       subscribers on other retail platforms.79
76    Form CO, paragraph 246.
77    Form CO, paragraphs 251-262.
78    Form CO, paragraphs 263-275.
79    Form CO, paragraph 290.
                                                 21
 ---pagebreak---                       5.2.3.2. The Commission's assessment
                                   (a) Ability to engage in input foreclosure
       Belgium
(92)   In the market for the wholesale supply of pay-TV channels, Canal + is present
       both in basic pay-TV and premium pay-TV.80 It is present in the following
       thematic categories: news, sports, youth, factual and general entertainment. The
       channels sold by Canal + are linear channels, some of which include catch-up
       services. In terms of the infrastructure used by the retail pay-TV operator, the
       customers of Canal + use all distribution technology (cable, satellite, terrestrial,
       IPTV and OTT).81
(93)   The total revenues generated in Belgium in 2018 by Canal + as TV broadcaster
       and channel wholesale TV distributor are about [Information related to Canal +’
       revenues]. On the basis of this [Information related to Canal +’ revenues] amount,
       the Notifying Party estimates that its share in the wholesale supply of TV
       channels and in each possible segment where it is present is [Information related
       to the extent of Canal +’ market presence] below 10% in the last three years
       (2016, 2017, 2018).82
(94)   The Commission notes that Canal +’s limited market position at the wholesale
       level of the television value chain in Belgium is further demonstrated by the fact
       that the market report of the Belgian Conseil Supérieur de l’Audiovisuel does not
       cover any of the channels that Canal + broadcasts (or Thema distributes, see
       paragraph (96) below) in Belgium.83 Even in the geographic area encompassing
       both Belgium and France, Canal + estimates that its market share in the market
       for the supply of TV channels remains below 30% in all plausible sub-segments.84
(95)   The Notifying Party has also provided data on Canal +’s channels and channels’
       packages that are available in the retail pay-TV operators’ premium packages. In
       Belgium, Canal + mainly sells its TV channels to [Information related to Canal +’
       customers] and [Information related to Canal +’ customers], two TV retailers that
       offer the same channel package under the brand [Information related to Canal +’
       customers], and [Information related to Canal +’ customers], a TV broadcaster
       and distributor that offers channel packages, consisting of its own and third-party
       channels, to subscribers of other retail pay-TV operators.85,86 Therefore, BeTV is
80   The channels Piwi +, Inforsport + and CStar are sold to retail pay-TV operators [Information related
     to Canal + business strategy with regard to the sale of its channels] and they form part of the basic
     pay-TV offer of those retailers. CNews is [Information related to Canal + business strategy with
     regard to the sale of its channels]. The following channels are sold as part of premium pay-TV
     packages in Belgium: Ciné +, Comédie +, Planète +, Planète + A&E, Planète + C&I, Seasons and
     Télétoon +. Furthermore, Canal + broadcasts two channels, A+ and Nollywood TV, that are
     distributed by Thema in Belgium.
81   Form CO, paragraphs 119-125; Notifying Party’s reply to RFI 3, question 5.
82   Form CO, paragraph 121.
83   Form CO, paragraph 121.
84   Form CO, paragraph 125.
85   Notifying Party’s reply to RFI 3, question 6.
86   Since March 2019, Canal + has been licensing a limited number of these channels to M7 in
     Belgium. Canal + has projected revenues of [Information related to Canal + revenues] from the sale
     of these channels to M7 in Belgium in 2019 (Notifying Party’s reply to RFI 3, question 8).
                                                      22
 ---pagebreak---        not a direct competitor of M7. The data provided shows that the number of
       subscribers who opted for packages including Canal +’s channels are limited
       compared with the total subscriber base of these respective operators.87 This
       suggests that those channels are not essential for providers of TV services to
       effectively compete in the downstream market.
(96)   With particular regard to the TV channels distributed in Belgium by Canal +’s
       subsidiary Thema, the Commission notes that Thema has exclusive rights for only
       [Information related to Thema’s exclusive distribution rights] out of [Information
       related to Thema’s exclusive distribution rights] channels for which it has
       distribution rights in Belgium. Moreover, Thema sold a single channel (i.e.,
       RTNC) that it distributes on an exclusive basis in Belgium. 88 In addition, Thema
       distributed two of Canal +'s channels, A+ and Nollywood TV, in Belgium.89 The
       number of subscribers to the package including these channels is [Information
       related to the number of subscribers to the package including Canal +’
       channels].90 Thema sold rights to [Information related to the number of
       subscribers to the package including Canal +’ channels] in Belgium, including
       distribution on exclusive and non-exclusive basis. The only channel currently sold
       to M7 is Stingray iConcerts, for which Thema [Information related to Thema’s
       distribution rights].91 Furthermore, the Commission notes that the TV channels
       for which Canal + has distribution rights in Belgium are mainly foreign TV
       channels and [Information related to Canal +’ business strategy] thematic
       channels with limited potential demand.
(97)   Therefore, the channels broadcast by Canal + and Thema in Belgium are not
       essential for providers of TV services to effectively compete in the downstream
       market and thus do not allow the merged entity to engage in input foreclosure vis-
       à-vis M7’s competitors.
(98)   Moreover, several important competitors would remain active and would continue
       to offer TV channels in each of the concerned segments, such as: Disney Cinema,
       beCiné, Movies & Series, TCM Cinéma, Action and Sundance TV for films;
       Comedy Central, RTL9, MTV, MCM and E Entertainment for entertainment;
       Eurosport, Zoom, Eleven Sports, Sport 10, Be Sport, Extreme Sports and
       Motorvision TV for sport; Nickelodeon, Disney Channel, Disney Junior, Disney
       XD, Disney Cinema HD, Cartoon Network, Studio 100, Baby TV, Boomerang for
       children; Discovery, National Geographic, National Geographic Wild, Viceland,
       Science et Vie TV, Histoire for documentaries; and Euronews, France 24, LCI,
       and BFM TV for news.
87   Form CO, paragraphs 250-262.
88   RTNC is a general entertainment TV channel of the national broadcaster of the Democratic
     Republic of the Congo.
89   A+ and Nollywood TV are TV channels dedicated to African TV film and series.
90   Form CO, paragraphs 269-272.
91   Stingray iConcerts is a television channel broadcasting full-length live musical performances from
     various genres of music (Form CO, paragraph 283; Notifying Party’s reply to RFI 3, question 8).
                                                     23
 ---pagebreak--- (99)  Finally, a large majority of respondents to the market investigation considers that
      the Transaction will have a neutral impact on competition in the TV value chain
      in Belgium.92
      Czechia
(100) In the market for the wholesale supply of pay-TV channels in Czechia, Canal + is
      present only as a wholesale distributor of TV channels through its subsidiary
      Thema. Thema has distribution rights in Czechia for about [Information related to
      Thema’s distribution rights] channels and has exclusive distribution rights for
      [Information related to Thema’s distribution rights] among them.93 In the years
      2016-2018, Thema sold [Information related to Thema’s sales] channels to Czech
      pay-TV operators, notably [Information related to Thema’s distribution rights],
      for which it [Information related to Thema’s distribution rights]. The only channel
      currently sold to M7 is Stingray iConcerts.94 The total revenues generated by
      Thema in Czechia in 2018 amounted to about [Information related to revenues
      generated by Thema].95
(101) The current activity of Canal + in Czechia in the wholesale TV market is
      therefore [Information related the extent of Canal +’market presence].
      Furthermore, the TV channels for which Canal + has distribution rights in
      Czechia are mainly foreign TV channels and [Information related to Canal +’
      business strategy] thematic channels with limited potential demand.
(102) Therefore, the channels broadcast by Canal + and Thema in Czechia are not
      essential for providers of TV services to effectively compete in the downstream
      market and thus do not allow the merged entity to engage in input foreclosure vis-
      à-vis M7’s competitors.
(103) Finally, a large majority of respondents to the market investigation considers that
      the Transaction will have a neutral impact on competition in the TV value chain
      in Czechia.96
      Netherlands
(104) In the market for the wholesale supply of pay-TV channels in the Netherlands,
      Canal + is present only as a wholesale distributor of TV channels through its
      subsidiary Thema. Thema has distribution rights in the Netherlands for about
      [Information related to Thema’s distribution rights] channels and has exclusive
      distribution rights for [Information related to Thema’s distribution rights] among
      them.97 In the years 2016-2018, Thema sold [Information related to Thema’s
      sales] channels to Dutch pay-TV operators and a foreign country package
      including 5-10 channels, depending on the year and the operator. Thema sold a
      single channel (i.e., Zen TV) [Information related to Thema’s distribution
92   Replies to Questionnaire, question 11.2.
93   Form CO, paragraph 266.
94   Form CO, paragraph 283; Notifying Party’s reply to RFI 3, question 8.
95   Form CO, paragraphs 283 and 286.
96   Replies to Questionnaire, question 11.3.
97   Form CO, paragraph 266.
                                                    24
 ---pagebreak---        rights].98 The only channel currently sold to M7 is Stingray iConcerts. 99 The total
       revenues generated by Thema in the Netherlands in 2018 amounted to about EUR
       [Information related to Thema’s revenues].100
(105) The current activity of Canal + in the Netherlands in the wholesale TV market is
       therefore [Information related the extent of Canal +’market presence].
       Furthermore, the Commission notes that the TV channels for which Canal + has
       distribution rights in the Netherlands are mainly foreign TV channels and
       [Information related to Canal +’ business strategy] thematic channels with limited
       potential demand.
(106) Moreover, Zen TV competes with several channels, such as BBC Entertainment,
       Discovery, Travelxp, Voyage, Viceland, E!, Fashion TV, arte, My Cuisine and
       Science et Vie TV.101
(107) Therefore, the channels broadcast by Canal + and Thema in the Netherlands are
       not essential for providers of TV services to effectively compete in the
       downstream market and thus do not allow the merged entity to engage in input
       foreclosure vis-à-vis M7’s competitors.
(108) Finally, a large majority of respondents to the market investigation considers that
       the Transaction will have a neutral impact on competition in the TV value chain
       in the Netherlands.102
       Slovakia
(109) In the market for the wholesale supply of pay-TV channels in Slovakia, Canal + is
       present only as a wholesale distributor of TV channels through its subsidiary
       Thema. Thema has distribution rights in Slovakia for about [Information related
       to Thema’s distribution rights] channels and has exclusive distribution rights for
       [Information related to Thema’s distribution rights] among them.103 In the years
       2016-2018, Thema sold [Information related to Thema’s sales] channels to
       Slovakian pay-TV operators. Thema sold only [Information related to Thema’s
       sales] (i.e., Zen TV and Luxe TV) [Information related to Thema’s distribution
       rights].104 The only channel currently sold to M7 is Stingray iConcerts. 105 The
       total revenues generated by Thema in Slovakia in 2018 amounted to about EUR
       [Information related to the revenues generated by Thema].106
98   My Zen TV is a lifestyle channel offering practical advice, experiences and entertainment content
     on light sports, home, health, cooking, flowers, travel, beauty and real-life stories (Form CO,
     paragraphs 276-278). [Contractual information].
99   Form CO, paragraph 283; Notifying Party’s reply to RFI 3, question 8.
100  Form CO, paragraph 285.
101  Notifying Party’s reply to RFI 3, question 7.
102  Replies to Questionnaire, question 11.3.
103  Form CO, paragraph 266.
104  My Zen TV and Luxe TV (Form CO, paragraphs 279-282). For a description of Zen TV, see
     footnote 98 above. Luxe TV is a worldwide TV channel broadcasting content related to “luxuries”.
     The content displayed is usually in the format of documentaries, magazines and news programs.
     Similarly to My Zen TV, Thema [Information related to Thema’s distribution rights].
105  Form CO, paragraph 283; Notifying Party’s reply to RFI 3, question 8.
106  Form CO, paragraph 286.
                                                     25
 ---pagebreak--- (110) The current activity of Canal + in Slovakia in the wholesale TV market is
      therefore [Information related the extent of Canal +’market presence].
      Furthermore, the Commission notes that the TV channels for which Canal + has
      distribution rights in Slovakia are mainly foreign TV channels and [Information
      related to Canal +’ business strategy] thematic channels with limited potential
      demand.
(111) Moreover, like Zen TV, Luxe TV competes with several channels, such as
      Viceland, E! and Fashion TV.107
(112) Therefore, the channels broadcast by Canal + and Thema in Slovakia are not
      essential for providers of TV services to effectively compete in the downstream
      market and thus do not allow the merged entity to engage in input foreclosure vis-
      à-vis M7’s competitors.
(113) Finally, a large majority of respondents to the market investigation considers that
      the Transaction will have a neutral impact on competition in the TV value chain
      in Slovakia.108
      Conclusion
(114) Based on the above, the Commission considers that the merged entity is unlikely
      to have the ability to foreclose competing pay-TV retailers in Belgium, Czechia,
      the Netherlands and Slovakia post-Transaction.
                                   (b) Incentive to engage in input foreclosure
(115) The large majority of respondents to the market investigation consider that, post-
      Transaction, the merged entity would not have the incentive to exclusively supply
      its channels to M7 or to otherwise degrade the terms and conditions on which it
      provides access.109 Nevertheless, a few respondents fear that the merged entity
      may try to impose licensing agreements covering several Member States, for
      instance Belgium and France. Several respondents refer to Canal +’s business
      strategy in France to accumulate exclusive distribution rights.
(116) The Commission notes that, at present, Canal +’s revenues from TV broadcasting
      are largely accounted for by acquirers other than M7 in each of the concerned
      Member States. M7 is projected to generate approximately [0-5]% of Canal +’s
      revenues from the licensing of its TV channels in Belgium in 2019 (taking into
      account the latest distribution agreements) and generated less than [0-5]% of
      Thema’s revenues from the distribution of TV channels in Belgium, Czechia, the
      Netherlands and Slovakia in 2018.110 An input foreclosing strategy would
      seriously affect the vast majority of the merged entity’s revenues. Therefore,
      Canal + is likely to continue to rely on licensing revenues from acquirers other
      than M7.
107  Notifying Party’s reply to RFI 3, question 7.
108  Replies to Questionnaire, question 11.4.
109  Replies to Questionnaire, question 11.1.
110  Notifying Party’s reply to RFI 3, question 8.
                                                   26
 ---pagebreak--- (117) Thema’s business model is based on the distribution of third parties’ TV channels
      outside their home market as well as of [Information related to Thema’s business
      strategy] thematic channels. TV broadcasters rely on Thema to sell their channels
      in countries in which they are not present and have no in-depth knowledge of the
      market. The objective of the TV broadcasters distributed by Thema is therefore to
      ensure the widest possible distribution of their channels and [Information related
      to Thema’s business strategy] for their channels. It follows that [Information
      related to Thema’s business strategy on distribution agreements].111
(118) Furthermore, considering the [Information related the extent of Canal +’market
      presence] relevance of Canal +’s TV channels offer in the concerned Member
      States and the significant position of alternative channel suppliers (see paragraphs
      (92) and (114)), it is unlikely that input foreclosure would result in material
      diversion from rivals to M7 at the downstream level. Therefore, additional retail
      revenues could not outweigh the likely wholesale losses.
(119) Specifically with regard to France, the Commission notes that the merged entity's
      downstream footprint and thus incentives remain unchanged as M7 is not active
      as TV retailer in France.
(120) With regard to multi-territory licensing, the Commission notes that the
      Transaction does not affect the merged entity's incentive to enter into single- or
      multi-territory licensing agreements with third parties. Currently, it is common in
      the sector that negotiations take place separately for each Member State.112
      Specifically with regard to multi-territory agreements concerning the linguistic
      regions affected by the Transaction, the Commission notes the following:
      (a)      Belgium and the Netherlands: Canal + does not broadcast TV channels in
               the Netherlands or to a Dutch speaking audience, which could be subject
               to multi-territory agreements covering Belgium and the Netherlands;
      (b)      Belgium and France: While Canal + broadcasts TV channels in France and
               Belgium and, post-Transaction, Canal + will be present at the retail level
               of the television value chain in both France (Canal +) and Belgium (M7),
               the Transaction will not have an impact on Canal +’s incentive to enter
               into multi-territory agreements covering France and Belgium with
               competing TV retailers as no TV retailer is present in both France and
               Belgium. Therefore, there can be no demand for Canal +’s channels
               covering both territories.113
(121) As a result, the merged entity is unlikely to have the incentive to foreclose
      competing providers of TV retail services from its TV channels in the relevant
      Member States and corresponding linguistic regions.
                                   (c) Impact on effective competition
(122) Even in the hypothetical situation that the merged entity were to have either the
      ability or the incentive to foreclose competing downstream rivals with regard to
111  Notifying Party’s reply to RFI 3, question 9.
112  Form CO, paragraph 40; Notifying Party’s reply to RFI 3, question 2.
113  Notifying Party’s reply to RFI 3, question 4.
                                                    27
 ---pagebreak---       the wholesale supply of pay-TV channels, such a strategy would not have an
      appreciable impact on competition.
(123) As detailed above in paragraphs (92) to (114), Canal +’s activities on the market
      for the wholesale supply of TV channels as TV broadcaster and wholesale
      supplier of TV channels are limited in Belgium, and [Information related to the
      extent of Canal +’market presence] in Czechia, the Netherlands and Slovakia. In
      any case, there are several providers of pay-TV channels that compete with Canal
      +'s channels in all relevant segments will remain active post-Transaction.
      Therefore, even if the merged entity were to adopt a foreclosure strategy,
      downstream rivals would continue to have access to sufficient alternative inputs.
                                (d) Conclusion
(124) In light of the above, the Commission considers that the Transaction does not give
      rise to serious doubts with regard to its compatibility with the internal market as a
      result of input foreclosure effects with regard to TV channels to the detriment of
      competing retail providers of TV retail services in Belgium, Czechia, the
      Netherlands and Slovakia as well as in the corresponding linguistic regions.
 5.3. Customer foreclosure
           5.3.1.   Introduction
(125) The Transaction will bring about a vertical relationship with regard to the
      production, licensing and acquisition of TV content and the wholesale supply of
      TV channels. M7 operates as a purchaser of TV channels (which it integrates in
      its TV retail offers) and, more marginally, of TV content (to provide non-linear
      services to its retail customers) while Canal + is active as a producer/licensor of
      TV content and wholesale provider of TV channels.
(126) According to the Non-Horizontal Merger Guidelines a downstream firm being
      part of a vertical merger may refuse to buy inputs from its rivals input suppliers as
      a result of the Transaction. This incentive to foreclose access to customers
      downstream may result from the vertical integration of an upstream supplier with
      an important customer downstream. Due to their downstream presence, the
      merged entity may foreclose its upstream rivals' access to an important customer
      base. In turn this can inhibit upstream rivals to effectively compete.114
(127) In television markets, different forms of customer foreclosure may occur. First: (i)
      intermediate TV channel wholesalers; or (ii) downstream providers of retail TV
      services may cease to purchase TV content from upstream rivals in the market for
      the supply of TV content. Second, downstream providers of retail TV services
      may cease to buy TV channels from their rivals at the intermediate level for the
      wholesale supply of TV channels.
           5.3.2.   Supply of TV content
(128) This section assesses whether post-Transaction, the merged entity would have the
      ability and incentive to cease acquiring TV content from its upstream rivals to be
114  Non-Horizontal Merger Guidelines, paragraph 58.
                                                   28
 ---pagebreak---       sold by the merged entity directly to end users. It then assesses what the overall
      likely effect on competition would be.
                    5.3.2.1.   Notifying Party's views
(129) The Notifying Party argues that, post-Transaction, it would neither have the
      ability nor the incentive to foreclose its upstream rivals in the market for the
      supply of TV content for the following reasons.
(130) First, the market share of the merged entity in the downstream market for the
      provision of retail TV services would fall below the level that could be considered
      to be sufficient for it to engage in a customer foreclosure strategy. In Czechia and
      Slovakia, M7’s market share would be above 30% in volume (subscribers) terms
      only, but below 30% in value terms. In Belgium and the Netherlands, market
      shares would be higher than 30% only in a hypothetical segmentation per
      distribution infrastructure. A market share higher than 30% in the segment of
      satellite retail pay-TV and terrestrial pay-TV bears no relevance regarding the
      merged entity’s ability to engage in customer foreclosure.115
(131) Second, the merged entity would not have the incentive to engage in customer
      foreclosure. M7’s commercial success is based on being able to offer a diversified
      package of TV content. The content supplied by the merged entity would by no
      means be sufficient to ensure that it could compete robustly at the downstream
      level.116
(132) Third, the value of M7’s purchases of TV content directly from suppliers at the
      content level of the television value chain is negligible and would not be
      sufficient to have any impact in the market, let alone to allow the merged entity to
      pursue customer foreclosure.117
(133) The merged entity’s inability to engage in customer foreclosure would be further
      confirmed by the presence of larger international online content retailers, such as
      Netflix, Amazon Prime or Apple, that represent an important outlet for original
      content at the retail level.118
                    5.3.2.2.   The Commission’s assessment
               (a) Ability to engage in customer foreclosure
(134) When considering whether the merged entity would have the ability to foreclose
      access to downstream markets, the Commission examines whether there are
      sufficient economic alternatives in the downstream market for upstream rivals to
      sell their output.
(135) In this respect and considering the position of the merged entity at the retail level,
      the Commission notes that:
115  Form CO, paragraphs 320-323.
116  Form CO, paragraph 324-325.
117  Form CO, paragraph 326.
118  Form CO, paragraph 327.
                                                29
 ---pagebreak---       (a)     in Belgium, M7 is the only retail pay-TV provider offering satellite and
              terrestrial TV services. However, considering all technologies, M7 has a
              [Information related to the extent of Canal +’market presence] market
              share, lower than [5-10]% in all plausible sub-segments. There are other
              relevant retail pay-TV operators holding much higher market shares in the
              market for the provision of retail pay-TV services (Telenet 40-50%,
              Proximus 20-35% and Voo 10-20%, range by volume and value) which
              are active in all plausible sub-segments (by linearity and content);
      (b)     in Czechia, M7 has a market share of [20-30]% (value) and [30-40]%
              (volume) in the market for the provision of retail pay-TV services, which
              is slightly higher in the basic pay-TV segment and significantly higher in
              the satellite segment ([70-80]% (value) and [80-90]% (volume)). There are
              other relevant retail pay-TV operators with significant market shares both
              in value and volume terms: UPC Cable (20-30%), O2 (10-20%) and T-
              Mobile (0-10%). Moreover, M7’s market share has been declining in the
              period 2016-2018 while competitors’ shares have increased;
      (c)     in the Netherlands, M7 is the main operator in the satellite segment, with a
              market share of [90-100]% in value and volume terms. However,
              considering all technologies, M7 has a [Information related to the extent of
              M7’s market presence] market share, inferior to [5-10]% in all plausible
              sub-segments. There are other relevant retail pay-TV operators with much
              higher market shares in the market for the provision of retail pay-TV
              services (Ziggo 50-60%, KPN 20-35%) which are active in all plausible
              sub-segments (by linearity and content);
      (d)     in Slovakia, M7 has a market share of [20-30]% (value) and [30-40]%
              (volume) in the market for the provision of retail pay-TV services, which
              is slightly higher in the basic pay-TV segment and significantly higher in
              the satellite segment ([50-60]% (value) and [60-70]% (volume)). There are
              other relevant retail pay-TV operators with significant market shares:
              Slovak Telekom (30-50%,) and UPC Cable (10-20%). Moreover, M7’s
              market share has been declining in the period 2016-2018 while
              competitors’ shares have increased.119
(136) Therefore, the Commission considers that, post-Transaction, the merged entity
      will not have a significant degree of market power in the downstream market for
      the retail provision of TV services (or in any plausible sub-segment thereof) in the
      Member States concerned.
(137) In any case, the Commission notes that, irrespective of its position in the markets
      for the provision of retail TV services, the role of M7 as direct acquirer of TV
      content is [Information related to the extent of M7’s market presence and role as
      direct role as direct acquirer of TV content]. As already explained at paragraph
      (81), M7 offers catch-up services as well as a VOD library to its customers in the
      countries where it is active as a pay-TV retailer. With regard to its catch-up
      services, M7 does not purchase these rights from suppliers at the content level of
      the television supply chain but rather from TV broadcasters and wholesale TV
      distributors. With regard to its VOD library, the uptake of this offering is limited
119  Form CO, Tables 1 and 2; Annex 6.3.4.
                                                30
 ---pagebreak---       and thus M7’s licensing fees are marginal. In 2018, M7 paid licensing fees to (i)
      [Information related to the payment of licensing fees] for access to its film
      catalogue (EUR [Information related to the payment of licensing fees]) and (ii)
      content licensors for its customers’ TVOD purchases (EUR [Information related
      to the payment of licensing fees]).120 Therefore, M7’s market shares mentioned
      above in the relevant retail TV markets are not an adequate indicator of M7’s role
      as direct purchaser of TV content.
(138) In general, the main acquirers of TV content are TV broadcasters and not
      traditional retail TV providers as M7. At the retail level, large international online
      content pay TV-retailers, such as Netflix, Amazon Prime or Apple, that are active
      mainly in the provision of non-linear services and normally directly acquire the
      TV content for their libraries play an increasing role as acquirers of TV content.
      These players, active worldwide, represent a new, important customer group of
      acquirers for TV content producers.121
(139) Finally, none of the respondents to the market investigation raised concerns
      related to risks of customer foreclosure with respect to competing providers of TV
      content in Belgium, Czechia, the Netherlands and Slovakia.122
(140) Given the merged entity’s marginal role as acquirer of TV content in Belgium,
      Czechia, the Netherlands and Slovakia, and the presence of relevant alternatives,
      the Commission considers that it would not have the ability to foreclose its
      upstream rivals in the market for the production, licensing and acquisition of TV
      content.
                (b) Incentive to engage in customer foreclosure
(141) The Commission does not consider that the merged entity would have the
      incentive to foreclose access to downstream markets by reducing purchases from
      upstream rivals for the following reasons.
(142) The attractiveness of a pay-TV operator's offer to consumers is based on the
      richness of the bundle of content and channels broadcast through its platform.123
      On this basis, the merged entity would not have the incentive to cease purchasing
      TV content from upstream competitors. As mentioned above in paragraph (77),
      Canal +’s sales of TV content to TV retailers have been [Information related the
      extent of Canal +’ sales] in Belgium and [Information related the extent of Canal
      +’ sales] in Czechia, the Netherlands and Slovakia in the last three years. Canal
      +’s role as provider of TV content at the retail level is [Information related to the
      extent of Canal +’market presence] and the merged entity would not have an
      incentive to restrict its VOD offering to Canal +’s content.
120  Form CO, paragraph 326.
121  Form CO, paragraph 327.
122  Replies to Questionnaire, question 11.2-11.5.
123  See for instance Commission decision of 15 June 2018 in case M.8861 – Comcast/Sky, recital 206;
     Commission decision of 21 December 2010 in case M.5932 – NewsCorp/BskyB, paragraph 154;
     Commission decision of 16 September 2014 in case M.7282 Liberty Global/Discovery/All3Media,
     paragraph 68.
                                                   31
 ---pagebreak--- (143) The merged entity will therefore not have the incentive to foreclose competing
       TV content providers in Belgium, the Netherlands, Czechia and Slovakia and
       corresponding linguistic regions.
               (c) Impact on competition
(144) A broad range of alternative TV broadcasters and content platform operators
       compete to acquire TV content in each of the relevant Member States and
       linguistic regions, each of which will continue to be credible purchasers of TV
       content post-Transaction thus allowing rival upstream licensors to continue to
       operate efficiently. Moreover, considering the marginal role of M7 as acquirer of
       TV content, a customer foreclosure strategy would not have any appreciable
       impact on TV content providers. In light of this, the Commission does not
       consider that a potential customer foreclosure strategy for content would have a
       material effect on competition in Belgium, Czechia, the Netherlands and Slovakia
       and the corresponding linguistic regions.
               (d) Conclusion
(145) In light of the above, the Commission concludes that the Transaction does not
       give rise to serious doubts with regard to its compatibility with the internal market
       as a result of customer foreclosure for the supply of TV content in Belgium,
       Czechia, the Netherlands and Slovakia as well as in the corresponding linguistic
       regions.
5.3.3. Wholesale supply of TV channels
(146) This section assesses whether post-Transaction, the merged entity would have the
       ability and incentive to cease acquiring TV channels from its upstream rivals and
       assesses what the overall likely effect on competition would be.
                     5.3.3.1.   The Notifying Party's view
(147) The Notifying Party argues that, post-Transaction, there would not be any
       customer foreclosure concerns for the following reasons.
(148) First, the market share of the merged entity in the downstream market would fall
       below the level that could be considered to be sufficient for it to engage in a
       customer foreclosure strategy. In Czechia and Slovakia, M7’s market share would
       be above 30% in volume (subscribers) terms only, but below 30% in value terms.
       In Belgium and the Netherlands market shares would be higher than 30% only in
       a hypothetical segmentation per infrastructure. A market share of higher than 30%
       in the segment of satellite retail pay-TV and terrestrial pay-TV bears no relevance
       regarding the merged entity’s ability to engage in customer foreclosure.124
(149) Second, the merged entity would not have the incentive to engage in customer
       foreclosure. Such a strategy would be immediately defeated by the fact that the
       merged entity’s wholesale offering cannot replace the channels that M7 currently
       purchases from wholesalers in Belgium, the Czechia, the Netherlands and
       Slovakia. There are no local channels or particularly important channels in the
124   Form CO, paragraphs 291-294.
                                                32
 ---pagebreak---       merged entity’s offering. Thema, in particular, focuses on offering international
      and thematic channels. Without offering local channels, the merged entity would
      not be able to continue to compete in the downstream market.125
                      5.3.3.2. The Commission's assessment
               (a) Ability to engage in input foreclosure
(150) At the outset, for customer foreclosure to be a concern, the Transaction must
      involve a company with a significant degree of market power as a customer in the
      downstream market.126
(151) As discussed in paragraphs (135) to (136), the merged entity will not have a
      significant degree of market power in the downstream market for the retail
      provision of TV services (or in any plausible sub-segments) in the Member States
      concerned. The Notifying Party confirms that its position with regard to the
      acquisition of TV channels is accurately reflected by its downstream market share
      in value terms.127
(152) With regard to Belgium and the Netherlands, M7’s market share in the market for
      the provision of pay-TV services is smaller than [5-10]% and [5-10]%,
      respectively, in all plausible segments and there are several significant
      competitors active on these markets: Telenet, Proximus and Voo in Belgium;
      Ziggo and KPN in the Netherlands. Therefore, the merged entity would not have
      the ability to harm upstream rivals based on partial (e.g., reduction of carriage
      fees) or total (e.g., termination of carriage agreements) foreclosure strategy. Even
      if the merged entity attempted to engage in a foreclosure strategy, such strategy
      would mainly concern the satellite and terrestrial segment and upstream rivals
      would have the ability to continue and potentially increase their sales with respect
      to other market segments (cable, IPTV) which represent the large majority of
      subscribers in Belgium and the Netherlands. Even if the market was segmented
      on the basis of distribution technology, sales in a different market segment would
      also qualify as economic alternative for upstream rivals to sell their output.128
(153) With respect to Czechia and Slovakia, the satellite segment represents a larger
      part of the market for the provision of pay-TV services and consequently M7’s
      overall market share is higher, in the range of 25-40% in Czechia and 20-30% in
      Slovakia. There are several significant competitors active on these markets: UPC
      Cable, O2 and T-Mobile in Czechia; Slovak Telekom and UPC Cable in Slovakia.
      Therefore, the merged entity would not have the ability to harm upstream rivals
      based on partial (e.g., reduction of carriage fees) or total (e.g., termination of
      carriage agreements) foreclosure strategy. Even if the merged entity attempted to
      engage in a foreclosure strategy, upstream rivals would have the ability to
      continue and potentially increase their sales with respect to other market segments
      (cable, IPTV, terrestrial) which represent more than half of the subscribers in
      Czechia and Slovakia.
125  Form CO, paragraph 295.
126  Non-Horizontal Merger Guidelines, paragraph 35.
127  Notifying Party’s reply to RFI 3, question 11.
128  Non-Horizontal Merger Guidelines, paragraph 66.
                                                    33
 ---pagebreak--- (154) In any case, as discussed in Section 5.1.3, the TV channels supplied by Canal +
      and Thema do not constitute particularly important inputs for the provision of
      retail pay-TV services in Belgium, Czechia, the Netherlands and Slovakia and
      many of the distributed channels are niche products. Therefore, the merged entity
      is unlikely to be able to use the threat of switching to Canal +’s product offering
      in negotiations with competing upstream providers of TV channels.
(155) Finally, none of the respondents to the market investigation raised concerns
      related to risks of customer foreclosure with respect to competing providers of TV
      channels in Belgium, Czechia, the Netherlands and Slovakia.129
(156) In light of the above, the Commission considers that the merged entity would lack
      the ability to engage in total or partial customer foreclosure strategies.
                (b) Incentive to engage in input foreclosure
(157) The Commission does not consider that the merged entity would have the
      incentive to foreclose access to downstream markets by reducing purchases from
      upstream for the following reasons.
(158) Retail pay-TV providers have to offer a diverse portfolio of channels in order to
      maximise their attractiveness for a large number of viewers. The risk of broad
      foreclosure strategy not targeting closely competing channels with Canal +'s
      channels, but foreclosing also channels that are not close competitors to Canal +'s
      channels can therefore be excluded at the outset.130
(159) The Commission notes that it is unlikely that the TV channels supplied by
      Canal + are particularly attractive (as discussed in Section 5.1.3) or close
      substitutes of the TV channels currently offered in Belgium, Czechia, the
      Netherlands and Slovakia.
(160) As confirmed by the Notifying Party, the merged entity could not replace M7’s
      current wholesale TV distributors with channels supplied by Canal + and Thema,
      as without offering the many local channels (none of which are supplied by the
      merged entity), it would not be able to continue to compete effectively in the
      downstream market. With regard to the channels distributed by Thema, the
      Commission notes that Thema’s business model is based on the distribution of
      third parties’ TV channels outside their home market as well as of [Information
      related to Canal +’ business strategy] thematic channels. Such channels are
      unlikely to replace significant parts of M7’s channel portfolio in Belgium,
      Czechia, the Netherlands and Slovakia. With regard to Canal +’s channels sold in
      Belgium, the Commission considers that these are also not suitable to replace a
      significant number of TV channels in M7’s current portfolio.
(161) In fact, in order to compete effectively in the downstream market with an
      attractive offering, M7 currently procures channels from [Information related to
      M7’s business strategy] different TV wholesalers in Belgium, [Information
      related to M7’s business strategy] different wholesalers in the Netherlands,
      [Information related to M7’s business strategy] wholesalers in the Czechia and
129  Replies to Questionnaire, question 11.2-11.5.
130  Commission decision of 15 June 2018 in case M.8861 – Comcast/Sky, recital 237.
                                                   34
 ---pagebreak---       [Information related to M7’s business strategy] wholesalers in Slovakia.131 In
      light of the merged entity’s limited TV channel offering, the merged entity is
      unlikely to have an incentive to significantly reduce the number of carriage
      agreements with wholesalers in each of the concerned Member States.
(162) To the contrary, the merged entity faces possible costs if it were to stop procuring
      certain TV channels from upstream rivals as such strategy would risk to
      significantly reduce the attractiveness of the merged entity’s downstream
      offering.132
(163) The Commission therefore considers that the merged entity will not have the
      incentive to foreclose competing TV content providers in the relevant Member
      States.
              (c) Impact on effective competition
(164) Given that there are multiple alternatives to the merged entity to which TV
      broadcasters can supply their TV channels (see paragraphs (152) and (153)), TV
      broadcasters and wholesalers of TV channels are protected from a foreclosure
      strategy. A broad range of retail pay-TV providers compete to acquire TV
      channels, each of which will continue to be credible purchasers of TV channels
      post-Transaction thus allowing rival upstream broadcasters and wholesalers to
      continue to operate efficiently. Moreover, given the merged entity’s limited TV
      channel portfolio in Belgium, Czechia, the Netherlands and Slovakia, the merged
      entity is unlikely to risk the loss of downstream customers and related revenues
      by removing third parties’ TV channels from its current channel portfolio and
      thus effectively reducing the attractiveness of its retail pay-TV service.
(165) On this basis, the Commission does not consider that a hypothetical customer
      foreclosure strategy for TV channels would have any material effect on
      competition in Belgium, Czechia, the Netherlands and Slovakia (as well as the
      corresponding linguistic regions).
              (d) Conclusion
(166) In light of the above, the Commission concludes that the Transaction does not
      give rise to serious doubts with regard to its compatibility with the internal market
      as a result of customer foreclosure for the wholesale supply of TV channels in
      Belgium, Czechia, the Netherlands and Slovakia.
131  Form CO, paragraph 296.
132  Non-Horizontal Merger Guidelines, paragraph 68.
                                                   35
 ---pagebreak--- 6.    CONCLUSION
(167) For the above reasons, the European Commission has decided not to oppose the
      notified operation and to declare it compatible with the internal market and with
      the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of
      the Merger Regulation and Article 57 of the EEA Agreement.
                                                   For the Commission
                                                   (Signed)
                                                   Margrethe VESTAGER
                                                   Member of the Commission
                                             36