CELEX: 32018M8785
Language: en
Date: 2018-11-06 00:00:00
Title: Commission Decision of 06/11/2018 declaring a concentration to be compatible with the common market (Case No COMP/M.8785 - The Walt Disney Company / Twenty-First Century Fox, Inc.) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                Brussels, 6.11.2018
                                                                C(2018)7466
  In the published version of this decision, some
  information has been omitted pursuant to                               PUBLIC VERSION
  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  has been replaced by ranges of figures or a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.8785 – The Walt Disney Company / Twenty-First Century
                    Fox
                    Commission decision pursuant to Article 6(1)(b) in conjunction with
                    Article 6(2) of Council Regulation No 139/20041 and Article 57 of the
                    Agreement on the European Economic Area2
Dear Sir or Madam,
(1)       On 14 September 2018, the European Commission received notification of a
          proposed concentration pursuant to Article 4 of the Merger Regulation by which
          The Walt Disney Company ("TWDC", USA) acquires within the meaning of
          Article 3(1)(b) of the Merger Regulation sole control of parts of Twenty-First
          Century Fox, Inc. ("Fox", USA) ("the Transaction").3 TWDC is hereinafter
          referred to as the "Notifying Party", and TWDC and Fox are hereinafter referred
          to as the "Parties".
1.        THE PARTIES
(2)       TWDC is primarily active in the production and theatrical distribution of films,
          the supply/licensing of audio-visual content, the operation and wholesale supply
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 338, 21.09.2018, p. 27.
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---         of TV channels, consumer products, books and magazines, the provision of live
        entertainment, and the licensing of music. It also owns and operates a theme park
        in the EEA, Disneyland Paris, provides cruises through the Disney Cruise Line,
        and offers travel packages. TWDC is organized into four business segments:
        (i) direct-to-consumer and international; (ii) parks, experiences and consumer
        products; (iii) media networks; and (iv) studio entertainment.
(3)     Fox is primarily active in the theatrical distribution of films, the supply/licensing
        of audio-visual content, and the operation and wholesale supply of TV channels.
        Fox is a diversified global media company with operations in three main industry
        segments: cable network programming, television ("TV") and filmed
        entertainment.
2.      THE CONCENTRATION
(4)     On 13 December 2017, TWDC and Fox entered into an agreement whereby
        TWDC would acquire certain assets of Fox4, including the Twentieth Century
        Fox Film and Television studios, along with cable and international TV
        businesses and Fox's stake in Sky plc ("Sky"). On 20 June 2018, TWDC and Fox
        entered into an amended and restated agreement and plan of merger, increasing
        the purchase value from approximately USD 52.4 billion to USD 71.3 billion.
(5)     The Transaction also takes place against the backdrop of Fox’s and Comcast
        Corporation's ("Comcast") attempts to acquire control over Sky. Comcast won the
        bidding war with Fox with an offer of 17.28 pounds per share for a total of
        USD 39 billion (against Fox's offer of 15.67 pounds per share).5 Comcast’s offer
        is conditional upon shareholders accounting for 50% +1 of the voting rights in
        Sky tendering their shares. Moreover, the City Code on Takeovers and Mergers
        prohibits Fox (and TWDC, as a party deemed to be "acting in concert" with Fox)
        from posting a new bid for Sky within 12 months of its current bid lapsing.6
        Finally, Fox completed the sale of its shares in Sky to Comcast on
        9 October 2018.7 Therefore the Commission assesses the Proposed Transaction
        only consisting of the acquisition of sole control by Disney over Fox excluding
        Sky from the perimeter of the transaction.
3.      EU DIMENSION
(6)     The undertakings concerned have a combined aggregate world-wide turnover of
        more than EUR 5 000 million8 (TWDC: EUR 49 943 million;
4   The assets that do not form part of the Transaction are a portfolio of Fox's news, sports, and broadcast
    businesses, including the Fox News Channel, Fox Business Network, Fox Broadcasting Company, Fox
    Sports, Fox Television Stations Group, and sports cable networks FS1, FS2, Fox Deportes, and Big
    Ten Network, and certain other assets. These will be grouped in a newly listed company that will be
    spun off to its shareholders.
5   See: http://www.thetakeoverpanel.org.uk/publication/view/2018-16-sky-plc.
6   At the time of the notification, Fox owned a 39% stake in Sky and had made an offer to acquire the
    remaining 61%. However, that stake did not confer Fox control over Sky. See Note on Sky Auction of
    27 September 2018. Fox's bid lapsed on 6 October 2018 (Reply to question 1 of RFI 19).
7   Reply to question 1 of RFI 19.
8   Turnover calculated in accordance with Article 5 of the Merger Regulation.
                                                         2
 ---pagebreak---         Fox: EUR 26 149 million). Each of them has an EU-wide turnover in excess of
        EUR 250 million (TWDC: EUR […] million; Fox: EUR […] million), 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.
4.      RELEVANT MARKETS
4.1.    Introduction
(7)     The Parties' activities mainly overlap in the audio-visual sector. Additional
        overlaps and vertical relationships arise in other areas, including the supply of
        advertising space, merchandising, live entertainment, music, theme parks, and
        travel. However, in the EEA horizontally and vertically affected markets only
        arise in the following areas:
            a. Production and distribution of films for theatrical exhibition;
            b. Distribution of home entertainment content;
            c. Licensing of audio-visual content for TV services;
            d. Wholesale supply of TV channels;
            e. Provision of retail audio-visual services.
4.2.    The theatrical release value chain
(8)     The theatrical value chain is comprised of different stages, starting with the
        production of films, then their distribution to exhibitors and finally their
        exhibition to the audience.
(9)     Production activities sit at the top of the audio-visual supply chain. Film studios
        produce films in a number of ways, including various forms of cooperation with
        and acquisitions from other production companies. Film production involves a
        number of operations such as collecting financing, developing scripts, casting
        actors and directors, shooting etc.9
(10)    Distribution of films is directly downstream from production and takes place after
        a film is completed. Producers either carry out the distribution of their films to
        exhibitors internally, through their own distributing arm, or they license the rights
        to distribute their films to exhibitors to third-party distributors. Such third-party
        distributors can be either independent distributors or, in some cases, the
        distribution arm of another producer. The market for distribution of films for
        theatrical exhibition is further discussed below in Section 4.4.
(11)    Exhibition of films lies directly downstream from distribution and is the final
        stage of the theatrical release of a film. Theatrical exhibitors, commonly referred
        to as "movie cinemas", are the point where films are "consumed" (viewed) by the
        final consumers, i.e. the audience. Neither the Parties nor any of their competitors
9   See Form CO, Chapter 1A, paragraph 3.
                                                  3
 ---pagebreak---        in the market for the production of films for theatrical exhibition are active in this
       segment of the value chain.
(12)   Starting from the end, exhibitors set the ticket prices final consumers pay for
       admission to the cinemas. Although the contractual relationships between, on the
       one hand, distributors and exhibitors and, on the other hand, producers and
       distributors can vary significantly, the general rule is the following.
(13)   Distributors negotiate with exhibitors (i) the terms of exhibition, the main ones
       being the number of screens a film will be exhibited on and the length of the
       exhibition window; and (ii) the price of distribution which takes the form of a
       revenue sharing agreement between distributors and exhibitors, called the "rental
       fee". Typically an exhibitor retains approximately 50% of net box office revenues
       on the week of release of a film and the exhibitor's share increases for each
       consecutive week a film is shown. This is the case both when distribution takes
       place through third-party distributors as well as when it takes place through the
       distribution arm of a vertically integrated producer.
(14)   When it comes to the relationship between distributors and producers there are
       two main variants. In the case of major film producing studios, distributors retain
       a distribution fee and remit the rest of their box office revenue share to the
       producer. The exact nature of the distribution fee (fixed or variable or a
       combination of both, scalable or not) is subject to the negotiations between the
       contracting parties. Marketing and promotion activities will usually, but not
       always, be arranged, and the corresponding costs covered, by the producer.
       Distributors bare little to no financial risk in these cases. Alternatively,
       distributors may acquire the exhibition rights of a film for a certain price (again
       fixed or variable or a combination of both, scalable or not, subject to
       negotiations), which is usually the case vis-à-vis smaller independent studios, and
       subsequently retain the entirety of the distribution revenue share. In this case,
       normally the distributor arranges and pays for any marketing and promotion
       activities. This variant entails financial risks for distributors with the upside of
       significant financial rewards in case the film proves to be a major box office
       success.
(15)   The Parties are active in the production of films for theatrical exhibition (release)
       and the direct distribution of these films to exhibitors in some Member States,
       while in others they engage in licensing of distribution rights to third-party
       distributors.
4.3.   Production and licensing of distribution rights of films for theatrical
       exhibition
4.3.1. Product market definition
(16)   The Notifying Party submits that a single product market exists encompassing the
       production and acquisition of films for theatrical release. The Notifying Party
       further submits that a distinct market exists for the distribution of films to
       exhibitors separate from the market for the production of films. The Notifying
       Party considers that no further segmentation of this product market is warranted.
(17)   In previous decisions, the Commission has considered the question of whether
       production/acquisition and distribution of films for theatrical release constitute a
                                                 4
 ---pagebreak---        single or two or more separate product markets and while in some cases
       ultimately left the question open10 in others found that the production and
       distribution of films for theatrical release constitute two separate markets.11
(18)   The Commission has further considered, but ultimately left the question open,
       whether a distinction needs to be drawn between films produced by US studios
       and films produced by non-US studios.12
(19)   The Commission has not previously assessed the scope of the producers' activities
       with respect to the licensing of distribution rights to third-party distributors. The
       Commission notes however that simply producing a film cannot constitute a
       market before a market-based exchange, such as the distribution of a film, takes
       place. The market investigation has not provided clear support either in favour or
       against the view that licensing of distribution rights to distributors and direct
       distribution to exhibitors constitute two separate product markets.
(20)   The results of the market investigation support the view that production and
       distribution of films for theatrical release constitute two separate product
       markets.13
(21)   On the issue of whether a distinction should be drawn between films produced by
       US studios and films produced by non-US studios the results of the market
       investigation are inconclusive with most distributors and exhibitors considering
       that the question is irrelevant since every film represents a unique offering that is
       not substitutable by other films and with the opinion of producers being split in
       half.14
(22)   In light of the above, the Commission considers that, for the purpose of this
       Decision, the production and licensing of distribution rights to third-party
       distributors of films for theatrical release constitutes a relevant product market.
       The Commission also takes the conservative view that licensing of distribution
       rights to third-party distributors constitutes a product market separate from the
       distribution of films to exhibitors, given that it entails different commercial
       activities consisting of marketing, promoting films etc. carried out by different
       players, with the exhibitors being the distributors' customers. The question
       whether the market for the production and licensing of films for theatrical release
       should be further segmented based on whether the films were produced by US or
       non-US studios can be left open, since the Transaction does not raise serious
       doubts as to its compatibility with the internal market under any plausible market
       definition.
10 Commission decision of 20 December 2012 in Case M.6791 - The Walt Disney Company/Lucasfilm;
   Commission decision of 13 July 2010 in Case M.5579 - Comcast/NBC Universal.
11 Commission decision of 14 June 2013 in Case M.6866 - Time Warner/CME ; Commission decision of
   21 September 1998 in Case M.1219 - Seagram/Polygram.
12 Commission Decision of 30 March 2005 in Case M.3595 - Sony/MGM.
13 Replies to Questionnaire Q1 to Film Producers of 17 September 2018, question 4; replies to
   questionnaire Q2 to Distributors of 17 September 2018; replies to questionnaire Q6 to Distributors of
   17 September 2018; replies to Questionnaire Q3 to Exhibitors of 17 September 2018.
14 Replies to Questionnaire Q1 to Film Producers of 17 September 2018, question 7; replies to
   Questionnaire Q2 to Distributors of 17 September 2018, questions 6; replies to Questionnaire Q6 to
   Distributors of 17 September 2018; replies to Questionnaire Q3 to Exhibitors of 17 September 2018.
                                                       5
 ---pagebreak--- 4.3.2. Geographic market definition
(23)    The Notifying Party submits that the geographic scope of the market for the
        production and supply of films is at least EEA-wide and most likely global in
        scope.
(24)    In past decisions, the Commission found the geographic market for the production
        of films for theatrical release to likely be at least EEA-wide but ultimately left the
        question open.15
(25)    The market investigation in the present case has however shown that the licensing
        of distribution rights of films for theatrical release, in other words the relationship
        between producers and distributors that the Notifying Party refers to as supply, is
        more often than not national.16
(26)    In light of the above, the Commission considers that, for the purpose of this
        Decision, the relevant geographic market for the production and licensing of
        distribution rights of films for theatrical release is national in scope.
4.4.    Distribution to exhibitors of films for theatrical exhibition
(27)    As explained in Section 4.2 above, theatrical distribution follows the production
        of a film and can be done internally, by players that are integrated through the
        value chain from production to distribution to exhibitors, or through external
        distributors to whom producers license the distribution rights of their films.
(28)    The Parties are vertically integrated and carry out the distribution of their own
        films in some Member States: both Parties self-distribute in Austria, Belgium &
        Luxembourg, France, Germany, Italy, Spain, Sweden and the UK & Ireland. In
        addition, TWDC also distributes its own films in Denmark, Finland,
        Liechtenstein, Netherlands, Poland and Norway. Elsewhere, the Parties rely on
        third party distributors. They also carry out the distribution of other studios' films
        in certain Member States, as will be explained in more detail below in
        Section 5.3.2.
4.4.1. Product market definition
(29)    At the level of the distribution of films to exhibitors, as is for the production of
        films (see Section 4.3), the Notifying Party argues that no further sub-
        segmentation is applicable: neither (i) by country of production, given that
        different stages of production may take place in several countries for a variety of
        factors, nor (ii) between films produced by US producers or non-US producers
        since the origin of films is unrelated to their success and the distribution strategy
        is the same. In essence, all films compete equally for screen space.
15  Commission Decision of 20 December 2012 in Case M.6791 - The Walt Disney Company / Lucasfilm,
    at para. 59; Commission Decision of 13 July 2010 in Case M.5779 - Comcast / NBC Universal, at
    para. 53.
16 Replies to Questionnaire 1 to Producers of 17 September 2018, question 17; replies to Questionnaire
    Q2 to Distributors of 17 September 2018, question 19; replies to Questionnaire Q6 to Distributors of
    17 September 2018.
                                                      6
 ---pagebreak--- (30)    As mentioned above, in previous decisions the Commission considered a distinct
        market for the theatrical distribution of films, different from the production of
        films. It also assessed whether a segmentation between US films and non-US
        films was applicable but left the exact product market definition open.17
(31)    In line with the views submitted with regard to the market for the production of
        films as set forth above (see paragraph (21)), distributors' views on whether films
        from US producers and non-US producers are substitutable at distribution level
        were divided. Distributors explained that US producers generally release larger
        budget films which are more likely to become blockbusters, however, they also
        stated that in the EEA local productions are numerous and often successful at
        national level. In addition, most distributors distribute both, films from US
        producers as well as local productions, and all films compete for space with
        exhibitors, which screen a variety of films and select them in a way as to ensure
        diversity.18
(32)    In light of the above, the Commission considers that, for the purpose of this
        Decision, the production of films for theatrical release and the distribution of
        films for theatrical release constitute two separate product markets. The question
        whether the market for the distribution of films for theatrical release should be
        further segmented based on whether the films were produced by US or non-US
        studios can be left open, since the Transaction does not raise serious doubts as to
        its compatibility with the internal market under any plausible market definition.
4.4.2. Geographic market definition
(33)    The Notifying Party submits that the geographic scope for the market of
        distribution of films for theatrical release is at least national.
(34)    The Commission has previously considered the relevant geographic market for
        theatrical distribution to be national or at most regional in scope, based on
        considerations such as language differences or the fact that distribution is often
        carried out on a national basis.19
(35)    The market investigation has confirmed that the distribution of films for
        exhibition is carried out at national level, regardless of considering the
        distribution of all films or US and non-US films. Most of the distributors
        confirmed that they are generally active only in one Member State with different
        distributors present in each Member State. This is also consistent with the fact
        that producers mostly licence the distribution rights for their films on a national
        basis or at most per linguistic region, and the same films are not released in all
        Member States.20
17  Commission decision of 30 March 2005 in Case M.3595 - Sony/MGM, para.11.
18  Replies to Questionnaire Q2 to Distributors of 17 September 2018, questions 4 to 6; replies to
    Questionnaire Q6 to Distributors of 17 September 2018.
19 Commission decision of 20 December 2012 in Case M.6791 - The Walt Disney Company/Lucasfilm,
    paras 57 and 59; Commission decision of 13 October 2000 in Case M.2050 -
    Vivendi/Canal+/Seagram, para. 16; Commission decision of 21 September 1998 in Case M.1219 -
    Seagram/Polygram, para 53.
20 Replies to Questionnaire Q2 to Distributors of 17 September 2018, questions 14 to 20; replies to
    Questionnaire Q6 to Distributors of 17 September 2018.
                                                      7
 ---pagebreak--- (36) In light of the above, the Commission considers that, for the purpose of this
     Decision, the relevant geographic market for the distribution of films for
     theatrical release is likely to be national in scope, regardless of the exact product
     market. In any event, the Commission considers that for the purpose of this
     Decision the exact geographic market definition can be left open as the
     Transaction does not raise serious doubts as to its compatibility with the internal
     market under any plausible market definition.
4.5. Distribution of home entertainment content
(37) After they leave cinemas, films and other audio-visual content (such as TV series)
     are distributed for "home entertainment", in the form of physical and/or digital
     products (e.g. electronic sell-through "EST") or are also distributed in the
     subscription video on demand ("SVOD"), transactional video on demand
     ("TVOD") and pay-per-view ("PPV") window in the TV markets.
(38) "Home entertainment" refers to the provision of copies of films for consumers to
     buy or rent and watch at their convenience. Home entertainment products used to
     be available exclusively in physical formats (such as DVDs and Blu-ray discs,
     which succeeded video tapes), but are now increasingly distributed in electronic
     form. With digital purchases, consumers can download a digital copy of the film
     "to own", or acquire unlimited rights to stream the content from a digital platform
     or virtual storage locker. This window continues indefinitely, and remains open as
     long as there is consumer interest in purchasing the film.
(39) TWDC and Fox supply or license their home entertainment content (films and
     television programmes) to third party wholesale distributors in physical format
     (DVD and Blu-ray Discs) and to third party retailers in digital formats
     (transactional VOD (TVOD), electronic sell-through (EST)) across the EEA.
(40) TWDC distributes its physical home entertainment films directly to retailers in
     the following countries: Austria; Belgium; Denmark; Finland; France; Germany;
     Italy; Luxembourg, the Netherlands; Norway; Spain; Sweden; the UK and
     Ireland. TWDC distributes its content through third party distributors in the other
     EEA countries, namely: Estonia, Latvia, Lithuania, Bulgaria, Croatia, Slovenia,
     Czech Republic, Slovakia, Greece, Cyprus, Iceland, Poland, Portugal, Romania
     and Hungary. With regards to other TV content, TWDC distributes it in all EEA
     countries except Bulgaria, Liechtenstein and Malta.
(41) Fox distributes its physical home entertainment films directly to retailers in the
     following countries: Austria; Belgium; Denmark; Finland; France; Germany;
     Italy; Luxembourg, the Netherlands; Norway; Spain; Sweden; the UK and
     Ireland. Fox distributes its content through third party distributors in the other
     EEA countries, namely: Estonia, Latvia, Lithuania, Bulgaria, Croatia, Slovenia,
     Czech Republic, Slovakia, Greece, Cyprus, Iceland, Poland, Portugal, Romania
     and Hungary. With regards to other TV content, Fox distributes it in all EEA
     countries except Malta.
(42) TWDC and Fox license their digital home entertainment films directly to retailers
     across all EEA countries. With regards to other TV content, such as TV-series,
     Fox licenses its digital home entertainment content across all EEA countries
     while TWDC is only active in Austria, France, Germany and the UK.
                                               8
 ---pagebreak--- 4.5.1. Product market definition
(43)    The Notifying Party submits that, due to the increasing convergence between the
        home entertainment and television markets, it is not relevant to distinguish the
        distribution of audio-visual content for home entertainment from the distribution
        of the same content in the TV markets. Moreover, the Notifying Party submits
        that, it is not relevant to delineate the market for distribution of home
        entertainment content by genre, release window, or country of production.
(44)    In previous decisions, the Commission has distinguished between the licensing
        and supply of home entertainment content for physical exploitation and for digital
        exploitation.21 The Commission has also considered, but ultimately left open,
        whether the market should be segmented by type of content (such as films, TV
        series, and other content, e.g. documentaries and concerts), sell-through and
        rental, and motion picture new releases and catalogue. 22
(45)    In Time Warner/CME, the Commission also distinguished between different
        levels in the value chain, which are different for physical and digital home
        entertainment products. However, the Commission left open whether the retail
        distribution of home entertainment content should be further segmented between
        physical and digital products. 23
(46)    With regards to a possible segmentation of home entertainment content on the
        basis of the different type of distribution channel (physical or digital), most of the
        respondents to the market investigation indicated that physical or digital home
        entertainment are substitutable from a customer perspective. However some
        respondents indicated that the two should be considered as complements since
        physical and digital home entertainment target different consumer groups.
        Moreover, providers of physical content would not be able to impose a constraint
        on providers of digital content. Physical content requires the cost of a DVD,
        packaging, and delivery (if ordered online). None of these costs exist for digital
        delivery. As such, even if they were perfectly substitutable from the consumers'
        perspective, physical content would not be able to constrain digital content.24 The
        existence of significant differences in terms of costs between physical and digital
        home entertainment products has also been confirmed by respondents to the
        market investigation. 25 Finally, the significant differences between the two
        distribution channels have been confirmed by most of the respondents to the
        market investigation. Most of the physical home entertainment distributors are not
        active in the distribution of digital home entertainment content and would not be
21  Commission decision of 14 June 2013 in Case M.6866 - Time Warner/ CME; Commission decision of
    20 December 2012 in Case M.6791 - The Walt Disney Company/Lucasfilm; Commission decision of
    13 July 2010 in Case M.5779 - Comcast/NBC Universal; Commission decision of 30 March 2005 in
    Case M.3595 - Sony/MGM.
22  Commission decision of 14 June 2013 in Case M.6866 - Time Warner/ CME; Commission decision of
    20 December 2012 in Case M.6791 - The Walt Disney Company/Lucasfilm.
23  Commission decision of 14 June 2013 in Case M.6866 - Time Warner/ CME.
24  Replies to Questionnaire Q1 to Producers of 17 September 2018, question 19; replies to Questionnaire
    Q4 to Physical Home Entertainment Customers of 17 September 2018, question 5; replies to
    Questionnaire Q5 to Digital Home Entertainment Customers of 17 September 2018, question 5.
25  Replies to Questionnaire Q1 to Producers of 17 September 2018, question 21; replies to Questionnaire
    Q4 to Physical Home Entertainment Customers of 17 September 2018, question 8; replies to
    Questionnaire Q5 to Digital Home Entertainment Customers of 17 September 2018, question 8.
                                                      9
 ---pagebreak---         able to start distributing digital content without incurring significant costs and
        investments. 26 Similarly, most digital home entertainment content distributors
        indicated that they will face significant barriers in order to start distributing
        physical home entertainment content. 27
(47)    With regards to a possible segmentation by type of content (such as films, TV
        series, and other content, e.g. documentaries and concerts), most respondents
        indicated that such a segmentation is not relevant for home entertainment content.
        However, some respondents, such as Sainsbury's, RTL and Telefonica, consider
        that a segmentation is still relevant when considering films, TV series and other
        TV contents since the target audience and pricing are different, and the
        distribution companies have a distinct focus on each of these sub-segments. 28
(48)    The market investigation provided mixed results on whether the market should be
        further segmented by type of releases into new releases and catalogue. On the one
        hand, some respondents, such as Orange and RTL, noted that new releases and
        catalogue content are commercialized distinctly and there are differences in terms
        of prices. On the other hand, other respondents, such as Talk Talk and Chili,
        consider that this distinction is artificial and that customers value both new
        releases and catalogue contents. 29
(49)    In any event, the Commission considers that for the purpose of this Decision the
        exact product market definition can be left open as the Transaction does not raise
        serious doubts as to its compatibility with the internal market under any plausible
        market definition.
(50)    In light of the above, the Commission considers that, for the purpose of this
        Decision, the distribution of content for physical home entertainment and the
        distribution of content for digital home entertainment constitute two separate
        product markets. The question whether these markets should be further
        segmented based on the type of content or type of releases can be left open, since
        the Transaction does not raise serious doubts as to its compatibility with the
        internal market under any plausible market definition.
4.5.2. Geographic market definition
(51)    The Commission has previously concluded that the relevant geographic market
        for both home entertainment and television rights is national in scope, or possibly
        regional along linguistically homogenous regions. 30
26  Replies to Questionnaire Q4 to Physical Home Entertainment Customers of 17 September 2018,
    question 6.
27  Replies to Questionnaire Q5 to Digital Home Entertainment Customers of 17 September 2018,
    question 6.
28  Replies to Questionnaire Q1 to Producers of 17 September 2018, question 23; replies to Questionnaire
    Q4 to Physical Home Entertainment Customers of 17 September 2018, question 10; replies to
    Questionnaire Q5 to Digital Home Entertainment Customers of 17 September 2018, question 10.
29  Replies to Questionnaire Q1 to Producers of 17 September 2018, question 24; replies to Questionnaire
    Q4 to Physical Home Entertainment Customers of 17 September 2018, question 11; replies to
    Questionnaire Q5 to Digital Home Entertainment Customers of 17 September 2018, question 11.
30  Commission decision of 14 June 2013 in Case M.6866 - Time Warner/ CME; Commission decision of
    20 December 2012 in Case M.6791 - The Walt Disney Company/Lucasfilm; Commission decision of
    13 July 2010 in Case M.5779 - Comcast/NBC Universal.
                                                      10
 ---pagebreak--- (52)    The Notifying Party submits that in previous decisions, the Commission
        concluded that the market for distribution of home entertainment content is
        national in scope.
(53)    Most of the respondents to the market investigation confirm that the market for
        the distribution of home entertainment content either through physical31 or
        digital32 distribution channel is national in scope. In particular, some respondents
        highlighted how content and release strategies may differ across countries.
(54)    In light of the above, the Commission considers that the retail market for the
        distribution of home entertainment content, under any possible product market
        definition, is national in scope.
(55)    In any event, the Commission considers that for the purpose of this Decision the
        exact geographic market definition can be left open as the Transaction does not
        raise serious doubts as to its compatibility with the internal market under any
        plausible market definition.
4.6.    Production and licensing of TV audio-visual content
(56)    Audio-visual ("AV") content for television (TV content) comprises all products
        (films, sports, series, shows, live events, documentaries, etc.) that are broadcast via
             33
        TV. In previous decisions, the Commission has identified different activities in the
        TV value chain, namely: (i) the production and supply of TV content (including
        the supply of pre-produced TV content and Commissioned TV content); (ii) the
        wholesale supply of TV channels; and (iii) the retail provision of TV services to
        end customers.34
(57)    TV production companies produce new TV audio-visual content for either:
        (i) internal use on their own TV channels or retail TV services if they are
        vertically integrated 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) supply to
        third-party customers (that is to say, non-captive TV production). Both Parties
        produce and license TV audio-visual content to third parties.
(58)    Third-party customers are typically: (i) TV broadcasters, which then incorporate
        the TV content into linear TV channels, or (ii) content platform operators, which
        then retail 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 non-traditional
        platforms, that is to say internet or so-called Over-The-Top ("OTT") platforms.
31  Replies to Questionnaire Q1 to Producers of 17 September 2018, question 25; replies to Questionnaire
    Q4 to Physical Home Entertainment Customers of 17 September 2018, question 13.
32 Replies to Questionnaire Q1 to Producers of 17 September 2018, question 25; replies to Questionnaire
    Q5 to Digital Home Entertainment Customers of 17 September 2018, question 13.
33 Commission decision of 25 June 2008 in Case M.5121 News Corp/Premiere, recital 28.
34 See, for example, Commission decision of 21 December 2010 in Case M.5932 News Corp/BskyB;
    Commission decision of 22 September 2006 in Case M.4353 Permira/All3Media Group, and
    Commission decision of 15 April 2013 in Case M.6880 Liberty Global/Virgin Media, 15 April 2013.
                                                      11
 ---pagebreak--- (59)  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:
               –         Commissioning TV content from a TV production company
                         (which owns the relevant TV format);
               –         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
               –         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).
(60)  In most cases, TV production companies produce TV content tailored to the needs
      of their customers on the basis of original TV formats35 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).
(61)  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.
(62)  It follows that the supply-side of this market comprises TV production
      companies, while the demand-side comprises third parties that commission the
      production of TV content or hire TV production services, typically TV
      broadcasters or content platform operators.
(63)  As regards the market for production and supply of TV content, TWDC is mainly
      active in the production and supply of pre-produced TV content. […]. Fox is
      active in both the supply of pre-produced TV content and the supply of
35 TV format refers to the overall concept and branding of a copyrighted TV programme.
                                                      12
 ---pagebreak---         commissioned TV content through its JV with Apollo, Endemol Shine Group
        ("Endemol Shine").36
4.6.1. Product market definition
(64)    The Notifying Party submits that the supply of commissioned TV content and the
        licensing of pre-produced TV content should be considered as part of the same
        product market. In this respect, TWDC claims that acquirers of content tend to
        have one overall budget for the acquisition of content. As a consequence,
        according to the Notifying Party, investment decisions regarding content
        acquisition are based on considerations like budget, needs, return on investment
        or timing, whereas a distinction along categories such as in-house production,
        commissioning of content or acquisition of pre-produced content is less relevant.
(65)    With regard to the licensing of pre-produced TV content, the Notifying Party
        further submits that a sub-segmentation by genre (films; sports; other content), by
        release window or by country of production is not warranted. In this respect,
        TWDC, inter alia, notes that, from a demand side perspective, both its direct
        customers as well as end consumers will substitute content belonging to a specific
        genre for a different content category in reaction to a relative increase in price.
        Similarly, according to the Notifying Party, since licensees acquire content across
        different release windows, a significant portion would switch from the acquisition
        of specific content for one window to another window in response to a relative
        price increase. With regard to the country of production, TWDC claims that the
        distinction between films produced by US studios and other films is not
        meaningful, inter alia, because, in its view, the geographic origin of production
        does not determine the quality or commercial success of the film.
(66)    Eventually, however, the Notifying Party considers that the precise definition of
        the relevant product market can be left open, as the Transaction does not raise
        competition concerns under any plausible market definition.
(67)    With regard to the market for the supply of TV audio-visual content, in previous
        decisions, the Commission has concluded that there are separate markets for:
        (i) the production and supply of commissioned TV content; and (ii) the licensing
        of broadcasting rights for pre-produced TV content (available 'off-the-shelf').37
(68)    With regard to the market for licensing of pre-produced TV content, the
        Commission has considered that it may be subdivided by content type, in
        particular: (i) films; (ii) sports; and (iii) other TV content; and potential sub-
        segments within these content types, but ultimately left the market definition
        open.38 The question whether TV content could be further sub-divided by
        distinguishing between US and non-US films, premium and non-premium content
        or scripted and non-scripted content was also left open in previous decisions.39
        The Commission has also considered further sub-dividing the market for the
36  Commission decision of 10 July 2014 in Case M.7279 – Apollo / Endemol.
37  Commission decision of 7 April 2017 in Case M.8354 – Fox / Sky. Commission decision of
    24 February 2015 in Case M.7194 – Liberty Global / Corelio / W&W / De Vijver Media.
38 Commission decision of 7 April 2017 in Case M.8354 – Fox / Sky; Commission decision of
    21 December 2011 in case M.6369 - HBO/Ziggo/HBO Nederland; Commission decision of
    24 February 2015 in Case M.7194 – Liberty Global / Corelio / W&W / De Vijver Media.
39 Commission decision of 7 April 2017 in Case M.8354 – Fox / Sky.
                                                    13
 ---pagebreak---         licensing of pre-produced TV content by exhibition window: (i) subscription
        video on demand ("SVOD"); (ii) transactional video on demand ("TVOD");
        (iii) pay-per-view ("PPV"); (iv) first pay-TV window; (v) second pay-TV
        window; and (vi) free-to-air ("FTA").40 In the market investigation, the
        Commission has also tested the role of OTT services as infrastructure used for the
        delivery of TV content to the consumer.
(69)    The results of the market investigation indicate that a majority of producers,
        broadcasters and retail distributors of TV audio-visual services consider the
        segmentations by content type and by exhibition window still relevant.41 As
        regards a sub-division by scripted and non-scripted content, the market
        investigation did not provide definite views.42
(70)    In any event, for the purpose of this Decision, the exact product market definition
        can be left open as the Transaction does not raise serious doubts as to its
        compatibility with the internal market under any plausible market definition.
(71)    In light of the above, the Commission considers that, for the purpose of this
        Decision, the licensing of television rights for films and the licensing of television
        rights for other TV content constitute two separate product markets. The question
        whether the market for the licensing of television rights for films should be
        further segmented by exhibition window or whether a distinction has to be made
        between US and non-US films can be left open, since the Transaction does not
        raise serious doubts as to its compatibility with the internal market under any
        plausible market definition. The question whether the market for the licensing of
        television rights for other TV content should be further segmented can be left
        open, since the Transaction does not raise serious doubts as to its compatibility
        with the internal market under any plausible market definition.
4.6.2. Geographic market definition
(72)    The Notifying Party makes reference to previous Commission decisions
        considering the relevant geographic market as either national or regional, based
        on linguistically homogenous areas.
(73)    The Commission has previously considered the geographic markets for both the
        production of TV content and broadcasting rights for TV content to be either
        national or regional, based on linguistically homogeneous areas.43
40  Commission decision of 7 April 2017 in Case M.8354 – Fox / Sky.
41  See replies to Questionnaire Q1 to Producers of 17 September 2018, questions 26-29; replies to
    Questionnaire Q7 to TV Channel Suppliers of 17 September 2018, questions 5-9; replies to
    Questionnaire Q9 to TV Channel Suppliers of 17 September 2018, questions 5-9; replies to
    Questionnaire Q8 to TV Retail Distributors of 17 September 2018, questions 7-11; replies to
    Questionnaire Q10 to TV Retail Distributors of 17 September 2018, questions 7-11.
42 Replies to Questionnaire Q1 to Producers of 17 September 2018, questions 30-33; replies to
    Questionnaire Q7 to TV Channel Suppliers of 17 September 2018, questions 10-12; replies to
    Questionnaire Q9 to TV Channel Suppliers of 17 September 2018, questions 10-12; replies to
    Questionnaire Q8 to TV Retail Distributors of 17 September 2018, questions 12-14; replies
    Questionnaire Q10 to TV Retail Distributors of 17 September 2018, questions 12-14.
43 Commission decision of 7 April 2017 in Case M.8354 – Fox / Sky; Commission decision of
    24 February 2015 in Case M.7194 – Liberty Global / Corelio / W&W / De Vijver Media.
                                                       14
 ---pagebreak--- (74)    Most TV broadcasters and TV retail distributors that provided a response to the
        market investigation indicated that they purchase content nationally or for certain
        linguistic regions. Some TV broadcasters indicated to also purchase content on an
        EEA or worldwide basis.44
(75)    In any event, for the purpose of this Decision, the exact geographic market
        definition can be left open, as the Transaction does not raise serious doubts as to
        its compatibility with the internal market regardless of whether the scope of the
        market is considered to be national or by linguistic region.
4.7.    Wholesale supply of TV channels
(76)    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 and licensing of content, and
        the downstream retail provision of TV services to customers.
4.7.1. Product market definition
(77)    The Notifying Party considers that there is a single market for the wholesale
        supply of TV channels, within which a range of wholesale suppliers compete, and
        that no segmentation should be made (i) between pay-TV and FTA channels; (ii)
        between basic and premium channels; (iii) by genre or theme; or, (iv) by
        infrastructure / technology.
(78)    Pay-TV and FTA channels. In particular, TWDC considers that pay-TV and FTA
        channels are substitutable from the demand-side perspective. According to
        TWDC pay-TV and FTA channels compete for and show similar content,
        including for example sports. TWDC notes that some channels, such as Disney
        Channel, are available on both an FTA and pay-TV basis, depending on the
        country of broadcast, and show the same or very similar content on both versions
        of the service. The Notifying Party further submits that pay-TV and FTA
        channels compete for the same audiences as all pay-TV subscribers can access
        FTA channels and competition from FTA services therefore constrains pay-TV
        retailers’ willingness to pay to carry TV channels on their subscription service.
        TWDC also considers that no clear technical differences exist between viewing
        content on FTA channels and pay-TV channels as set-top boxes for viewing
        digital FTA channels and connected TVs with additional functionality have
        similar technical capabilities to pay-TV set-top boxes.
(79)    Basic and premium channels. The Notifying Party submits that a subdivision
        between "basic" and "premium" channels is not appropriate as: (i) there is no
        consistent definition of "basic" and "premium" channels; (ii) it is not possible to
        generate reliable market shares for each segment; (iii) the same programs are
        often distributed to both types of channels that market themselves as "basic" and
        "premium"; and, (iv) retail TV services seek to acquire channels with content that
44  Replies to Questionnaire Q7 to TV Channel Suppliers of 17 September 2018, question 13; replies to
    Questionnaire Q9 to TV Channel Suppliers of 17 September 2018, question 13; replies to
    Questionnaire Q8 to TV Retail Distributors of 17 September 2018, question 15; replies to
    Questionnaire Q10 to TV Retail Distributors of 17 September 2018, question 15.
                                                      15
 ---pagebreak---        will appeal to audiences, regardless of whether that content is deemed "premium"
       or "basic".
(80)   Segmentation by genre or theme. The Notifying Party submits that there is
       substitutability across various genres. TWDC further observes that: (i) content
       producers, TV retailers, and consumers vary in their classifications as to what
       constitutes a particular "genre"; (ii) genre classifications are static and potentially
       misleading given that programming content available on a channel may vary over
       time; (iii) the retailers’ decision to acquire a particular channel does not turn on
       whether a channel could be identified as belonging to a particular "genre"; and,
       (iv) applying genre segmentations within narrow wholesale markets would
       overlook constraints from similar content on FTA or pay-TV services.
(81)   Segmentation by infrastructure / technology. The Notifying Party refers to
       previous decisions of the Commission and the German FCO which found that no
       distinction by infrastructure or technology was appropriate. In addition, TWDC
       observes that wholesale suppliers of channels supplied on a non-exclusive basis
       do not generally supply different channels to a retailer depending on the
       distribution technology they employ but will generally seek to supply the
       channels on all platforms/services that are secure and capable of carrying the
       channels. According to the Notifying Party these technology distinctions are even
       less relevant with the rise of OTT services, accessible throughout the EEA.
(82)   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.
       The Commission has further concluded that within the pay-TV channels market,
       there are separate markets for: (i) premium pay-TV channels; and (ii) basic pay-
       TV channels.45
(83)   In previous decisions, the Commission also examined a number of other potential
       segmentations, including: (i) genre or thematic content (such as films, general
       entertainment, sports, factual content, news, youth channels, and others);
       (ii) linear channels vs non-linear services (VOD, PPV); and (iii) the different
       means of infrastructure used for the delivery to the viewer (cable, satellite,
       terrestrial TV and IPTV).46 It has ultimately left the market definition open in all
       these regards.
(84)   The market investigation did not provide definite views as regards the definition
       of the relevant product market. While a broad majority of both TV broadcasters
       and TV distributors considered cable, satellite, IPTV, terrestrial TV, and OTT
       substitutable,47 the views on a distinction between FTA channels and pay-TV
       channels and by genre were more diverse. On the one hand, the majority of TV
45 Commission decision of 15 June 2018 in Case M.8861 – Comcast / Sky; Commission decision of
   24 February 2015 in Case M.7194 – Liberty Global / Corelio / W&W / De Vijver Media.
46 Commission decision of 7 April 2017 in Case M.8354 – Fox / Sky; Commission decision of
   24 February 2015 in Case M.7194 – Liberty Global / Corelio / W&W / De Vijver Media.
47 Replies to Questionnaire Q7 to TV Channel Suppliers of 17 September 2018, question 19; replies to
   Questionnaire Q9 to TV Channel Suppliers of 17 September 2018, question 19; replies to
   Questionnaire Q8 to TV Retail Distributors of 17 September 2018, question 21; replies to
   Questionnaire Q10 to TV Retail Distributors of 17 September 2018, question 21.
                                                     16
 ---pagebreak---         distributors agreed with the Commission's decisional practice in this regard.48 On
        the other hand, a number of replies from TV broadcasters raised doubts regarding
        the relevance of a distinction between FTA and (premium and basic) pay-TV
        channels or a general distinction by genres.49 However, in relation to factual and
        children's channels, the overall majority of respondents stressed the particular
        content offerings based on the interests of the respective target audience. In the
        respondents' view, these particularities make these two genres too specific from a
        consumer perspective to be substitutable by other genres.50
(85)    In light of the above, the Commission concludes that the relevant product markets
        for the purpose of this Decision are, irrespective of the type of infrastructure used
        for their transmission, each of the markets for the wholesale supply of (i) FTA,
        (ii) basic Pay-TV and (iii) premium Pay-TV channels. The question whether these
        markets should be further segmented based on the genre of the channel can be left
        open, as the commitments offered by TWDC solve the competition concerns also
        under any narrower product market definition (see Section 6).
4.7.2. Geographic market definition
(86)    The Notifying Party submits that since languages may represent an important
        factor in the viewer’s decision to watch certain channels, it may theoretically be
        possible to identify markets that are narrower or larger than national in
        geographic scope where either two or more different languages are spoken by
        significant proportions of the population or the same language is spoken in two or
        more neighbouring countries. The Notifying Party further submits that audience
        shares for geographic regions wider than single EEA countries have limited value
        since channels are generally licensed by wholesale suppliers to retail platforms on
        a national basis and the same channels may not be available throughout a
        linguistically homogenous, supra-national region. Regardless of the geographic
        market definition, the Notifying Party submits no competition concerns would
        arise and the precise geographic scope can be left open.
(87)    The Commission has previously considered that the market could be national,51
        sub-national52 or by linguistic region encompassing more than one Member
        State.53
(88)    A broad majority of respondents to the market investigation indicated that TV
        channels are licensed on a national level or within a linguistic region.54
48  Replies to Questionnaire Q8 to TV Retail Distributors of 17 September 2018, questions 16-20; replies
    to Questionnaire Q10 to TV Retail Distributors of 17 September 2018, questions 16-20.
49  Replies to Questionnaire Q7 to TV Channel Suppliers of 17 September 2018, questions 14-16; replies
    to Questionnaire Q9 to TV Channel Suppliers of 17 September 2018, questions 14-16.
50  Replies to Questionnaire Q8 to TV Retail Distributors of 17 September 2018, questions 19-20; replies
    to Questionnaire Q10 to TV Retail Distributors of 17 September 2018, questions 19-20; replies to
    Questionnaire Q7 to TV Channel Suppliers of 17 September 2018, questions 17-18; replies to
    Questionnaire Q9 to TV Channel Suppliers of 17 September 2018, questions 17-18.
51  Commission decision of 21 December 2011 in Case M.6369 - HBO/Ziggo/HBO Nederland, recital 39;
    Commission decision of 14 April 2013 in Case M.6880 - Liberty Global/Virgin Media, recital 41;
    Commission decision of 30 May 2018 in Case M.7000 - Liberty Global/Ziggo.
52  Commission decision of 24 February 2015 in Case M. 7194 - Liberty Global / Corelio / W&W / De
    Vijver Media.
53  Commission decision of 21 December 2010 in Case M.5932 - News Corp/BskyB, recitals 86–88;
    Liberty Global/Virgin Media.
                                                       17
 ---pagebreak--- (89)     In any event, for the purpose of this Decision, the exact geographic market
         definition can be left open, as the commitments offered by TWDC solve the
         competition concerns also under any plausible geographic market definition (see
         Section 6).
4.8.     Retail supply of TV services
(90)     In the market for the retail provision of TV services, the suppliers of linear and
         non-linear (mainly Video-On-Demand, "VOD") TV services serve end customers
         who wish to purchase such services. 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 Video on Demand ("VOD"), Subscription VOD ("SVOD"),
         Transactional VOD ("TVOD") and Pay Per View ("PPV"). TV content can be
         delivered to end users through a number of technical means including cable,
         satellite and IPTV55. So-called over-the-top ("OTT")56 players deliver channels
         and content in both a linear and non-linear fashion through the use of the internet.
(91)     TWDC (but not Fox) offers retail TV services across the EEA to end consumers.
         TWDC's retail TV services include DisneyLife which is available only in the UK
         and Ireland and ESPN Player, an OTT service available throughout the EEA.
4.8.1. Product market definition
(92)     The Notifying Party submits that it is not relevant to delineate the market for the
         retail provision of TV services based on the segmentation analysed by the
         Commission in its previous decisions57, namely: (i) the type of technology used;
         (ii) the nature of TV services provided in terms of pay-TV and Free-To-Air
         ("FTA") TV services; and, (iii) the nature of TV services provided in terms of
         linear and non-linear services.
(93)     In its previous decisions the Commission has considered the retail provision of
         FTA TV and pay-TV services as separate markets but ultimately left open the
         product market definition58. The Commission also considered whether retail TV
54  Replies to Questionnaire Q9 to TV Channel Suppliers of 17 September 2018 Q7; replies to Questionnaire
    Q9 to TV Channel Suppliers of 17 September 2018, question 20; replies to Questionnaire Q8 to TV
    Retail Distributors of 17 September 2018; replies to Questionnaire Q10 to TV Retail Distributors of
    17 September 2018, question 22.
55  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.
56  Over-the-top (OTT) is any application or service that provides a product over the Internet and bypasses
    traditional distribution. Applications and services that are provided as 'over-the-top' are most typically
    related to media and communication.
57  Commission decision of 21 December 2010 in Case M.5932 - News Corp/BskyB; Commission decision
    of 22 September 2006 in Case M.4353 - Permira/All3Media Group; Commission decision of 15 April
    2013 in Case M.6880 - Liberty Global/Virgin Media; Commission decision of 24 February 2015 in
    Case M.7194 - Liberty Global/Corelio/W&W/De Vijver Media.
58  Commission decision of 18 July 2007 in Case M.4504 - SFR/Télé 2 France, recital 40; Commission
    decision of 25 June 2008 in Case M.5121 - News Corp / Premiere, recital 20; Commission decision of
    7 April 2017 in Case M.8354 – Fox / Sky, paragraph 97; Commission decision of 3 August 2016 in
    Case M.7978 – Vodafone/Liberty Global/Dutch JV, paragraph 56; Commission decision of 24
    February 2015 in Case M.7194 - Liberty Global / Corelio / W&W / De Vijver Media, recital 119-120;
                                                            18
 ---pagebreak---         can be segmented further according to: (ii) linear vs non-linear TV services59;
        (iii) according to distribution technologies (e.g. cable, OTT, satellite, IPTV or
        terrestrial)60; and (iv) premium pay-TV vs basic pay-TV services61 but, has left
        the market definition open with regard to each of these potential sub-segments.
(94)    With regards to a possible segmentation between FTA and pay-TV services, most
        of the respondents to the market investigation indicated that such a distinction is
        still relevant in the present case.62 Most of the respondents to the market
        investigation further noted that a segmentation between basic and premium pay-
        TV services would also be relevant. 63
(95)    With regards to a possible segmentation of TV retail services according to linear
        vs non-linear TV services, the market investigation provided mixed results. In
        particular, some respondents such as Telia and MEO noted that catch up services
        are often acquired together with linear content. Some content like SVOD, TVOD
        and AVOD are acquired separately. 64
(96)    With regards to a possible segmentation of TV retail services depending on the
        type of infrastructure used for their transmission, the results of the market
        investigation provided mixed results with some respondents arguing that most of
        the content is available on each technology and it does not matter how it reaches
        the household, while others stated that different infrastructures often have a
        varying quality, different types of services and as well as customer needs.65
(97)    Finally, the market investigation provided mixed results on whether VOD
        services by OTT players (such as Amazon, Netflix) should be considered as
        alternatives or complements to retail pay-TV services. On the one hand, some
        respondents, such as Magyar Telekom, noted that SVOD services are acquired as
   Commission decision of 25 June 2008 in Case M.5121 - News Corp/Premiere, recitals 15 and 21;
   Commission decision of 10 October 2014 in Case M.7000 - Liberty Global/Ziggo, recital 108.
59 Commission decision of 6 February 2018 in Case M.8665 – Discovery / Scripps, paragraph 33;
   Commission decision of 7 April 2017 in Case M.8354 – Fox / Sky, paras 98 and 99; Commission
   decision of 3 August 2016 in Case M.7978 – Vodafone/Liberty Global/Dutch JV, para 58; Commission
   decision of 24 February 2015 in case M.7194 - Liberty Global / Corelio / W&W / De Vijver Media,
   recital 124; Commission decision of 25 June 2008 in Case M.5121 - News Corp/Premiere, recital 21;
   Commission decision of 10 October 2014 in Case M.7000 - Liberty Global/Ziggo, recitals 109–110.
60 Commission decision of 6 February 2018 in Case M.8665 – Discovery / Scripps, paragraph 33;
   Commission decision of 7 April 2017 in Case M.8354 – Fox / Sky, paragraph 100; Commission
   decision of 3 August 2016 in Case M.7978 – Vodafone/Liberty Global/Dutch JV, paragraph 62;
   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 10 October 2014 in Case M.7000 - Liberty
   Global/Ziggo, recital 113.
61 Commission decision of 24 February 2015 in Case M.7194 - Liberty Global / Corelio / W&W / De
   Vijver Media, recital 119.
62 Replies to Questionnaire Q8 to TV Retail Distributors of 17 September 2018; replies to Questionnaire
   Q10 to TV Retail Distributors of 17 September 2018, question 26.
63 Replies to Questionnaire Q8 to TV Retail Distributors of 17 September 2018; replies to Questionnaire
   Q10 to TV Retail Distributors of 17 September 2018, question 27.
64 Replies to Questionnaire Q8 to TV Retail Distributors of 17 September 2018; replies to Questionnaire
   Q10 to TV Retail Distributors of 17 September 2018, question 25.
65 Replies to Questionnaire Q8 to TV Retail Distributors of 17 September 2018; replies to Questionnaire
   Q10 to TV Retail Distributors of 17 September 2018, question 31.
                                                     19
 ---pagebreak---          a complement of basic pay-TV package. On the other hand, other respondents,
         such as Orange, indicated that OTT players are acquiring significant audio-visual
         content and they compete directly with their premium pay-TV services. 66
(98)     Given the fact that the assessment of the Transaction would remain the same
         whether (i) FTA services and pay-TV services, (ii) linear pay-TV services and
         non-linear pay-TV services, (iii) different distribution technologies, and
         (iv) SDUs and MDUs are considered to belong to the same product market or to
         give rise to separate markets, the exact scope of the relevant market for TV
         services can be left open in this regard.
(99)     Therefore, the Commission considers that for the purpose of this Decision the
         exact product market definition can be left open as the Transaction does not raise
         serious doubts as to its compatibility with the internal market under any plausible
         market definition.
4.8.2. Geographic market definition
(100) The Commission has in the past considered that the geographic scope of the
         market for the retail provision of TV services could be national, since providers of
         retail TV services compete on a nationwide basis, or limited to the coverage area
         of each cable operator.67
(101) The Notifying Party considers that the question whether the scope of the market
         for the retail provision of TV services should be either national, since TV
         distributors compete on a nationwide basis, or limited to the coverage area of each
         cable operator, could be left open.
(102) Most of the respondents to the market investigation consider that the market for
         the retail provision of TV services is national in scope.68
(103) In any event, the Commission considers that the exact geographic market
         definition can be left open in this case as the Transaction does not raise serious
         doubts as to its compatibility with the internal market under any plausible market
         definition.
66  Replies to Questionnaire Q8 to TV Retail Distributors of 17 September 2018; replies to Questionnaire
    Q10 to TV Retail Distributors of 17 September 2018, question 28.
67 Commission decision of 26 February 2007 in Case M.4521 - LGI/Telenet, recital 25; Commission
    decision of 24 February 2015 in Case M.7194 - Liberty Global/Corelio/W&W/De Vijver Media, recital
    139; Commission decision of 25 June 2008 in Case M.5121 - News Corp/Premiere, recital 24;
    Commission decision of 25 January 2010 in Case M.5734 - Liberty Global Europe/Unitymedia,
    recitals 40 and 43; Commission decision of 21 December 2010 in Case M.5932 - NewsCorp/BSkyB,
    recital 109; Commission decision of 21 December 2011 in Case M.6369 - HBO/Ziggo/HBO
    Nederland, recital 42; Commission decision of 15 April 2013 in Case M.6880 - Liberty Global/Virgin
    Media, recital 54; Case M.7000 – Liberty Global/Ziggo, recital 118.
68 Replies to Questionnaire Q1 to Mobile Operators of 4 September 2018, question 22; replies to
    Questionnaire Q2 to Fixed Operators of 4 September 2018, question 22.
                                                      20
 ---pagebreak--- 5.      COMPETITIVE ASSESSMENT
5.1.    Analytical framework
(104) Under Article 2(2) and (3) of the Merger Regulation, the Commission must assess
        whether a proposed concentration would significantly impede effective
        competition in the internal market or in a substantial part of it, in particular
        through the creation or strengthening of a dominant position.
(105) In this respect, a merger may entail horizontal and/or non-horizontal effects.
        Horizontal effects are those deriving from a concentration where the undertakings
        concerned are actual or potential competitors of each other in one or more of the
        relevant markets concerned. Non-horizontal effects are those deriving from a
        concentration where the undertakings concerned are active in different relevant
        markets.
(106) As regards non-horizontal mergers, two broad types of such mergers can be
        distinguished: vertical mergers and conglomerate mergers.69 Vertical mergers
        involve companies operating at different levels of the supply chain.70
        Conglomerate mergers are mergers between firms that are in a relationship which
        is neither horizontal (as competitors in the same relevant market) nor vertical (as
        suppliers or customers).71
(107) A case where a merger entails both horizontal and non-horizontal effects may for
        instance be when the merging firms are not only in a vertical or conglomerate
        relationship, but are also actual or potential competitors of each other in one or
        more of the relevant markets concerned. In such a case, the Commission will
        appraise horizontal, vertical and/or conglomerate effects in accordance with the
        guidance set out in the relevant notices.72
(108) The Commission appraises horizontal effects in accordance with the guidance set
        out in the relevant notice, that is to say the Horizontal Merger Guidelines.73
        Additionally, the Commission appraises non-horizontal effects in accordance with
        the guidance set out in the relevant notice, that is to say the Non-Horizontal
        Merger Guidelines.74
5.1.1. Horizontal effects
(109) The Horizontal Merger Guidelines distinguish between two main ways in which
        mergers between actual or potential competitors on the same relevant market may
        significantly impede effective competition, namely non-coordinated and
        coordinated effects.
69  Non-Horizontal Merger Guidelines, recital 3.
70  Non-Horizontal Merger Guidelines, recital 4.
71  Non-Horizontal Merger Guidelines, recital 5.
72  Non-Horizontal Merger Guidelines, recital 7.
73  Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of
    concentrations between undertakings ("Horizontal Merger Guidelines"), OJ C 31, 05.02.2004.
74  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.
                                                     21
 ---pagebreak--- (110) As regards horizontal non-coordinated effects, under the substantive test set out in
       Article 2(2) and (3) of the Merger Regulation, also mergers that do not lead to the
       creation or the strengthening of the dominant position of a single firm may be
       incompatible with the internal market. Indeed, the Merger Regulation recognises
       that in oligopolistic markets, it is all the more necessary to maintain effective
       competition.75 This is in view of the more significant consequences that mergers
       may have on such markets. For this reason, the Merger Regulation provides that
       "under certain circumstances, concentrations involving the elimination of
       important competitive constraints that the merging parties had exerted upon each
       other, as well as a reduction of competitive pressure on the remaining
       competitors, may, even in the absence of a likelihood of coordination between the
       members of the oligopoly, result in a significant impediment to effective
       competition".76
(111) The Horizontal Merger Guidelines list a number of factors which may influence
       whether or not significant horizontal non-coordinated effects are likely to result
       from a merger, such as the large market shares of the merging firms, the fact that
       the merging firms are close competitors, the limited possibilities for customers to
       switch suppliers, or the fact that the merger would eliminate an important
       competitive force. That list of factors applies equally regardless of whether a
       merger would create or strengthen a dominant position, or would otherwise
       significantly impede effective competition due to non-coordinated effects.
       Furthermore, not all of these factors need to be present to make significant non-
       coordinated effects likely and it is not an exhaustive list.77 Finally, the Horizontal
       Merger Guidelines describe a number of factors, which could counteract the
       harmful effects of a merger on competition, including the likelihood of buyer
       power, entry and efficiencies.
(112) A merger in a concentrated market may also significantly impede effective
       competition due to horizontal coordinated effects where, through the creation or
       the strengthening of a collective dominant position, it increases the likelihood that
       firms are able to coordinate their behaviour and raise prices, even without
       entering into an agreement or resorting to a concerted practice within the meaning
       of Article 101 TFEU. A merger may also make coordination easier, more stable
       or more effective for firms that were already coordinating before the merger,
       either by making the coordination more robust or by permitting firms to
       coordinate on even higher prices.78
(113) To assess whether a merger gives rise to horizontal coordinated effects, the
       Commission should examine, first, whether it would be possible to reach terms of
       coordination and, second, whether the coordination would be likely to be
       sustainable.79
75 Merger Regulation, recital 25.
76 Merger Regulation, recital 25. Similar wording is also found in paragraph 25 of the Horizontal Merger
   Guidelines. See also Commission decision of 2 July 2014 in Case M.7018 – Telefónica
   Deutschland/E-Plus, recital 113; Commission decision of 28 May 2014 in Case M.6992 – Hutchison
   3G UK/Telefónica Ireland, recital 179; Commission decision of 12 December 2012 in Case M.6497 –
   Hutchison 3G Austria/Orange Austria, recital 88.
77 Horizontal Merger Guidelines, paragraph 26.
78 Horizontal Merger Guidelines, paragraph 39.
79 Horizontal Merger Guidelines, paragraph 42.
                                                      22
 ---pagebreak--- 5.1.2. Vertical effects
(114) A merger is said to result in foreclosure where actual or potential rivals' access to
       supplies or markets is hampered or eliminated as a result of the merger, thereby
       reducing these companies' ability and/or incentive to compete.80 Such foreclosure
       may discourage entry or expansion of rivals or encourage their exit. Such
       foreclosure is regarded as anti-competitive where the merged entity — and,
       possibly, some of its competitors as well — are as a result able to profitably
       increase the price charged to consumers.81
(115) Two forms of vertical foreclosure can be distinguished. The first is where the
       merger is likely to raise the costs of downstream rivals by restricting their access
       to an important input (input foreclosure). The second is where the merger is likely
       to result in foreclosure of upstream rivals by restricting their access to a
       sufficiently large customer base (customer foreclosure).
5.2.   Introduction
(116) As noted, the Transaction gives rise to both horizontal overlaps and vertical links
       between the activities of TWDC and Fox.
5.3.   Horizontally affected markets
5.3.1. Production and licensing of distribution rights of films for theatrical exhibition
                     5.3.1.1.    Notifying Party's views
(117) The Notifying Party submits that the Transaction will not give rise to unilateral
       effects concerns in the market for the production and supply of films for theatrical
       release in any EEA Member State because: (i) there are strong competitors
       present on the market, market entry is common, and the Parties are not each
       other's closest competitor; (ii) the combined market share of the Parties remains
       modest; (iii) even the Parties' modest market share is not a reliable indicator of
       their competitive position, due to the hit-driven nature of the market; (iv) the
       merged entity will continue to be constrained by third-party distributors; and
       (v) TWDC remains committed to producing high-quality content.
                     5.3.1.2.    Commission's assessment
(118) The Parties' activities overlap in a total of 15 EEA Member States, where the
       Parties' activities overlap in the production and licensing of distribution rights of
       films for theatrical release. These Member States are: Bulgaria, Croatia, Cyprus,
       Czech Republic, Estonia, Greece, Hungary, Iceland, Latvia, Lithuania, Malta,
       Portugal, Romania, Slovakia and Slovenia.
                (a) Production and licensing of distribution rights of films for theatrical
                    exhibition, all producers
(119) In the overall market encompassing all film producing studios, the merged entity's
       market shares in 2017, calculated on the basis of gross box office receipts would
80  Non-horizontal Merger Guidelines, paragraph 29.
81  Non-horizontal Merger Guidelines, paragraph 29.
                                                    23
 ---pagebreak---  ---pagebreak---  ---pagebreak---  ---pagebreak--- (129) Moreover, TWDC and Fox do not appear to be close competitors in the market
        for the production of US films for theatrical release for the same reasons outlined
        in paragraph (122) above.
(130) In light of the above, the Commission concludes that the Transaction does not
        raise serious doubts as to its compatibility with the internal market in relation to
        the market for the production and supply of films for theatrical release that
        includes only US producers.
5.3.2. Distribution of films for theatrical exhibition
(131) The Parties are active in the distribution of films for theatrical release in a number
        of Member States. Both TWDC and Fox have distribution activities in: Austria,
        Belgium, France, Germany, Ireland, Italy, Luxembourg, Spain, Sweden and the
        UK.89 In addition, TWDC, but not Fox, has distribution activities in: Denmark,
        Finland, the Netherlands, Poland, Liechtenstein and Norway.
(132) While the Parties mostly distribute their own films on an exclusive basis, in some
        Member States they also carry out the theatrical distribution for other producers'
        films. TWDC distributes: In Finland for Sony, in Germany for Universum, and in
        Liechtenstein for Paramount.90 Fox distributes: in Belgium and Luxembourg for
        Warner Bros, in Germany for Prokino, Majestic, eOne and SquareOne, in Italy for
        Paramount, in the UK for Pathé, in Sweden for Nordisk and Warner Bros, and
        throughout the EEA for Regency Entertainment.91
                        5.3.2.1.     Notifying Party's views
(133) The Notifying Party submits that the Transaction will not give rise to unilateral
        effects in the market for the distribution of films for theatrical release in any EEA
        Member State. This is because the market for distribution is fragmented and
        TWDC will still face a large number of rivals in every Member State, including
        local distributors and providers of other content.92 Furthermore, the Notifying
        Party submits that the combined market shares of the Parties are limited,
        especially considering the hit-driven nature of theatrical distribution. Finally, the
        Notifying Party argues that exhibition markets are highly concentrated with few
        exhibitors present in each Member State, capable of constraining distributors. The
        Notifying Party submits that these arguments are applicable even if one were to
        consider a potential segmentation between US and non-US films.
89  The Notifying Party has provided market shares based on box office receipts collected from exhibitors.
    The data has been sourced primarily from IMDb and ComScore. Since ComScore provides data for
    Belgium & Luxembourg and for Ireland & the UK together, the Notifying Party has provided data for
    those countries together.
90 ComScore does not provide data for Liechtenstein and the Notifying Party was not able thus to provide
    data for Liechtenstein. In any case, Fox is not active in the distribution of films for theatrical release in
    Liechtenstein, therefore there is no overlap between the Parties' activities.
91 Fox has a minority interest in Monarchy Enterprises Holdings B.V., which in turn owns, among others,
    Regency Entertainment Inc., which in turn owns a group of companies operating under the names
    Regency and New Regency (together these entities are referred to as "Regency"). Fox distributes
    Regency's films alongside its own films throughout the EEA.
92 Non-film providers distribute content other than films, such as the broadcast of live including sports,
    concerts etc.
                                                         27
 ---pagebreak---  ---pagebreak---          particularly important for their portfolio.94 It releases a limited number of films
         per year, but represents nevertheless a share of exhibitors' turnover similar to that
         of other US majors due to the success of these films. On the other hand, Fox
         releases a significantly larger number of films that are more varied in content and
         on average less successful than those of TWDC. Several respondents explained
         that while TWDC is more focused on large blockbusters, Fox has a more
         diversified offer including arthouse type films through its Searchlight branch. The
         closest competitor of TWDC does not appear to be Fox, but Universal or Warner
         Bros in most instances, both at production level but also in terms of distribution.95
         The addition of Fox' films therefore will not significantly increase TWDC's
         bargaining position vis-à-vis exhibitors.
(139) In addition, competition between films is largely determined by respective film's
         release schedule. The largest part of the box office revenue of a film is achieved
         during the first weeks of exhibition. The Parties' films achieve […]% of the box
         office revenue during the first two weeks of exhibition and […]% during the first
         three.96 The Parties rarely release films within one or two weeks of each other's.
         In 2017, there was only one weekend where both Parties released a film.97 The
         Commission considers that this is another indication of the Parties' not being close
         competitors pre-Transaction.
(140) In the same line, it is unlikely that the merged entity will occupy more screen
         space to the detriment of smaller, local producers, given the incentive is rather to
         limit the number of its own films that are screened at the same time to avoid
         competition for viewers between them, thereby freeing screens to other producers'
         films. In terms of offer, aside from TWDC and Fox, there are several distributors
         of US and non-US films carrying other films that exhibitors can screen. TWDC
         and Fox distributed together only 101 films, out of the 331 films distributed by
         US films distributors in the EEA in 2017 and the additional 2721 non-US films.98
(141) Similarly, the Commission considers that the Transaction does not raise serious
         doubts as to its compatibility with the internal market even in the markets where
         the merged entity will hold more than [30-40]% shares, namely Belgium &
         Luxembourg and Sweden.99 The higher combined share of the Parties in both
94  Replies to Questionnaire Q3 to exhibitors of 17 September 2018, question 25.
95  Replies to Questionnaire Q6 to distributors of 17 September 2018, questions 22 to 26 and Replies to
    Questionnaire Q3 to exhibitors of 17 September 2018, questions 21 to 27.
96  Commission's estimates based on film revenue data provided by the Parties in Annexes 5.1 and 5.2 in
    reply to RFI 5.
97  Notifying Party's Submission on Theatrical Distribution of 15 October 2018.
98  Notifying Party's Submission on Theatrical Distribution of 15 October 2018.
99 It must be noted that the Notifying Party argues that sub-distribution agreements whereby Fox
    distributes films for Warner Bros and Regency in Belgium & Luxembourg, as well as Nordisk in
    Sweden should be excluded for the purpose of assessing the Parties' position on the market for the
    theatrical distribution of films. This is because producers retain rights of approval or control over
    certain key terms and parameters of distribution (such as release dates). The Commission however
    considers that the contractual arrangement between producer and distributor does not affect the
    bargaining position of distributors vis-á-vis exhibitors. As a result, sub-distribution agreements are
    treated as equivalent to full distribution agreements. If sub-distribution would be excluded, the market
    shares of the Parties would be [20-30]% (TWDC [10-20]%; Fox [5-10]%) in Belgium & Luxembourg
    and [30-40]% (TWDC [20-30]%; Fox [5-10]%) in Sweden for the distribution of all films, [30-40]%
    (TWDC [20-30]%; Fox [10-20]%) in Belgium & Luxembourg and [40-50]% (TWDC [20-30]%;
    Fox [10-20]%) in Sweden for the distribution of US films.
                                                         29
 ---pagebreak---         territories can be explained by Fox's distribution activities on behalf of Warner
        Bros and Regency in Belgium & Luxembourg and Warner Bros, Regency and
        Nordisk in Sweden. Moreover, the 2017 market shares of Fox, both in Belgium &
        Luxembourg and Sweden, include the distribution of DreamWorks Animation's
        films, while that distribution agreement ended in December 2017.
(142) In Belgium & Luxembourg, the combined market share of the Parties will be
        [40-50]%. It will still face important competitors such as Sony ([20-30]%) and the
        local distributor Belga Films ([10-20]%), which carries the distribution of local
        productions but also large films such as "The Hunger Games" series of Lionsgate.
        Kinepolis is also an important distributor in Belgium with a share of [5-10]%,
        which is furthermore integrated downstream on the exhibition market in Belgium
        and Luxembourg where it is the largest exhibitor.
(143) Fox distributes Regency and Warner Bros' films in Belgium & Luxembourg and
        distributed DreamWorks Animation's films until 31 December 2017. The end of
        the agreement with DreamWorks Animation will carry a reduction in Fox's
        position on the distribution market as of 2018.100 […]101 If Fox would cease
        distributing for Warner Bros and Regency, in addition to DreamWorks, Fox's
        market share in Belgium & Luxembourg in 2017 would be [5-10]%in the
        theatrical distribution of all films.102
(144) In addition, with respect to rental fees contracted with exhibitors in Belgium, they
        are capped by law at 50%.103 [Details on the Parties' contractual arrangements],
        TWDC will not be able to increase rental fees to a significant extent.
(145) In Sweden, the combined market share of the Parties will be [50-60]%. It will still
        face important competitors such as UIP, distributing for Paramount, Universal
        and Sony ([20-30]%) and the local distributor SF Studios ([10-20]%), which
        carries the distribution of local productions and large films such as "The Hobbit"
        series of Warner Bros.
(146) Fox distributes Regency, Warner Bros and Nordisk films in Sweden and
        distributed DreamWorks Animation's films until 31 December 2017. The end of
        the agreement with DreamWorks Animation will carry a reduction in Fox's
        position on the distribution market as of 2018.104 [Details on Fox's contractual
        arrangements].105 [Details on Fox's contractual arrangements].106 It is also unclear
        whether it would be in the interest of Warner Bros and Nordisk to keep
        distributing their films in Sweden through the distribution arm of a large
        competitor also on the upstream film production level.
100 Notifying Party's Submission on Theatrical Distribution of 15 October 2018, Annex 1.
101 Reply to question 30 of RFI 10, Annex 31.1.
102 Form CO, Chapter 4A.
103 Article 2 of the ministerial decree of 13 March 1986 on "Rental charges for films intended for
    commercial screening". Rental fees can be exceptionally increased to 55% in certain circumstances
    through ministerial decree, but this is rarely used.
104 Notifying Party's Submission on Theatrical Distribution of 15 October 2018, Annex 1.
105 Reply to question 30 of RFI 10, Annex 31.1.
106 Form CO, Chapter 2A - Theatrical distribution of films, footnote 54.
                                                         30
 ---pagebreak--- (147) If Fox would cease distributing for Warner Bros, Regency and Nordisk, in
         addition to DreamWorks, Fox's market share in Sweden in 2017 would be
         [5-10]% in the theatrical distribution of all films.107
(148) Furthermore, despite the Parties distributing a larger slate of films in Belgium &
         Luxembourg and Sweden, based on information provided by the Notifying Party,
         it is unclear whether the fact of controlling more films (including via distribution)
         results in a disproportionally larger share of revenues for the distributor.108
(149) There is also no practice of bundling or block booking films for theatrical release
         in the industry, nor have either of TWDC or Fox ever engaged in them anywhere
         in the EEA: the breadth of the portfolio of distributors is unrelated to the booking
         of the films which is done on an individual basis.109
(150) In the course of the market investigation, some exhibitors and distributors
         indicated that they feared that post-Transaction, TWDC would try to impose
         exhibition terms more favourable to TWDC which they would not be able to
         refuse.110 However, the Commission does not consider that the Transaction will
         allow TWDC to worsen exhibition terms due to the addition of Fox films for all
         reasons explained above (see paragraphs (137) to (139)).
(151) Exhibitors also fear that this may result in reduced screen space especially for
         smaller domestic producers, preventing exhibitors from offering a diversified
         portfolio to cover all audiences' tastes. Similarly, the Commission does not
         consider that the Transaction would lead to TWDC occupying more space, as
         described in paragraph (140). Moreover, the Commission notes that the concern
         that the Parties would occupy more screen space is in contradiction with the
         concern that fewer films will be produced (see paragraph (123)).
(152) In light of the above, the Commission concludes that the Transaction does not
         raise serious doubts as to its compatibility with the internal market in relation to
         the market for the distribution of films for theatrical release that includes all films
         in any EEA Member State.
                  (b) Distribution of US films for theatrical exhibition
(153) Even on the narrower market for the distribution of US films, the combined
         market shares of the Parties are still below [30-40]% in all affected markets with
         the exception of Belgium & Luxembourg and Sweden.
107 Form CO, Chapter 4A.
108 Notifying Party's Submission on Theatrical Distribution of 15 October 2018, Annex 5.
109 Notifying Party's Submission on Theatrical Distribution of 15 October 2018.
110 Replies to Questionnaire Q3 to exhibitors of 17 September 2018, questions 41 and 42.
                                                        31
 ---pagebreak---  ---pagebreak---                 o In the Netherlands […].
                o In Spain […].
                o In Denmark, Finland, Sweden, Norway […].
                o In United Kingdom […].
(159) With regards to the supply of digital home entertainment other TV content, such
        as TV-series, Fox licenses its digital home entertainment content across all EEA
        countries while TWDC is only active in Austria, France, Germany and the UK.
(160) As indicated in paragraphs (40) and (41), the Parties are also active in almost all
        EEA countries in the supply of physical home entertainment other TV content,
        such as TV-series.111
                      5.3.3.1.  Notifying Party's views
(161) The Notifying Party submits that the Transaction will not give rise to unilateral
        effects in the market for the distribution of home entertainment content in any
        EEA Member State. First, the Notifying Party submits that the combined market
        shares of the Parties are limited, especially considering that the market should not
        be segmented according to type of distribution (digital or physical) or content
        (films or other TV content). Second, the Notifying Party considers that several
        distributors would remain active across the EEA. Third, the Parties face strong
        competition from local content. Fourth, customers have significant buyer power
        and can switch easily to other distributors.
                      5.3.3.2.  The Commission's assessment
                 (a) Physical home entertainment content
(162) The activities of the Parties in the distribution of physical home entertainment
        content give rise to affected markets in several countries across the EEA, namely:
        (a)     Physical home entertainment films: in Austria, Belgium, Croatia, Cyprus,
                Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece,
                Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg,
                Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia
                Spain, Sweden and the UK.
        (b)     Physical home entertainment other TV content: in Denmark, Finland,
                France, Norway, Spain and Sweden.
(163) However, the Commission considers that the Transaction does not raise serious
        doubts as to its compatibility with the internal market in any EEA Member State
        for the reasons set out below.
(164) First, in most Member States the combined position of the Parties will remain
        modest. Post-Transaction, as shown in Table 5 the merged entity will hold market
111 "Other TV content" includes non-film, non-sport content, such as TV series, reality shows, game
    shows and cartoons.
                                                   33
 ---pagebreak---  ---pagebreak---  ---pagebreak--- (167) Fourth, the market investigation has showed that TWDC and Fox are not
        particularly close competitors in neither the distribution of films nor other TV
        content for physical home entertainment. Most of the respondents have indicated
        that Universal and Warner Bros are closer competitors to TWDC than Fox.116
        Most of the respondents further indicated that TWDC and Fox do not exert a
        particularly important competitive constraint on other market participants in the
        distribution of physical home entertainment content. In particular, it has been
        highlighted that a significant number of competitors would remain active in the
        market.117 Several respondents also noted that while, after the Transaction, the
        merged entity will increase its market position, consumer demand and the sale of
        physical home entertainment content has significantly reduced in the recent years
        and it is expected to continue declining. 118
(168) Finally, most of the respondents to the market investigation consider that the
        Transaction would have either a positive or a neutral impact on the physical home
        entertainment content markets and their businesses.119 For example, Colruyt
        indicated that offer, quality and quantity would stay the same. Hofer noted that
        the Transaction would have minimal impact on its business. AB Svensk
        considered that the physical home entertainment market is rapidly declining and
        the merger will not have any impact on current market conditions.
(169) In light of the above, the Commission concludes that the Transaction does not
        raise serious doubts as to its compatibility with the internal market in relation to
        the market for the distribution of physical home entertainment content, including
        both films and other TV content.
                  (b) Digital home entertainment content
(170) The activities of the Parties in the distribution of digital home entertainment
        content give rise to affected markets in several countries across the EEA.
        (a)      Digital home entertainment films in Austria, Bulgaria, Cyprus, Czech
                 Republic, Estonia, Finland, France, Germany, Greece, Hungary, Iceland,
                 Ireland, Latvia, Lithuania, Malta, Poland, Portugal, Romania, Slovakia,
                 Slovenia and the UK.
        (b)      Digital home entertainment other TV content in Austria, Germany and the
                 UK.
(171) However, the Commission considers that the Transaction does not raise serious
        doubts as to its compatibility with the internal market in any EEA Member State
        for the reasons set out below.
116 Replies to Questionnaire  Q4 to Physical Home Entertainment Customers of 17 September 2018,
    questions 17, 19 and 20.
117 Replies to Questionnaire  Q4 to Physical Home Entertainment Customers of 17 September 2018,
    question 21.
118 Replies to Questionnaire  Q4 to Physical Home Entertainment Customers of 17 September 2018,
    question 23.
119 Replies to Questionnaire  Q4 to Physical Home Entertainment Customers of 17 September 2018,
    questions 26 and 27.
                                                  36
 ---pagebreak---  ---pagebreak---  ---pagebreak--- 5.3.4. Production and licensing of TV audio-visual content
(177) Both Parties produce and license TV audio-visual content to third parties
         throughout the EEA. Whereas the Transaction does not lead to affected markets
         in the production and licensing of commissioned TV content, affected markets
         arise with regard to the production and licensing of rights for pre-produced film
         and other TV content.
                        5.3.4.1.   Notifying Party's views
(178) The Notifying Party submits that the Transaction will not give rise to unilateral
         effects in the markets for the production and licensing of TV audio-visual content
         in any EEA Member State. In TWDC's view, post-transaction, it will continue to
         face competition from a large number of competitors licensing TV content within
         the EEA which include major US and European distributors. Furthermore, the
         Notifying Party submits that, with a portfolio mainly consisting of US produced
         content, it faces competitive constraints from local content producers that are able
         to adapt to local and regional cultural particularities. According to TWDC, this
         effect is reinforced by European and national legislation requiring TV retailers to
         reserve a percentage of their transmission time to local and EU content. The
         Notifying Party further submits that the Parties' combined market shares are
         moderate and likely overstate their market position since the performance of
         licensors depends on the slate of films in a given year. Finally, TWDC submits
         that in-house production and commissioned content exercise competitive
         constraints on licensors of pre-produced TV content and that the Parties will face
         significant buyer power from large and sophisticated broadcasting groups, Pay-
         TV retailers and OTT operators.
                        5.3.4.2.   The Commission's assessment
                  (a) Licensing of television rights for films
(179) In the past, the Commission has considered sub-dividing the markets for the
         licensing of television rights for films by exhibition window and distinguishing
         between the licensing of television rights of US films and other films in each
         exhibition window.
(180) While the Parties’ combined market share in certain countries and linguistic
         regions125 within the sub-segments is higher than their share in an overall market
         for the licensing of television rights for films, the Commission considers that the
         Transaction does not raise serious doubts in any EEA Member State for the
         reasons set out below.
125 The Notifying Party confirms that combined market shares for linguistic regions would not materially
    differ from shares provided on a by-country basis. As regards certain territory groups (namely the
    Baltic countries; Belgium & Luxembourg; Germany & Austria; Greece & Cyprus; the Nordic
    countries and the UK & Ireland), the Notifying Party submits that it is not able to provide data on a by-
    country basis for these regions in a reliable manner. However, the Parties submit that they have no
    reliable data indicating that market shares would materially differ on a national basis from those
    provided to the Commission (reply to question 11 of RFI 18).
                                                       39
 ---pagebreak---  ---pagebreak---          to its customers.129 However, the Commission considers that, even though the
         merged entity will hold a broader content portfolio post-Transaction, it will not be
         able to significantly degrade terms and condition vis-à-vis its customers due to its
         limited market share and the availability of alternative licensors in the market.
(185) The Parties' combined market shares exceed 35% in the market for licensing of
         TVOD/PPV rights for US films in Greece & Cyprus ([50-60]%), in the market for
         the licensing of first pay-TV window rights for films in France ([30-40]%), in the
         market for the licensing of first pay-TV window rights for US films in France
         ([40-50]%), Greece & Cyprus ([40-50]%), and Malta ([40-50]%), and in the
         market for the licensing of FTA window rights for US films in Belgium &
         Luxembourg ([40-50]%). However, in the Commission's view, these market
         shares may be overstated for the reasons set out below.
(186) In Belgium & Luxembourg, Greece & Cyprus, and Malta, the shares provided by
         the Notifying Party for 2016 reflect a distribution agreement between Fox and
         […] which is no longer in force. The Commission deems it likely that, in the
         absence of this distribution agreement, Fox' current market share is lower than
         suggested by the figures for 2016. Furthermore, TWDC's Maltese licensing
         revenues for 2016 exceptionally also included […], leading to inflated 2016
         revenues compared to 2015 and 2017. Finally, the provided market share for
         France in 2016 is likely to overstate Fox' current position: [Details on Fox’s
         contractual agreements].
(187) In light of the above, the Commission concludes that the Transaction does not
         raise serious doubts as to its compatibility with the internal market in relation to
         an overall market for the licensing of television rights for films irrespective of
         whether separate markets exist for US films and/or for exhibition windows.
                  (b) Licensing of television rights for other TV content
(188) The activities of the Parties in the licensing of television rights for other TV
         content give rise to affected markets in Germany & Austria and the UK &
         Ireland.130 The Commission nevertheless considers that the Transaction does not
         raise serious doubts as to its compatibility with the internal market in any EEA
         Member State for the reasons set out below.
(189) First, in most Member States, the combined position of the Parties will remain
         modest. Post-Transaction, as shown in Table 10, the Parties' combined market
         shares will be of [20-30]% in Germany and [30-40]% in the UK & Ireland, while
         it will be below [20-30]% in all other countries.
129 Replies to Questionnaire Q9 to TV Channel Suppliers of 17 September 2018, questions 31-32.
130 The Notifying Party confirms that combined market shares for linguistic regions would not materially
    differ from shares provided on a by-country basis. As regards certain territory groups (namely the
    Baltic countries; Belgium & Luxembourg; Germany & Austria; Greece & Cyprus; the Nordic
    countries and the UK & Ireland), the Notifying Party submits that it is not able to provide data on a by-
    country basis for these regions in a reliable manner. However, the Notifying Party submits that such
    market shares would not materially differ from those provided to the Commission (reply to question 11
    of RFI 18).
                                                       41
 ---pagebreak---  ---pagebreak--- 5.3.5. Wholesale supply of TV channels
(194) TWDC and Fox both licence TV channels in the EEA. TWDC also owns, through
       ABC, a 50% stake in A+E Television Networks, LLC (“A&E”), a joint venture
       with Hearst Corporation ("Hearst"). A&E operates six channels showing mostly
       general entertainment and factual content. The Notifying Party argues that A&E
       operates independently from TWDC; it neither manages the negotiating and/or
       licensing of A&E’s factual channels, nor controls A&E’s distribution and/or
       pricing decisions.
(195) The activities of the Parties overlap exclusively in the wholesale supply of basic
       pay-TV channels. In particular, the Transaction gives rise to horizontally affected
       markets in the wholesale supply of basic pay-TV channels (and possible segments
       thereof) in several Member States namely, (i) the wholesale markets for the
       supply of basic pay-TV channels in Germany, Italy, Portugal and Spain; (ii) the
       wholesale market for the supply of general entertainment basic pay-TV channels
       in Italy, Portugal and Spain; (iii) the wholesale market for the supply of children
       basic pay-TV channels in Belgium, Bulgaria, France, Germany, Ireland, Italy, the
       Netherlands, Norway, Poland, Portugal, Romania, Spain and the UK; and (iv) the
       wholesale market for the supply of factual basic pay-TV channels in Belgium,
       Germany, Ireland, Italy, the Netherlands, Norway, Spain and the UK.
                     5.3.5.1.  Notifying Party's views
(196) The Notifying Party submits that the Transaction will not give rise to unilateral
       effects in either the market for the wholesale supply of TV channels or any
       narrower product market(s) in any EEA Member State. First, the audience shares
       held by the Parties in the wholesale market for the supply of pay-TV channels and
       its various segments vastly overstate the Parties' actual market position since even
       large audience shares are in no way indicative of market power given that FTA
       channels exert a strong competitive pressure on pay-TV channels across the EEA.
       Second, in relation to the wholesale supply of children basic pay-TV channels, the
       increment brought by the Transaction is minimal. Third, in relation to the
       wholesale supply of factual basic pay-TV channels, the increment brought by the
       Transaction relates to A&E channels, whose day-to-day activities TWDC has no
       control over. Fourth, in each of the technically affected markets, strong third-
       party rivals will remain post-Transaction. Fifth, given the ongoing shift towards
       non-linear consumption of TV content, share of supply data for the wholesale
       supply of TV channels (generally and on narrower market segmentations)
       substantially understate the competitive constraints on wholesale TV channel
       suppliers.
                     5.3.5.2.  The Commission's assessment
                (a) Wholesale supply of basic pay-TV channels
(197) The activities of the Parties in the wholesale supply of basic pay-TV channels
       give rise to affected markets in four Member States, namely: in Germany, Italy,
       Spain and Portugal (see Table 11).
                                                43
 ---pagebreak---  ---pagebreak---  ---pagebreak---  ---pagebreak---  ---pagebreak---  ---pagebreak--- (219) The Commission considers that in this market the Transaction raises serious
         doubts as to its compatibility with the internal market in Belgium, Germany,
         Ireland, Italy, the Netherlands, Norway, Spain and the UK for the reasons set out
         below.
(220) First, as shown in Table 14, through the combination of Fox's and TWDC's
         (A&E) activities the merged entity will hold a significant market position in the
         market for the wholesale supply of factual basic pay-TV channels across the
         EEA. The Parties would hold particularly strong positions in Germany, Italy and
         Spain. While the combined market shares of the Parties in Norway, the UK and
         Ireland is not particularly high, the Transaction will combine the second and third
         largest providers of factual basic pay-TV channels in those counties. Moreover,
         Discovery would be the only main operator to remain active in the market with
         market shares of respectively [70-80]%, [50-60]% and [50-60]% by audience in
         Norway, the UK and Ireland.
(221) Second, the market investigation has indicated that the Parties are close
         competitors in this market.142 In particular, most of the respondents indicated
         Fox's National Geographic143 channels as the first or second closest competitor to
         TWDC's A&E factual channels144 with Discovery as the only main competing
         provider of factual basic pay-TV channels that would remain available in the
         EEA.
(222) Third, in relation to the Notifying Party's argument that the Transaction would not
         have any impact on the wholesale market for the supply of factual basic pay-TV
         channels due to the absence of control by TWDC on A&E's day-to-day activities,
         the Commission notes that TWDC has the ability of veto over significant aspect
         of A&E activities which may limit its ability to compete across the EEA with
         Fox's National Geographic channels.145
(223) Fourth, most of the respondents to the market investigation indicated that the
         Transaction would have a negative impact on the markets for the wholesale
         supply of basic pay-TV channels.146 In particular, most of the respondents
         indicated that the Transaction would significantly strengthen TWDC's position in
         the supply of factual channels in the EEA. 147
(224) In light of the above, the Commission concludes that the Transaction raises
         serious doubts as to its compatibility with the internal market in relation to the
142  See replies to Questionnaire Q7 to TV Channel Suppliers of 17 September 2018, question 23; replies
     to Questionnaire Q9 to TV Channel Suppliers of 17 September 2018, questions 23, 24; replies to
     Questionnaire Q8 to TV Retail Distributors of 17 September 2018, question 34; replies to
     Questionnaire Q10 to TV Retail Distributors of 17 September 2018, questions 33.
143 Fox's factual channels include National Geographic, National Geographic People, National
     Geographic Wild.
144 A&E channels include History, A&E, H2, Blaze, Crime + Investigation, and Lifetime channels.
145 For example, TWDC has veto rights on: […]).
146 See replies to Questionnaire Q7 to TV Channel Suppliers of 17 September 2018, question 38; replies
     to Questionnaire Q9 to TV Channel Suppliers of 17 September 2018, question 47; replies to
     Questionnaire Q8 to TV Retail Distributors of 17 September 2018, question 46; replies to
     Questionnaire Q10 to TV Retail Distributors of 17 September 2018, question 56.
147 See replies to Questionnaire Q8 to TV Retail Distributors of 17 September 2018, question 41; replies
     to Questionnaire Q10 to TV Retail Distributors of 17 September 2018, questions 45.
                                                        49
 ---pagebreak---          markets for wholesale supply of factual basic pay-TV channels in Belgium,
         Germany, Ireland, Italy, Netherlands, Norway, Spain and the UK.
5.4.     Vertically affected markets
5.4.1. Production and licensing of rights (upstream) and distribution of films for
         theatrical release (downstream)
(225) The Parties' presence in both the production and licensing of rights (upstream)
         and the distribution to exhibitors (downstream) of films for theatrical release
         gives rise to vertically affected markets in a number of Member States.
         Considering the broader markets for the production and licensing of rights of all
         films and theatrical distribution of all films, affected markets arise in Belgium &
         Luxembourg, Germany, Spain, Sweden and UK & Ireland. On the narrower
         markets for the production and licensing of rights and theatrical distribution of US
         films, affected market arise in Austria, Denmark, Belgium & Luxembourg,
         Finland, France, Germany, Italy, Norway, Spain, Sweden, UK & Ireland.
                         5.4.1.1.   Notifying Party's views
(226) The Notifying Party submits that the Transaction will provide TWDC with
         neither the ability nor the incentive to engage in either input foreclosure or
         customer foreclosure. Concerning input foreclosure, the Notifying Party argues
         that TWDC will not be able to engage in input foreclosure in view of the Parties'
         relatively modest combined market share in the upstream market for the
         production and licensing of rights of films and the fact that Fox's films are not a
         critical input for distributors. Concerning customer foreclosure, the Notifying
         Party submits that it will not be able to foreclose other producers' films […], but
         also because of the many alternative routes to market including other producers'
         distribution arms and independent distributors that would be available to them.
                         5.4.1.2.   The Commission's assessment
                    (a) Input foreclosure
(227) In terms of input foreclosure, the Commission has assessed whether, in Member
         States where one of the Parties is vertically integrated into distribution, whereas
         the other party supplies its films to third party distributors, the merged entity
         could foreclose third party distributors downstream by fully internalising the
         distribution process.148
(228) Input foreclosure concerns could arise in Member States where TWDC is
         vertically integrated into distribution whereas Fox supplies its films to third party
         distributors. These are Denmark, Finland, Norway, the Netherlands and Poland.
         There are no Member States where Fox is vertically integrated but TWDC is not.
         Affected markets only arise in Denmark, Finland and Norway in the narrower
         segment of distribution of US films. 149 The Commission nevertheless considers
148 In countries where both Parties are vertically integrated into distribution no vertical links arise between
    production and distribution and these markets are assessed horizontally in Section 5.3.2.
149 The combined market shares of the Parties on the upstream market for the production and licensing of
    rights of all films and TWDC's market share on the downstream market for theatrical distribution of all
                                                         50
 ---pagebreak---  ---pagebreak---          market power and the availability of alternative suppliers, the Commission
         considers that, post-Transaction, TWDC will not have the ability to foreclose
         third party distributors from access to US films for theatrical release.
(232) During the market investigation only one respondent raised the concern that post-
         Transaction distributors might be foreclosed from access to films. However, it did
         not concern any of the Member States where affected markets arise. The same
         respondent also considered that post-Transaction enough alternative providers of
         films for theatrical distribution will remain in the market.151
(233) Some distributors of Fox's films voiced specific concerns in Member States where
         none of the Parties are vertically integrated, especially in Bulgaria and Portugal.
         According to these respondents, the Transaction may cause increased
         concentration on the distribution market by consolidating the distribution of
         TWDC and Fox's films through TWDC's current distributors.152 However, for the
         reasons explained in paragraph (125), the Commission considers that these
         concerns are unfounded and in any event do not relate to a merger-specific
         change of the structure of the market.
(234) In view of the above, the Commission considers that the Transaction would not
         raise serious doubts as to its compatibility with the internal market in relation to
         potential input foreclosure with respect to the vertical relationship between the
         market for the production and supply of films for theatrical release and the market
         for the distribution of films for theatrical release.
                  (b) Customer foreclosure
(235) In terms of customer foreclosure, vertical links arise in Member States where the
         Parties are vertically integrated into distribution and besides their own films offer
         distribution services to competing production studios as well. The question is
         whether post-Transaction the merged entity would have the ability and incentive
         to cease distributing the films of competing studios actively foreclosing them
         from access to exhibitors. Since the competitive dynamics are the same on the
         markets for production and distribution of all films and production and
         distribution of US films, the assessment is applicable to both and they will thus be
         analysed together.
(236) TWDC carries out the distribution of films of other studios in Finland and
         Germany. Fox does so in all EEA Member States where it is active in distribution.
(237) Considering the markets for the production and licensing of rights (upstream) and
         theatrical distribution (downstream) of all films, the Parties' activities give rise to
         vertically affected markets in Belgium & Luxembourg, Germany, Spain, Sweden
         and UK & Ireland.
151 Replies to Questionnaire Q2 to distributors, of 17 September 2018, question 41.
152 Replies to Questionnaire Q2 to distributors, of 17 September 2018, questions 43 and 47.
                                                         52
 ---pagebreak---  ---pagebreak---  ---pagebreak--- (243) No concerns have been raised from customers of the Parties in this respect during
         the market investigation.153
(244) In view of the above, the Commission considers that the Transaction would not
         raise serious doubts as to its compatibility with the internal market in relation to
         potential customer foreclosure with respect to the vertical relationship between
         the market for the production and supply of films for theatrical release and the
         market for the distribution of films for theatrical release, both in the case of all
         films as well as for US films.
5.4.2. Licensing of TV content and wholesale supply of basic pay-TV channels and retail
         supply of TV services
(245) The Transaction gives rise to vertical relationships with regard to the Parties'
         activities in the upstream market for the production and licensing of TV audio-
         visual content and their downstream activities in (i) the wholesale supply of TV
         channels, and in (ii) the retail supply of TV services. TWDC and Fox also acquire
         audio-visual content for incorporation into their own TV channels and retail TV
         services. More specifically, vertically affected markets arise due to the Parties'
         upstream activities in the in licensing of television rights for films154 and pre-
         produced other TV content ([30-40]% in the UK and Ireland), and TWDC's
         extremely limited downstream activity as a retail provider of SVOD (DisneyLife).
                         5.4.2.1.    Notifying Party's views
(246) The Notifying Party submits that the Transaction will provide TWDC with
         neither the ability nor the incentive to engage in either input foreclosure or
         customer foreclosure. Concerning input foreclosure, the Notifying Party argues
         that TWDC will not be able to engage in such conduct in view of the Parties'
         relatively modest combined market share in the upstream market for the
         production of films and the fact that Fox's films are not a critical input for
         distributors. Concerning customer foreclosure, the Notifying Party submits that it
         will not be able to foreclose other producers' films due to the contractual
         obligations of the Parties with those producers, but also because of the many
         alternative routes to the market available to competitors including other
         producers' of films would be available to them.
                         5.4.2.2.    The Commission's assessment
                  (a) Input foreclosure
(247) In terms of input foreclosure the Commission assesses whether post-Transaction
         the merged entity would have the ability and incentive to foreclose downstream
         competitors in the markets of (i) wholesale supply of TV channels and (ii) retail
         supply of TV services from access to (US) films.
153 Replies to Questionnaire Q1 to studios, of 17 September 2018, question 87.
154 The Parties hold a combined market shares over [30-40]% in the markets for: (i) licensing of
    television rights for films in France and the UK/Ireland; (ii) licensing of TVOD/PPV rights for films
    (Greece/Cyprus); (iii) licensing of first pay-TV window rights for films in France, Greece/Cyprus,
    Malta and Spain; (iv) licensing of FTA rights for films in Baltics (Estonia, Latvia, Lithuania), Belgium
    & Luxembourg, Bulgaria, Slovakia and the UK & Ireland..
                                                         55
 ---pagebreak--- (248) During the market investigation respondents have indicated that, post-
        Transaction, the merged entity may (i) enjoy increased bargaining power and
        therefore degrade terms and conditions to which it makes its content available,
        and/or (ii) offer exclusively its TV content through its upcoming OTT
        subscription service, Disney Play.
(249) However, the Commission considers that the Transaction would not result in the
        foreclosure of third party wholesale channel suppliers and TV retailers and is
        unlikely to have an overall negative impact on effective competition.
(250) First, the merged entity would not have the ability to foreclose access to films to
        its customers. With regards to the licensing of (US) films rights, as indicated in
        Section 5.3.4.2.(a), the Parties hold a combined market shares over [30-40]% in
        the following plausible markets: (i) licensing of television rights for (US) films in
        France and the UK/Ireland; (ii) licensing of TVOD/PPV rights for (US) films
        (Greece/Cyprus); (iii) licensing of first pay-TV window rights for (US) films in
        France, Greece/Cyprus, Malta and Spain; (iv) licensing of FTA rights for (US)
        films in Baltics (Estonia, Latvia, Lithuania), Belgium & Luxembourg, Bulgaria,
        Slovakia and the UK & Ireland. For the reasons set out in Section 5.3.4.2.(a), the
        Commission considers that the merged entity would not hold significant market
        power under any narrower product and geographic market definition. Moreover, it
        will not be able to significantly degrade terms and conditions vis-à-vis its
        customers due to the availability of several alternatives in the upstream markets.
        The Parties will still face significant competitive constraints post-Transaction. A
        significant number of competitors remain in all affected markets, including other
        major US studios. With regards to the licensing of other TV content, the
        Commission notes that the Parties hold a combined market share over [30-40]%
        exclusively in the UK and Ireland (see Section 5.3.4.2.(b)). The Commission
        considers that the presence of the other US majors such as Warner Bros (which
        includes HBO channels), Universal, Sony and Paramount suffices to guarantee
        that post-Transaction, wholesale suppliers of TV channels will be able to source
        other TV content from credible alternatives to the merged entity.
(251) With respect to the potential foreclosure strategy in relation to competing
        providers of TV channels across the EEA, the Commission considers that, as
        shown in Section 5.3.5, the merged entity is mainly active in the wholesale supply
        of channels of specific genres such as factual and children and it would therefore
        not likely have the incentive to stop offering its films to third parties in order to
        use them on genre channels which target specific and distinct audiences.
(252) With respect to the potential foreclosure strategy in relation to competing
        providers of TV retail services across the EEA, the Commission considers that,
        since the merged entity has no meaningful presence in the retail provision of
        audio-visual services across the EEA155, even if the merged entity would
        implement such conduct, it is unlikely to significantly affect other retail provider
        of TV services with high market shares in countries where they operate in the
        next three years.
155 The market position of the merged entity would not be materially different in the narrower plausible
    market for the provision of retail OTT audio-visual services. In this market, the main market players
    would be Netflix and Amazon.
                                                      56
 ---pagebreak--- (253) In view of the above, the Commission considers that the Transaction would not
       raise serious doubts as to its compatibility with the internal market in relation to
       potential input foreclosure with respect to the vertical relationship between the
       upstream market for the production and licensing of TV content in general, and
       films in particular, and the downstream markets for the wholesale supply of pay-
       TV channels and retail provision of TV services.
                (b) Customer foreclosure
(254) In terms of customer foreclosure the Commission needs to assess whether post-
       Transaction the merged entity would have the ability and incentive to foreclose
       upstream competitors in the market for the production and licensing of TV audio-
       visual content from access to the market by no longer acquiring such content as
       an input to its activities in the downstream markets of (i) wholesale supply of
       basic pay-TV channels and (ii) retail supply of TV services.
(255) With respect to the merged entity's ability to foreclose competitors from access to
       the market of wholesale supply of basic pay-TV channels, the Commission notes
       that, as discussed in Section 5.3.5, the merged entity would not hold significant
       market power under any product and geographic market definition other than the
       market for the wholesale supply of factual pay-TV channels in a number of
       Member States. With respect to the vertical link between the Parties' activities in
       producing films, the question of customer foreclosure concerns upstream
       competitors in the production of films and the Parties' acquisition of such content
       in their downstream activities. Therefore, any market power held by the Parties in
       the market for the wholesale supply of factual pay-TV channels is irrelevant in
       the assessment. With respect to the vertical link between the Parties' activities in
       supply of other TV content, and in particular factual content which could be
       relevant to competing providers of factual basic pay-TV channels, the
       Commission notes that pre-Transaction, […]156. […]. Moreover, no respondents
       to the market investigation raised concerns related to the potential foreclosure of
       third party providers of factual content. In any event, any merger specific increase
       in the Parties' position in the market for the wholesale of factual basic pay-TV
       channels is removed by the commitments (see Section 6 below).
(256) With respect to the merged entity's ability to foreclose competitors from access to
       the market of retail supply of TV services, and more specifically TWDC's SVOD
       service DisneyLife, the Commission considers that the merged entity will not
       hold significant market power in the downstream market for the retail supply of
       TV services. TWDC has a market share of less than [0-5]% across the EEA
       through the supply of ESPN Player. As a result, and given numerous competitors
       will remain on the market, TWDC will not be able to foreclose competitors from
       access to the market of retail supply of TV services.
(257) In view of the above, the Commission considers that the Transaction would not
       raise serious doubts as to its compatibility with the internal market in relation to
       potential customer foreclosure with respect to the vertical relationship between
       the upstream market for the production and licensing of TV content in general,
156 […].
                                                57
 ---pagebreak---       and films in particular, and the downstream markets for the wholesale supply of
      pay-TV channels and retail provision of TV services.
6.    COMMITMENTS
6.1.  Introduction
(258) In order to remove the serious doubts arising from the Transaction described in
      Section 5.3.5.2 (d) in relation to the market for the wholesale supply of factual
      Pay-TV channels in Belgium, Germany, Ireland, Italy, the Netherlands, Norway,
      Spain and the UK, the Notifying Party submitted commitments pursuant to
      Article 6(2) of the Merger Regulation on 12 October 2018 (the "Initial
      Commitments").
(259) The Commission launched a market test of the Initial Commitments on
      16 October 2018. Following the feedback received from the Commission, the
      Notifying Party submitted a final set of commitments on 24 October 2018 (the
      "Final Commitments").
(260) The Final Commitments are annexed to this decision and form an integral part
      thereof.
6.2.  Analytical framework
(261) Where the Commission considers that a concentration will raise competition
      concerns the parties may seek to modify the concentration in order to resolve such
      competition concerns and thereby gain clearance of their merger.157
(262) In Phase I, commitments offered by the parties can only be accepted where the
      competition problem is readily identifiable and can easily be remedied. The
      competition problem therefore needs to be so straightforward and the remedies so
      clear-cut that it is not necessary to enter into an in-depth investigation. The
      commitments must be sufficient to clearly rule out "serious doubts" within the
      meaning of Article 6(1)(c) of the Merger Regulation. Where the assessment
      confirms that the proposed commitments remove the grounds for serious doubts
      on this basis, the Commission clears the merger in Phase I.158
(263) In assessing whether the proposed commitments will likely eliminate the
      competition concerns identified, the Commission considers all relevant factors
      including inter alia the type, scale and scope of the proposed commitments,
      judged by reference to the structure and particular characteristics of the market in
      which the competition concerns arise, including the position of the parties and
      other participants on the market.159
157  Commission notice on remedies acceptable under Council Regulation (EC) No 139/2004 and under
     Commission Regulation (EC) No 802/2004 (the "Remedies Notice"), OJ 2008/C 267/01,
     Paragraph 5.
158  Remedies Notice, Paragraph 81.
159  Remedies Notice, Paragraph 12.
                                                  58
 ---pagebreak--- (264) In order for the commitments to comply with these principles, commitments must
       be capable of being implemented effectively within a short period of time.160
       Where, however, the parties submit remedies proposals that are so extensive and
       complex that it is not possible for the Commission to determine with the requisite
       degree of certainty, at the time of its decision, that they will be fully implemented
       and that they are likely to maintain effective competition in the market, an
       authorisation decision cannot be granted.161
(265) As concerns the form of acceptable commitments, the Merger Regulation leaves
       discretion to the Commission as long as the commitments meet the requisite
       standard.162 Structural commitments will meet the conditions set out above only in
       so far as the Commission is able to conclude with the requisite degree of certainty
       that it will be possible to implement them and that it will be likely that the new
       commercial structures resulting from them will be sufficiently workable and
       lasting to ensure that the significant impediment to effective competition will not
       materialise.163
(266) Divestiture commitments are generally the best way to eliminate competition
       concerns resulting from horizontal overlaps, although other structural
       commitments, such as access remedies, may be suitable to resolve concerns if
       those remedies are equivalent to divestitures in their effects.164
(267) It is against this background that the Commission analysed the proposed
       commitments in this case.
6.3.   Initial Commitments
6.3.1. Description of the Initial Commitments
(268) The Initial Commitments consisted of the divestment of TWDC’s direct and
       indirect ownership interests in the legal entities that hold the "factual" channels
       currently operated by A&E LLC (including its subsidiaries and joint ventures) in
       the EEA, which include the History, H2, and Crime + Investigation channels (the
       "Divestment Business").
(269) The Divestment Business also included all assets and staff that are primarily
       dedicated to and constitute the current operation or are necessary to ensure the
       viability and competitiveness of the Divestment Business, in particular:
               a. all tangible and intangible assets (including intellectual property rights
                    but not including ownership rights in the: A&E, History, H2, Crime &
                    Investigation, Blaze or Lifetime channel names or logos);
               b. all licences, permits and authorisations issued by any governmental
                    organisation for the benefit of the Divestment Business;
160   Remedies Notice, Paragraph 9.
161   Remedies Notice, Paragraphs 13, 14 and 61 et seq.
162   Case T-177/04 easyJet v Commission [2006] ECR II-1913, Paragraph 197.
163   Remedies Notice, Paragraph 10.
164   Remedies Notice, Paragraph 61.
                                                     59
 ---pagebreak---                  c. all contracts, leases, commitments and customer orders of the
                    Divestment Business; all customer, credit and other records of the
                    Divestment Business; and
                 d. the Personnel.
(270) In addition, the Initial Commitments included access to all current arrangements
       under which TWDC or its Affiliated Undertakings supply or make available
       assets, products or services to the Divestment Business for a transitional period of
       up to [...] years on terms and conditions equivalent to those at present afforded to
       the Divestment Business. The assets, products and services would relate to the
       supply of content and shared IT and corporate functions.
(271) With regards to supply of content, the Divestment Business procures audio-visual
       content from A&E LLC for use on their channels, under arm’s length content
       licences. TWDC commits to procure that A&E LLC will amend the existing
       agreements in order to continue to supply such program rights to AETN Italy,
       THCG, AETN UK, and THCI (as appropriate) for a period of at least […]
       following the transfer of the Divestment Business to the Purchaser.
(272) With regards to supply of shared IT and corporate functions, AETN UK and
       AETN Italy rely on A&E LLC for certain software and IT support services.
6.3.2. Commission's assessment
(273) The Commission initiated a market test of the commitments on 16 October 2018
       and received responses from TV distributors and TV broadcasters.
(274) The results of the market test were broadly positive on the concept of the Initial
       Commitment; market participants considered that in principle the Commitment
       constituted a structural solution for the competition concerns identified by the
       Commission with respect to the market for the wholesale supply of pay-TV
       channels. However, taking into account the responses from the market test, the
       Commission identified several shortcomings affecting the viability and the
       competitiveness of the Divestment Business.
(275) Taking into account the responses from the market test, the Commission
       subsequently assessed the commitments and concluded that they did not entirely
       remove its competition concerns.
(276) First, several respondents to the market test indicated that in order to ensure the
       viability of the Divestment Business, it would be necessary to guarantee the
       future programming supply to the Divestment Business by extending the duration
       of agreements related to the supply of content. Most of the respondents indicated
       that […] is a short duration and several respondents suggested that those
       agreements should remain in place for […].165
(277) Second, on the basis of information provided by respondents to the market test,
       the Commission considered that the Initial Commitments did not clearly indicate
       the duration, terms and conditions to which A&E, History, H2, Crime &
165   Replies to Market Test on Remedies of 16 October 2018, questions 7, 11, 17.
                                                    60
 ---pagebreak---        Investigation, Blaze or Lifetime trademarks, channel names or logos would have
       been made available to the Divestment Business. Several respondents indicated
       that those tangible assets are crucial to the viability of the Divestment Business.
       One respondent noted that channel carriage agreements are for branded channels
       and that without the brands there is a risk that those agreements will be terminated
       or renegotiated by the retail customers.166
(278) With regards to personnel, most of the respondents to the market test did not
       identify difficulties or risks in the implementation of the transfer of personnel.167
       Respondents mainly highlighted that key personnel responsible for taking
       decisions on the acquisition of content, distribution of channels or other strategic
       decision should be part of the Divestment Business.168
(279) […]169 […].170
6.4.   Final Commitments
6.4.1. Description of the Final Commitments
(280) The Notifying Party submitted revised commitments on 24 October 2018, to
       address the shortcomings identified by the Commission subsequent to the market
       test. The Final Commitments consist of the revised version of the Initial
       Commitments and more precisely they contain the following main modifications.
(281) First, the Notifying Party has indicated the legal entities, with their assets and
       personnel, that hold the "factual" channels currently operated by A&E LLC
       (including its subsidiaries and joint ventures) in the EEA. Specifically: […]171;
       […].172
(282) Second, the duration of transitional agreements related to the supply of content to
       the Divestment Business has been extended. The existing content supply
       agreements between A&E LLC and the Divestment Business will remain in place
       for a period of at least […] following the transfer of the Divestment Business to
       the Purchaser and on terms and conditions equivalent to those at present afforded
       to these entities.
(283) Third, the Final Commitments include the terms to which the Divestment
       Business will have access to A&E LLC’s trademarks, channel names, logos. The
       Divestment Business will have access to those intangible assets at no charge and
       for as long as it is necessary to ensure the continued viability and competitiveness
       of the Divestment Business.
(284) […].
166   Replies to Market Test on Remedies of 16 October 2018, question 10.
167   Replies to Market Test on Remedies of 16 October 2018, questions 8.
168   Replies to Market Test on Remedies of 16 October 2018, question 9.
169   Replies to Market Test on Remedies of 16 October 2018, question 14.
170   Replies to Market Test on Remedies of 16 October 2018, question 15.
171   […].
172   […].
                                                    61
 ---pagebreak--- 6.4.2. Commission's assessment
(285) In the Final Commitments, the Notifying Party's amendments appropriately
        address the shortcomings identified by the Commission affecting the viability and
        the competitiveness of the Divestment Business.
(286) First, under the Final Commitments, the duration of the content supply
        agreements has been extended in line with the suggestions received by market
        participants in the market test.
(287) Second, the Final Commitments clearly indicate the duration, terms and
        conditions to which A&E, History, H2, Crime & Investigation, Blaze or Lifetime
        trademarks, channel names or logos will be made available to the Divestment
        Business.
(288) Moreover, the Final Commitments clearly indicate the legal entities, their main
        assets, agreements with customers and personnel which form part of the
        Divestment Business.
(289) […].173 […]174 […].
6.4.3. Conclusion
(290) For the reasons outlined above, the commitments entered into by the undertakings
        concerned are sufficient to eliminate the serious doubts as to the compatibility of
        the Transaction with the internal market.
(291) Under the first sentence of the second subparagraph of Article 6(2) of the Merger
        Regulation, the Commission may attach to its decision conditions and obligations
        intended to ensure that the undertakings concerned comply with the commitments
        they have entered into vis-à-vis the Commission with a view to rendering the
        concentration compatible with the internal market.
(292) The fulfilment of the measure that gives rise to the structural change of the market
        is a condition, whereas the implementing steps which are necessary to achieve
        this result are generally obligations on the Parties. Where a condition is not
        fulfilled, the Commission's decision declaring the concentration compatible with
        the internal market is no longer applicable. Where the undertakings concerned
        commit a breach of an obligation, the Commission may revoke the clearance
        decision in accordance with Article 6(3) of the Merger Regulation. The
        undertaking concerned may also be subject to fines and periodic penalty
        payments under Articles 14(2) and 15(1) of the Merger Regulation.
(293) In accordance with the basic distinction between conditions and obligations, the
        commitments in Section B and the Schedule of the Annex constitute conditions
        attached to this decision, as only through full compliance therewith can the
        structural changes in the relevant markets be achieved. The other commitments
        set out in the Annex constitute obligations, as they concern the implementing
173 Paragraph 2 of the Final Commitments.
174 Notice on remedies, paragraph 55.
                                                62
 ---pagebreak---       steps which are necessary to achieve the modifications sought in a manner
      compatible with the internal market.
(294) The full text of the Final Commitments is attached to this Decision as the Annex
      and forms an integral part thereof.
7.    CONCLUSION
(295) For the above reasons, the Commission has decided not to oppose the Transaction
      as modified by the Final Commitments and to declare it compatible with the
      internal market and with the functioning of the EEA Agreement, subject to full
      compliance with the conditions in Section B and the Schedule of the Final
      Commitments annexed to this decision and with the obligations contained in the
      other paragraphs of the Final Commitments. This decision is adopted in
      application of Article 6(1)(b) in conjunction with Article 6(2) of the Merger
      Regulation and Article 57 of the EEA Agreement.
                                                   For the Commission
                                                   (Signed)
                                                   Margrethe VESTAGER
                                                   Member of the Commission
                                            63
 ---pagebreak---  Case M. 8785 – THE WALT DISNEY COMPANY / TWENTY-FIRST
                                        CENTURY FOX
          COMMITMENTS TO THE EUROPEAN COMMISSION
Pursuant to Article 6(2) of Council Regulation (EC) No 139/2004 (the “Merger Regulation”),
The Walt Disney Company (“TWDC”) (the “Notifying Party”) hereby enters into the following
Commitments (the “Commitments”) vis-à-vis the European Commission (the “Commission”)
with a view to rendering its acquisition of sole control of certain subsidiaries of Twenty-First
Century Fox, Inc (the “Concentration”) compatible with the internal market and the functioning
of the EEA Agreement.
This text shall be interpreted in light of the Commission’s decision pursuant to Article 6(1)(b) of
the Merger Regulation of the Merger Regulation to declare the Concentration compatible with
the internal market and the functioning of the EEA Agreement (the “Decision”), in the general
framework of European Union law, in particular in light of the Merger Regulation, and by
reference to the Commission Notice on remedies acceptable under Council Regulation (EC) No
139/2004 and under Commission Regulation (EC) No 802/2004 (the “Remedies Notice”).
Section A.        Definitions
1. For the purpose of the Commitments, the following terms shall have the following meaning:
     A&E LLC: A&E Television Networks, LLC
     Affiliated Undertakings: undertakings controlled by the Parties and/or by the ultimate
     parents of the Parties, whereby the notion of control shall be interpreted pursuant to Article 3
     of the Merger Regulation and in light of the Commission Consolidated Jurisdictional Notice
     under Council Regulation (EC) No 139/2004 on the control of concentrations between
     undertakings (the "Consolidated Jurisdictional Notice").
     Assets: the assets that are primarily related to the Divestment Business and contribute to the
     current operation or are necessary to ensure the viability and competitiveness of the
     Divestment Business as indicated in Section B, paragraph 5 (a), (b) and (c) and described
     more in detail in the Schedule.
     Closing: the transfer of the legal title to the Divestment Business to the Purchaser.
     Closing Period: the period of […] from the approval of the Purchaser and the terms of sale
     by the Commission, or the date on which the Concentration closes, whichever is later.
     Confidential Information: any business secrets, know-how, commercial information, or any
     other information of a proprietary nature that is not in the public domain.
 ---pagebreak--- Conflict of Interest: any conflict of interest that impairs the Trustee's objectivity and
independence in discharging its duties under the Commitments.
Divestment Business: the business or businesses as defined in Section B and in the Schedule
which the Notifying Party commits to divest.
Divestiture Trustee: one or more natural or legal person(s) who is/are approved by the
Commission and appointed by TWDC and who has/have received from TWDC the exclusive
Trustee Mandate to sell the Divestment Business to a Purchaser at no minimum price.
Effective Date: the date of adoption of the Decision.
First Divestiture Period: the period of […] from the Effective Date.
Hold Separate Manager: the person appointed by TWDC or an Affiliated Undertaking for
the Divestment Business to manage the day-to-day business under the supervision of the
Monitoring Trustee.
Key Personnel: all personnel necessary to maintain the viability and competitiveness of the
Divestment Business, as listed in the Schedule, including the Hold Separate Manager.
Monitoring Trustee: one or more natural or legal person(s) who is/are approved by the
Commission and appointed by TWDC, and who has/have the duty to monitor TWDC’s
compliance with the conditions and obligations attached to the Decision.
Parties: the Notifying Party and the undertaking that is the target of the concentration.
Personnel: all staff currently employed by the Divestment Business, including staff seconded
to the Divestment Business, shared personnel primarily devoted to the Divestment Business
as well as the additional personnel listed in the Schedule.
Purchaser: the entity approved by the Commission as acquirer of the Divestment Business in
accordance with the criteria set out in Section D.
Purchaser Criteria: the criteria laid down in paragraph 17 of these Commitments that the
Purchaser must fulfil in order to be approved by the Commission.
Schedule: the schedule to these Commitments describing more in detail the Divestment
Business.
Trustee(s): the Monitoring Trustee and/or the Divestiture Trustee as the case may be.
Trustee Divestiture Period: the period of […] from the end of the First Divestiture Period.
                                                  2
 ---pagebreak---     The Walt Disney Company (“TWDC”): The Walt Disney Company, incorporated under
    the laws of the State of Delaware, with its registered office at 500 South Buena Vista Street
    Burbank, California 91521.
Section B.       The commitment to divest and the Divestment Business
       Commitment to divest
2. In order to maintain effective competition, TWDC commits to divest, or procure the
    divestiture of, the Divestment Business by the end of the Trustee Divestiture Period as a
    going concern to a purchaser and on terms of sale approved by the Commission in
    accordance with the procedure described in paragraph 18 of these Commitments
    (“Divestiture”). To carry out the divestiture, TWDC commits to find a purchaser and to enter
    into a final binding sale and purchase agreement for the sale of the Divestment Business
    within the First Divestiture Period. If TWDC has not entered into such an agreement at the
    end of the First Divestiture Period, TWDC shall grant the Divestiture Trustee an exclusive
    mandate to sell the Divestment Business in accordance with the procedure described in
    paragraph 30 in the Trustee Divestiture Period. The proposed concentration shall not be
    implemented before TWDC or the Divestiture Trustee and Purchaser have entered into a final
    binding sale and purchase agreement for the sale of the Divestment Business and the
    Commission has approved the Purchaser and the terms of sale in accordance with paragraph
    18.
3. TWDC shall be deemed to have complied with this commitment if:
       (a)      by the end of the Trustee Divestiture Period, TWDC or the Divestiture Trustee
                and the Purchaser have entered into a final binding sale and purchase agreement
                and the Commission approves the proposed purchaser and the terms of sale as
                being consistent with the Commitments in accordance with the procedure
                described in paragraph 18; and
       (b)      the Closing of the sale of the Divestment Business to the Purchaser takes place
                within the Closing Period.
4. In order to maintain the structural effect of the Commitments, the Notifying Party shall, for a
    period of 10 years after Closing, not acquire, whether directly or indirectly, the possibility of
    exercising influence (as defined in paragraph 43 of the Remedies Notice, footnote 3) over the
    whole or part of the Divestment Business, unless, following the submission of a reasoned
    request from the Notifying Party showing good cause and accompanied by a report from the
    Monitoring Trustee (as provided in paragraph 44 of these Commitments), the Commission
    finds that the structure of the market has changed to such an extent that the absence of
    influence over the Divestment Business is no longer necessary to render the proposed
    concentration compatible with the internal market.
                                                     3
 ---pagebreak---       Structure and definition of the Divestment Business
5. The Divestment Business consists of TWDC’s ownership interests in the legal entities that
   hold the “factual” channels currently operated by A&E LLC (including its subsidiaries and
   joint ventures) in the EEA, which include the History, H2, and Crime + Investigation
   channels operated by A&E LLC (including its subsidiaries and joint ventures) in the EEA.
   The legal and functional structure of the Divestment Business as operated to date is described
   in the Schedule. The Divestment Business includes all assets and staff that are primarily
   dedicated to and constitute the current operation or are necessary to ensure the viability and
   competitiveness of the Divestment Business, in particular:
      (a)       all tangible and intangible assets (including intellectual property rights but not
                including ownership rights in the: A&E, History, H2, Crime & Investigation,
                Blaze or Lifetime trademarks, channel names, or logos);
      (b)       all licences, permits and authorisations issued by any governmental organisation
                for the benefit of the Divestment Business;
      (c)       all contracts, leases, commitments and customer orders of the Divestment
                Business; all customer, credit and other records of the Divestment Business; and
      (d)       the Personnel.
6. TWDC commits to procure that A&E LLC will maintain the existing content supply
   agreements listed under 6(c) of the Schedule in order to continue to supply such program
   rights (including rights to new programs that become available during this period) to AETN
   Italy, THCG, AETN UK, and THCI (as appropriate) for a period of at least […] years
   following the transfer of the Divestment Business to the Purchaser and on terms and
   conditions equivalent to those at present afforded to these entities. At the Purchaser’s
   election, program rights made available to AETN Italy, THCG, AETN UK, and THCI (as
   appropriate) under this clause will include rights to content made available to A&E LLC’s
   channels operating outside the EEA under the A&E, Blaze, Lifetime, History, H2, or Crime +
   Investigation (or similar) channel names.
7. TWDC commits to enter into the necessary contract arrangements to ensure that A&E LLC
   will make available to the Divestment Business at no charge the A&E LLC’s trademarks,
   channel names, and logos to AETN Italy, THCG, AETN UK, and THCI for as long as it is
   necessary to ensure the continued viability and competitiveness of the Divestment Business .
8. In addition, the Divestment Business includes the benefit, for a transitional period of up to
   […] after Closing and on terms and conditions equivalent to those at present afforded to the
   Divestment Business, of all other current arrangements under which TWDC or its Affiliated
   Undertakings supply or make available assets, products or services to the Divestment
   Business, as detailed in the Schedule, unless otherwise agreed with the Purchaser. Strict
   firewall procedures will be adopted so as to ensure that any competitively sensitive
   information related to, or arising from such supply arrangements (for example, product
   roadmaps) will not be shared with, or passed on to, anyone outside the business units
   supplying or making available such assets, products or services.
                                                    4
 ---pagebreak---  Section C.        Related commitments
       Preservation of viability, marketability and competitiveness
9. From the Effective Date until Closing, the Notifying Party shall preserve or procure the
    preservation of the economic viability, marketability and competitiveness of the Divestment
    Business, in accordance with good business practice, and shall minimise as far as possible
    any risk of loss of competitive potential of the Divestment Business. In particular TWDC
    undertakes:
       (a)        not to carry out any action that might have a significant adverse impact on the
                  value, management or competitiveness of the Divestment Business or that might
                  alter the nature and scope of activity, or the industrial or commercial strategy or
                  the investment policy of the Divestment Business;
       (b)        to make available, or procure to make available, sufficient resources for the
                  development of the Divestment Business, on the basis and continuation of the
                  existing business plans;
       (c)        to take all reasonable steps, or procure that all reasonable steps are being taken,
                  including appropriate incentive schemes (based on industry practice), to
                  encourage all Key Personnel to remain with the Divestment Business, and not to
                  solicit or move any Personnel to TWDC’s remaining business. Where,
                  nevertheless, individual members of the Key Personnel exceptionally leave the
                  Divestment Business, TWDC shall provide a reasoned proposal to replace the
                  person or persons concerned to the Commission and the Monitoring Trustee.
                  TWDC must be able to demonstrate to the Commission that the replacement is
                  well suited to carry out the functions exercised by those individual members of
                  the Key Personnel. The replacement shall take place under the supervision of the
                  Monitoring Trustee, who shall report to the Commission.
       Hold-separate obligations
10. The Notifying Party commits, from the Effective Date until Closing, to procure that the
    Divestment Business is kept separate from the business(es) that the Notifying Party and A&E
    LLC will be retaining and, after closing of the Concentration to keep the Divestment
    Business Separate from the business that the Notifying Party and A&E LLC is retaining and
    to ensure that unless explicitly permitted under these Commitments: (i) management and
    staff of the business(es) retained by TWDC have no involvement in the Divestment Business;
    (ii) the Key Personnel and Personnel of the Divestment Business have no involvement in any
    business retained by TWDC and do not report to any individual outside the Divestment
    Business.
11. Until Closing, TWDC shall assist the Monitoring Trustee in ensuring that the Divestment
    Business is managed as a distinct and saleable entity separate from the business(es) which
    TWDC (including its Affiliated Undertakings) is retaining. Immediately after the adoption of
    the Decision, TWDC shall appoint, or procure the appointment of, a Hold Separate Manager.
    The Hold Separate Manager, who shall be part of the Key Personnel, shall manage the
    Divestment Business independently and in the best interest of the business with a view to
                                                      5
 ---pagebreak---     ensuring its continued economic viability, marketability and competitiveness and its
    independence from the businesses retained by TWDC. The Hold Separate Manager shall
    closely cooperate with and report to the Monitoring Trustee and, if applicable, the Divestiture
    Trustee. Any replacement of the Hold Separate Manager shall be subject to the procedure
    laid down in paragraph 8(c) of these Commitments. The Commission may, after having heard
    TWDC, require TWDC to replace the Hold Separate Manager.
       Ring-fencing
12. TWDC shall implement, or procure to implement, all necessary measures to ensure that it
    does not, after the Effective Date , obtain any Confidential Information relating to the
    Divestment Business and that any such Confidential Information obtained by TWDC before
    the Effective Date will be eliminated and not be used by TWDC, except as is necessary to
    ensure the viability of the Divestment Business (including as is necessary for any retained
    businesses to provide transitional services to the Divestment Business) and to meet TWDC’s
    legal and statutory obligations. This includes measures vis-à-vis TWDC's appointees on the
    supervisory board and/or board of directors of the A&E LLC. In particular, the participation
    of the Divestment Business in any central information technology network shall be severed to
    the extent possible, without compromising the viability of the Divestment Business. TWDC
    may obtain or keep information relating to the Divestment Business which is reasonably
    necessary for the divestiture of the Divestment Business or the disclosure of which to TWDC
    is required by law.
       Non-solicitation clause
13. TWDC undertakes, subject to customary limitations, not to solicit, and to procure that
    Affiliated Undertakings do not solicit, the Key Personnel transferred with the Divestment
    Business for a period of two years after Closing.
       Due diligence
14. In order to enable potential purchasers to carry out a reasonable due diligence of the
    Divestment Business, TWDC shall, subject to customary confidentiality assurances and
    dependent on the stage of the divestiture process, and to the extent reasonably possible:
       (a)       provide to potential purchasers sufficient information as regards the Divestment
                 Business;
       (b)       provide to potential purchasers sufficient information relating to the Personnel
                 and allow them reasonable access to the Personnel.
        Reporting
15. TWDC shall submit written reports in English on potential purchasers of the Divestment
    Business and developments in the negotiations with such potential purchasers to the
    Commission and the Monitoring Trustee no later than 10 days after the end of every month
    following the Effective Date (or otherwise at the Commission’s request). TWDC shall submit
    a list of all potential purchasers having expressed interest in acquiring the Divestment
    Business to the Commission at each and every stage of the divestiture process, as well as a
    copy of all the offers made by potential purchasers within five days of their receipt.
                                                     6
 ---pagebreak--- 16. TWDC shall inform the Commission and the Monitoring Trustee on the preparation of the
    data room documentation and the due diligence procedure and shall submit a copy of any
    information memorandum to the Commission and the Monitoring Trustee before sending the
    memorandum out to potential purchasers.
Section D.       The Purchaser
17. In order to be approved by the Commission, the Purchaser must fulfil the following criteria:
      (a) The Purchaser shall be independent of the Notifying Party and its Affiliated
      Undertakings (this being assessed having regard to the situation following the divestiture).
      (b) The Purchaser shall have the financial resources, proven expertise and incentive to
      maintain and develop the Divestment Business as a viable and active competitive force in
      competition with the Parties and other competitors;
      (c) The acquisition of the Divestment Business by the Purchaser must neither be likely to
      create, in light of the information available to the Commission, prima facie competition
      concerns nor give rise to a risk that the implementation of the Commitments will be
      delayed. In particular, the Purchaser must reasonably be expected to obtain all necessary
      approvals from the relevant regulatory authorities for the acquisition of the Divestment
      Business.
18. The final binding sale and purchase agreement (as well as ancillary agreements) relating to
    the divestment of the Divestment Business shall be conditional on the Commission’s
    approval. When TWDC has reached an agreement with a purchaser, it shall submit a fully
    documented and reasoned proposal, including a copy of the final agreement(s), within one
    week to the Commission and the Monitoring Trustee. TWDC must be able to demonstrate to
    the Commission that the purchaser fulfils the Purchaser Criteria and that the Divestment
    Business is being sold in a manner consistent with the Commission's Decision and the
    Commitments. For the approval, the Commission shall verify that the purchaser fulfils the
    Purchaser Criteria and that the Divestment Business is being sold in a manner consistent with
    the Commitments including their objective to bring about a lasting structural change in the
    market. The Commission may approve the sale of the Divestment Business without one or
    more Assets or parts of the Personnel, or by substituting one or more Assets or parts of the
    Personnel with one or more different assets or different personnel, if this does not affect the
    viability and competitiveness of the Divestment Business after the sale, taking account of the
    proposed purchaser.
Section E.       Trustee
       I.        Appointment procedure
19. TWDC shall appoint a Monitoring Trustee to carry out the functions specified in these
    Commitments for a Monitoring Trustee. The Notifying Party commits not to close the
    Concentration before the appointment of a Monitoring Trustee.
                                                    7
 ---pagebreak--- 20. If TWDC has not entered into a binding sale and purchase agreement regarding the
    Divestment Business one month before the end of the First Divestiture Period or if the
    Commission has rejected a purchaser proposed by TWDC at that time or thereafter, TWDC
    shall appoint a Divestiture Trustee. The appointment of the Divestiture Trustee shall take
    effect upon the commencement of the Trustee Divestiture Period.
21. The Trustee shall:
       (i) at the time of appointment, be independent of the Notifying Party and its/their Affiliated
       Undertakings;
       (ii) possess the necessary qualifications to carry out its mandate, for example have
       sufficient relevant experience as an investment banker or consultant or auditor; and
       (iii) neither have nor become exposed to a Conflict of Interest.
22. The Trustee shall be remunerated by the Notifying Party in a way that does not impede the
    independent and effective fulfilment of its mandate. In particular, where the remuneration
    package of a Divestiture Trustee includes a success premium linked to the final sale value of
    the Divestment Business, such success premium may only be earned if the divestiture takes
    place within the Trustee Divestiture Period.
                    Proposal by TWDC
23. No later than two weeks after the Effective Date, TWDC shall submit the name or names of
    one or more natural or legal persons whom TWDC proposes to appoint or cause to be
    appointed as the Monitoring Trustee to the Commission for approval. No later than one
    month before the end of the First Divestiture Period or on request by the Commission,
    TWDC shall submit a list of one or more persons whom TWDC proposes to appoint as
    Divestiture Trustee to the Commission for approval. The proposal shall contain sufficient
    information for the Commission to verify that the person or persons proposed as Trustee
    fulfil the requirements set out in paragraph 21 and shall include:
       (a)         the full terms of the proposed mandate, which shall include all provisions
                   necessary to enable the Trustee to fulfil its duties under these Commitments;
       (b)         the outline of a work plan which describes how the Trustee intends to carry out
                   its assigned tasks;
       (c)         an indication whether the proposed Trustee is to act as both Monitoring Trustee
                   and Divestiture Trustee or whether different trustees are proposed for the two
                   functions.
                    Approval or rejection by the Commission
24. The Commission shall have the discretion to approve or reject the proposed Trustee(s) and to
    approve the proposed mandate subject to any modifications it deems necessary for the
    Trustee to fulfil its obligations. If only one name is approved, TWDC shall appoint or cause
    to be appointed the person or persons concerned as Trustee, in accordance with the mandate
    approved by the Commission. If more than one name is approved, TWDC shall be free to
                                                       8
 ---pagebreak---     choose the Trustee to be appointed from among the names approved. The Trustee shall be
    appointed within one week of the Commission’s approval, in accordance with the mandate
    approved by the Commission.
                   New proposal by the TWDC
25. If all the proposed Trustees are rejected, TWDC shall submit the names of at least two more
    natural or legal persons within one week of being informed of the rejection, in accordance
    with paragraphs 19 and 24 of these Commitments.
                   Trustee nominated by the Commission
26. If all further proposed Trustees are rejected by the Commission, the Commission shall
    nominate a Trustee, whom TWDC shall appoint, or cause to be appointed, in accordance with
    a trustee mandate approved by the Commission.
        II.        Functions of the Trustee
27. The Trustee shall assume its specified duties and obligations in order to ensure compliance
    with the Commitments. The Commission may, on its own initiative or at the request of the
    Trustee or TWDC, give any orders or instructions to the Trustee in order to ensure
    compliance with the conditions and obligations attached to the Decision.
                   Duties and obligations of the Monitoring Trustee
28. The Monitoring Trustee shall:
    (i)       propose in its first report to the Commission a detailed work plan describing how it
              intends to monitor compliance with the obligations and conditions attached to the
              Decision.
    (ii)      oversee, in close co-operation with the Hold Separate Manager, the on-going
              management of the Divestment Business with a view to ensuring its continued
              economic viability, marketability and competitiveness and monitor compliance by
              TWDC with the conditions and obligations attached to the Decision. To that end the
              Monitoring Trustee shall:
                (a) monitor the preservation of the economic viability, marketability and
                     competitiveness of the Divestment Business, and the keeping separate of the
                     Divestment Business from the business retained by the Parties (including its
                     Affiliated Undertakings), in accordance with paragraphs 9 and 10 of these
                     Commitments;
                (b) supervise the management of the Divestment Business as a distinct and
                     saleable entity, in accordance with paragraph 11 of these Commitments;
                (c) with respect to Confidential Information:
                                                      9
 ---pagebreak---                 −   determine all necessary measures to ensure that TWDC does not after
                    the Effective Date obtain any Confidential Information relating to the
                    Divestment Business,
                −   in particular strive for the severing of the Divestment Business’
                    participation in a central information technology network to the extent
                    possible, without compromising the viability of the Divestment
                    Business,
                −   make sure that any Confidential Information relating to the Divestment
                    Business obtained by TWDC before the Effective Date is eliminated
                    and will not be used by TWDC and
                −   decide whether such information may be disclosed to or kept by TWDC
                    as the disclosure is reasonably necessary to allow TWDC to carry out
                    the divestiture or as the disclosure is required by law;
        (d) monitor the splitting of assets and the allocation of Personnel between the
              Divestment Business and TWDC or Affiliated Undertakings;
(iii) propose to TWDC such measures as the Monitoring Trustee considers necessary to
      ensure TWDC’s compliance with the conditions and obligations attached to the
      Decision, in particular the maintenance of the full economic viability, marketability
      or competitiveness of the Divestment Business, the holding separate of the
      Divestment Business and the non-disclosure of competitively sensitive information;
(iv)  review and assess potential purchasers as well as the progress of the divestiture
      process and verify that, dependent on the stage of the divestiture process:
        (a) potential purchasers receive sufficient and correct information relating to the
              Divestment Business and the Personnel in particular by reviewing, if
              available, the data room documentation, the information memorandum and
              the due diligence process, and
        (b) potential purchasers are granted reasonable access to the Personnel;
(v)   act as a contact point for any requests by third parties, in particular potential
      purchasers, in relation to the Commitments;
(vi)  provide to the Commission, sending TWDC a non-confidential copy at the same
      time, a written report within 15 days after the end of every month that shall cover the
      operation and management of the Divestment Business as well as the splitting of
      assets and the allocation of Personnel so that the Commission can assess whether the
      business is held in a manner consistent with the Commitments and the progress of the
      divestiture process as well as potential purchasers;
(vii) promptly report in writing to the Commission, sending TWDC a non-confidential
      copy at the same time, if it concludes on reasonable grounds that TWDC is failing to
      comply with these Commitments;
                                                10
 ---pagebreak---     (viii)   within one week after receipt of the documented proposal referred to in paragraph 18
             of these Commitments, submit to the Commission, sending TWDC a non-
             confidential copy at the same time, a reasoned opinion as to the suitability and
             independence of the proposed purchaser and the viability of the Divestment Business
             after the Sale and as to whether the Divestment Business is sold in a manner
             consistent with the conditions and obligations attached to the Decision, in particular,
             if relevant, whether the Sale of the Divestment Business without one or more Assets
             or not all of the Personnel affects the viability of the Divestment Business after the
             sale, taking account of the proposed purchaser;
    (ix)     assume the other functions assigned to the Monitoring Trustee under the conditions
             and obligations attached to the Decision.
29. If the Monitoring and Divestiture Trustee are not the same legal or natural persons, the
    Monitoring Trustee and the Divestiture Trustee shall cooperate closely with each other
    during and for the purpose of the preparation of the Trustee Divestiture Period in order to
    facilitate each other's tasks.
                   Duties and obligations of the Divestiture Trustee
30. Within the Trustee Divestiture Period, the Divestiture Trustee shall sell at no minimum price
    the Divestment Business to a purchaser, provided that the Commission has approved both the
    purchaser and the final binding sale and purchase agreement (and ancillary agreements) as in
    line with the Commission's Decision and the Commitments in accordance with paragraphs 17
    and 18 of these Commitments. The Divestiture Trustee shall include in the sale and purchase
    agreement (as well as in any ancillary agreements) such terms and conditions as it considers
    appropriate for an expedient sale in the Trustee Divestiture Period. In particular, the
    Divestiture Trustee may include in the sale and purchase agreement such customary
    representations and warranties and indemnities as are reasonably required to effect the sale.
    The Divestiture Trustee shall protect the legitimate financial interests of TWDC, subject to
    the Notifying Party’s unconditional obligation to divest at no minimum price in the Trustee
    Divestiture Period.
31. In the Trustee Divestiture Period (or otherwise at the Commission’s request), the Divestiture
    Trustee shall provide the Commission with a comprehensive monthly report written in
    English on the progress of the divestiture process. Such reports shall be submitted within 15
    days after the end of every month with a simultaneous copy to the Monitoring Trustee and a
    non-confidential copy to the Notifying Party.
       III.        Duties and obligations of the Parties
32. TWDC shall provide and shall cause its advisors to provide the Trustee with all such co-
    operation, assistance and information as the Trustee may reasonably require to perform its
    tasks. The Trustee shall have or TWDC shall procure full and complete access to any of
    TWDC’s or the Divestment Business’ books, records, documents, management or other
    personnel, facilities, sites and technical information necessary for fulfilling its duties under
    the Commitments and TWDC and the Divestment Business shall provide the Trustee upon
    request with copies of any document. TWDC shall procure for the Divestment Business to
                                                      11
 ---pagebreak---     make available to the Trustee one or more offices on their premises and shall be available for
    meetings in order to provide the Trustee with all information necessary for the performance
    of its tasks.
33. TWDC shall provide or procure for the Monitoring Trustee all managerial and administrative
    support that it may reasonably request on behalf of the management of the Divestment
    Business. This shall include all administrative support functions relating to the Divestment
    Business which are currently carried out at headquarters level. TWDC shall provide and shall
    cause its advisors to provide the Monitoring Trustee, on request, with the information
    submitted to potential purchasers, in particular give the Monitoring Trustee access to the data
    room documentation and all other information granted to potential purchasers in the due
    diligence procedure. TWDC shall inform the Monitoring Trustee on possible purchasers,
    submit lists of potential purchasers at each stage of the selection process, including the offers
    made by potential purchasers at those stages, and keep the Monitoring Trustee informed of
    all developments in the divestiture process.
34. TWDC shall grant or procure Affiliated Undertakings to grant comprehensive powers of
    attorney, duly executed, to the Divestiture Trustee to effect the sale (including ancillary
    agreements), the Closing and all actions and declarations which the Divestiture Trustee
    considers necessary or appropriate to achieve the sale and the Closing, including the
    appointment of advisors to assist with the sale process. Upon request of the Divestiture
    Trustee, TWDC shall cause the documents required for effecting the sale and the Closing to
    be duly executed.
35. TWDC shall indemnify the Trustee and its employees and agents (each an “Indemnified
    Party”) and hold each Indemnified Party harmless against, and hereby agrees that an
    Indemnified Party shall have no liability to TWDC for, any liabilities arising out of the
    performance of the Trustee’s duties under the Commitments, except to the extent that such
    liabilities result from the wilful default, recklessness, gross negligence or bad faith of the
    Trustee, its employees, agents or advisors.
36. At the expense of TWDC, the Trustee may appoint advisors (in particular for corporate
    finance or legal advice), subject to TWDC’s approval (this approval not to be unreasonably
    withheld or delayed) if the Trustee considers the appointment of such advisors necessary or
    appropriate for the performance of its duties and obligations under the Mandate, provided
    that any fees and other expenses incurred by the Trustee are reasonable. Should TWDC
    refuse to approve the advisors proposed by the Trustee the Commission may approve the
    appointment of such advisors instead, after having heard TWDC. Only the Trustee shall be
    entitled to issue instructions to the advisors. Paragraph 35 of these Commitments shall apply
    mutatis mutandis. In the Trustee Divestiture Period, the Divestiture Trustee may use advisors
    who served TWDC during the Divestiture Period if the Divestiture Trustee considers this in
    the best interest of an expedient sale.
37. TWDC agrees that the Commission may share Confidential Information proprietary to
    TWDC with the Trustee. The Trustee shall not disclose such information and the principles
    contained in Article 17 (1) and (2) of the Merger Regulation apply mutatis mutandis.
                                                     12
 ---pagebreak--- 38. The Notifying Party agrees that the contact details of the Trustee are published on the website
    of the Commission's Directorate-General for Competition and they shall inform interested
    third parties, in particular any potential purchasers, of the identity and the tasks of the
    Trustee.
39. For a period of 10 years from the Effective Date the Commission may request all information
    from the Parties that is reasonably necessary to monitor the effective implementation of these
    Commitments.
        IV.       Replacement, discharge and reappointment of the Trustee
40. If the Trustee ceases to perform its functions under the Commitments or for any other good
    cause, including the exposure of the Trustee to a Conflict of Interest:
    (a) the Commission may, after hearing the Trustee and TWDC, require TWDC to replace the
    Trustee; or
    (b) TWDC may, with the prior approval of the Commission, replace the Trustee.
41. If the Trustee is removed according to paragraph 40 of these Commitments, the Trustee may
    be required to continue in its function until a new Trustee is in place to whom the Trustee has
    effected a full hand over of all relevant information. The new Trustee shall be appointed in
    accordance with the procedure referred to in paragraphs 19-26 of these Commitments.
42. Unless removed according to paragraph 40 of these Commitments, the Trustee shall cease to
    act as Trustee only after the Commission has discharged it from its duties after all the
    Commitments with which the Trustee has been entrusted have been implemented. However,
    the Commission may at any time require the reappointment of the Monitoring Trustee if it
    subsequently appears that the relevant remedies might not have been fully and properly
    implemented.
Section F.        The review clause
43. The Commission may extend the time periods foreseen in the Commitments in response to a
    request from TWDC or, in appropriate cases, on its own initiative. Where TWDC requests an
    extension of a time period, it shall submit a reasoned request to the Commission no later than
    one month before the expiry of that period, showing good cause. This request shall be
    accompanied by a report from the Monitoring Trustee, who shall, at the same time send a
    non-confidential copy of the report to the Notifying Party. Only in exceptional circumstances
    shall TWDC be entitled to request an extension within the last month of any period.
44. The Commission may further, in response to a reasoned request from the Notifying Party
    showing good cause waive, modify or substitute, in exceptional circumstances, one or more
    of the undertakings in these Commitments. This request shall be accompanied by a report
    from the Monitoring Trustee, who shall, at the same time send a non-confidential copy of the
    report to the Notifying Party. The request shall not have the effect of suspending the
    application of the undertaking and, in particular, of suspending the expiry of any time period
    in which the undertaking has to be complied with.
                                                     13
 ---pagebreak--- Section G.      Entry into force
45. The Commitments shall take effect upon the date of adoption of the Decision.
       ……………………………………
       duly authorised for and on behalf of
       The Walt Disney Company
                                                 14
 ---pagebreak---  ---pagebreak---  ---pagebreak--- 7.  TWDC commits to procure that A&E LLC will maintain the existing content supply
    agreements listed under 6(c) of this Schedule in order to continue to supply such program
    rights (including rights to new programs that become available during this period) to
    AETN Italy, THCG, AETN UK, and THCI (as appropriate) for a period of at least […]
    years following the transfer of the Divestment Business to the Purchaser and on terms and
    conditions equivalent to those at present afforded to these entities. At the Purchaser’s
    election, program rights made available to AETN Italy, THCG, AETN UK, and THCI (as
    appropriate) under this clause will include rights to content made available to A&E LLC’s
    channels operating outside the EEA under the A&E, Blaze, Lifetime, History, H2, or
    Crime + Investigation (or similar) channel names.
8.  TWDC commits to enter into the necessary contract arrangements to ensure that A&E LLC
    will make available to the Divestment Business at no charge the A&E LLC’s trademarks,
    channel names, and logos to AETN Italy, THCG, AETN UK, and THCI for as long as it is
    necessary to ensure the continued viability and competitiveness of the Divestment
    Business.
9.  TWDC commits to procure that, during a transitional period of up to […], A&E LLC will
    continue to make the necessary IT functions available to AETN UK and AETN Italy.
10. TWDC commits to procure that, during a transitional period of up to […..], A&E LLC will
    continue to make employees at its International Division and the Finance & Accounting,
    Legal & Business Affairs, Human Resources, Facilities, and Technology Departments
    available for consultation with AETN Italy, THCG, AETN UK, and THCI.
11. The Divestment Business shall not include TWDC’s interests in any channels or
    businesses other than those listed above, whether operated by A&E LLC, TWDC, or 21CF
    (or entities under their “control” for the purposes of the EU Merger Regulation).
12. If there is any asset or personnel which is not covered by paragraphs 2-10 of this Schedule
    but which is both used (exclusively or not) in the Divestment Business and necessary for
    its continued viability and competitiveness, that asset or adequate substitute will be offered
    to the Purchaser. For avoidance of doubt this should also include personnel or assets
    owned or employed by A&E LLC.
                                                   3