UOKiK gives conditional consent to takeover of Multimedia Polska by Vectra

Conditional consent: Vectra – Multimedia Polska

Vectra and Multimedia Polska (Multimedia) operate on the market of cable television and provide services for accessing the Internet.

The Office referred the case to the second stage of the proceedings and raised objections to the transaction. The market research showed that consent to the transaction would lead to restriction of competition on local markets. At the same time, Vectra was obliged to fulfil specific conditions which would reduce a risk to equal competition of entrepreneurs.

Our condition applies to a total of 21 towns. It consists of two parts. The first is structural, i.e. it consists of selling the chain in eight towns where the shares of concentration participants are the largest. In 13 others Vectra will have to enable clients to change operators without the need to incur costs, says Michał Holeksa, Vice President of UOKiK.

Selling the chain

According to UOKiK’s condition, Vectra will have to sell its or Multimedia’s chain in eight towns (such as Gorzów Wielkopolski, Kwidzyń, Łowicz, Olsztyn, Ostróda, Pogórze, Pruszcz Gdański and Stargard). Vectra will set up new companies to which it will transfer both tangible and intangible assets, including contracts with subscribers, telecommunications infrastructure, contracts with employees, accounting and technical and subscriber databases, from each of the above-mentioned towns. Then these companies will be sold to an independent investor that cannot be either a member to the Vectra capital group or be jointly controlled by any entity from this group. The buyer must be accepted by UOKiK. Before new companies are sold, they will be obliged to provide access to pay-TV and broadband fixed-line Internet at least at the same level Vectra or Multimedia provided their services. In addition, Vectra will not take any marketing actions to acquire subscribers until the companies are sold.

Subscribers have flexibility to choose their service provider

Another condition that Vectra must fulfil is to allow subscribers from 13 towns to freely change service providers. These towns include: Barcin, Inowrocław, Kruszwica, Lubicz Dolny, Łęczyca, Mogilno, Nakło nad Notecią, Piechcin, Słubice, Strzelno, Suwałki, Szubin and Świnoujście. Within seven months of the decision becoming valid, Vectra must notify its customers that during the next nine months they may terminate the contract for access to pay-TV and/or broadband fixed-line Internet free of charge. It will apply to contracts with Vectra and its subsidiaries, including Multimedia.

The notification can be sent by registered mail or e-mail. In addition, this information will be provided together with bills and invoices and through set-top boxes.

How UOKiK defined the market

Pursuant to previous decisions, UOKiK assumed that pay-TV is a separate product market compared to digital terrestrial television. In practice, this means that Vectra and Multimedia compete for clients with other providers of cable and satellite TVs. Potential pay-TV subscribers have little interest in terrestrial television services.

As far as the Internet is concerned, the Office made a distinction between fixed and mobile network access markets, as it did before. This is a result of speed, quality and stability of the Internet connection and preferences of consumers who do not want to replace one service with another.

In geographical terms, however, the town area is the market on which operators of cable television and broadband internet access operate and compete with other providers of such services. This is a consequence of limited range of their network, and thus geographically limited competition for customers in a specific area.

Pursuant to legal regulations, a transaction must be reported to UOKiK if it involves enterprises with a total turnover for the previous year exceeding EUR 1 billion in the world or EUR 50 million in Poland. When analysing the concentration, President of the Office may prohibit the transaction, give consent to it or make such a consent conditional on an enterprise fulfilling additional conditions. Decisions are valid for two years. Since 2004, this has been the 31st decision imposing obligations on an applicant filling for transaction in total and the first one passed this year.

This decision is not final. The applicant may appeal to the Court of Competition and Consumer Protection. At the same time we inform that the UOKiK website provides information on all antitrust proceedings regarding concentration conducted by the Office.