Vodafone draws formal EU objections to Liberty Global deal

02 April 2019 12:32 by Nicholas Hirst

Vodafone has received formal EU objections to its plan to buy a swath of Liberty Global’s businesses in Europe, MLex has learned.

The charge sheet from the European Commission raises concerns about how the merger would affect competition in two German markets — broadband and broadcasting — and seems to drop preoccupations about the Czech Republic, it is understood.

The Statement of Objections, which was issued last month, also appears to scale back reservations about the delivery of television to German apartment blocks and other “multi-dwelling units,” or MDUs. That development will doubtless please Vodafone and Liberty Global, which have long argued that the regional footprints of their cable networks in Germany “don’t compete or overlap.”

Vodafone called the development "an expected part of the review process" and said in a statement that it intended to continue its "constructive dialogue with the commission."*

The official EU objections oblige Vodafone to respond in writing. The UK-based operator will have an opportunity to request a closed-door hearing where it can present its arguments to commission officials in Brussels.

The commission currently has until June 3 to rule on the transaction, according to its online register of notified mergers. The deadline could be pushed back if the acquirer draws from a pot of extra working days. At this stage of the review, the regulator would have to agree to an extension.

Vodafone said it still expected to receive "final approval in the middle of this year,” its statement said.

Concerns and questionnaires

Vodafone announced in May that it had agreed to purchase Liberty Global’s cable operations in Germany, the Czech Republic, Hungary and Romania for 18.4 billion euros, or about $20.5 billion today.

The EU regulator opened an in-depth investigation into the deal in December, warning that the German piece of the merger might lessen the bargaining power of broadcasters, slow the rollout of next-generation networks, and curb competition in the retail markets for television distribution and telecommunications.

Since then, the commission has canvassed Vodafone’s suppliers and competitors in Germany on issues ranging from how often consumers buy bundles of telecom services to how far Netflix has spread in the country.

Case handlers also asked telecom operators, broadcasters and others to submit in writing proposals for concessions that Vodafone might make to remedy their concerns about the deal, as MLex has reported.

The proposed solutions ranged from asset sales and network-access agreements to changes in a system under which Vodafone and Liberty’s cable networks collect “carriage fees” from broadcasters.

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