News

The CC applies binding conditions on acquisition of MTG Broadcasting AB

(23.10.2017.)

On 6 October, the Competition Council of Latvia (the CC) adopted a decision to approve UAB Bite Lietuva acquiring of companies of MTG Broadcasting AB Group in Latvia. The CC has applied several binding conditions on the merger to prevent possible harm to competition on the television programme wholesale market and advertisement placement market on television.

According to the merger notification UAB Bite Lietuva plans to acquire control over all companies of MTG Broadcasting AB Group in Latvia – SIA “TV3 LATVIA”, AS “Latvijas Neatkarīgā Televīzija”, VIASAT AS Latvia branch, SIA “Star FM” and SIA “Smart AD”. The CC identified two markets as affected by the transaction: television programme wholesale market in Latvia and advertisement placement market on television in Latvia.

UAB Bite Lietuva does not offer retail of television programme, but it has made a public announcement concerning its desire to do it in future. The CC foresees, that by doing so the company as the potential retailer of television programmes and MTG Broadcasting AB as the wholesaler of television programmes potentially would establish vertical cooperation relations, which would cause risks for other retailers of television programmes to acquire programmes of MTG Broadcasting AB on equivalent conditions. Whereas, considering the significant influence of MTG Broadcasting AB on the advertisement placement market, the CC sees potential restrictions to competitors of UAB Bite Lietuva to access this market.

Based on the identified problems, the CC concluded, that the merger may significantly reduce competition in separate markets. In order to prevent the expected harm to competition, UAB Bite Lietuva offered binding conditions, which the CC has approved as efficient. These conditions stipulate, that:

  • In order to prevent the risk, that the merged market participant restricts access to the television programme wholesale market for other companies, it shall distribute owned television programmes to all market participants on non-discriminatory conditions. The company also shall ensure on its website an opportunity for everyone to become acquainted with the applied current procedures for granting of broadcasting rights, including various technological solutions, as well as the principles for application of discounts, making it clear and understandable for all market participants.
  • Also the merged parties will not be allowed to combine the television programme group TV3, 3+, TV6 with the television programme group LNT and Kanāls2 for selling them to other market participants for further distribution to viewers. This will also allow the competing companies to acquire broadcasting rights of separate television programmes, not the entire set of MTG Broadcasting AB television programmes. It has to be emphasized, that this condition was applied to MTG Broadcasting AB already in 2012, when it acquired AS “Latvijas Neatkarīgā Televīzija”.
  • If the aforementioned programmes are offered as combined programmes within one group, the discount for the programme group offer shall not exceed 20% of the total price for programmes of the respective group when acquired separately.
  • In order to prevent competition restriction on the market of advertisement placement on television, for example, by denying competitors of UAB Bite Lietuva a possibility to advertise in programmes of MTG Broadcasting AB, the merger shall ensure a possibility to place advertising clips in programmes on non-discriminatory conditions for all market participants. By 30 November of this year, the company shall publish on its website the procedures and criteria, according to which the possibility for placement of such advertisements is offered.
  • Also, to prevent the risk of using the commercial information of competitors, obtained during the process of placement of advertisements by UAB Bite Lietuva, the new market participant is obliged to use the obtained information only for the intended purpose, i.e., for placement of advertisements.
  • Taking into consideration, that UAB Bite Lietuva owns capital shares of SIA “Baltcom”, the new market participant has to ensure starting from the moment of coming into effect of the decision, that neither its representatives, nor representatives of associated companies will not participate in management bodies and will not engage in adoption of strategical, tactical and operational decisions related to activity of SIA “Baltcom”. By doing so, the risk of the new company violating the permissible limits of cooperation with SIA “Baltcom” or making unauthorized information exchange, which may promote unauthorized coordination of activities of both companies, will be eliminated.