The Commission has only just published this 1998
decision, taken under the then “new” Article 2(4) of
the Merger Control Regulation.
Background
Acquisition by Cegetel, Canal+, American On-line
and Berthelsmann of joint control over AOL/CIS. Cegetel provides a
broad range of telecom services and Internet services in France.
Canal+ is a French company that provides pay-television
broadcasting and distributes television services by cable and
satellite. American On-line (AOL) is a corporation engaged in the
provision of interactive services to individual subscribers towards
the world. It operates in France via two joint ventures with
Bertelsmann: BAOL-SNC and CompuServe Interactive Services France
(CIS SNC). Bertelsmann is a media group which publishes books,
magazines and newspapers, publishes and distributes music and
records and programs aimed for private television. It is also
engaged in multimedia. According to the Commission, the relevant
product markets are dial-up Internet access, Internet advertising
and paid for content provision. The relevant geographic scope of
the market, according to the Commission, could either be national
or extended to all French-speaking regions.
Assessment
Owing to the market shares of the parties and the
fact that the size of the market for paid-for content is extremely
small, and the vast number of information providers that develop
content and make it available, the Commission concluded that the
joint venture would not create or strengthen a dominant
position.
The Commission assessed the operation pursuant to
Article 2(4) of the Merger Regulation and assessed the
co-ordination of competitive behaviour in the market for dial-up
Internet access, content provision on the Internet and network
distribution services. On all of these markets, given the market
shares of the parties, any possible coordination could not lead to
an appreciable restriction of competition due to the small market
share.
The parties notified possible restrictions as
ancillary restraints. AOL, CIS and Cegetel undertook to license to
the joint venture certain technology, content and trademarks and to
provide certain related services. Also, Cegetel agreed to provide
either free of charge or on the basis of most-favoured customer
terms, certain marketing and promotional benefit to the joint
venture over a period of 5 years. A non-competition obligation was
agreed, provided that for a period of 5 years AOL, Bertelsmann,
Cegetel and Canal+ will not offer or provide, other then through
the joint venture, within France, PC access services falling within
the scope of activities of the joint venture. The above-mentioned
clauses were all considered as directly related and necessary to
the implementation of the concentration.
The parties also notified as an ancillary provision
the creation of an interim committee which will review the
operations of the joint venture and oversee compliance of the
parties with their duties and obligations between the signing date
and the date the agreements become fully effective. The Commission
stated that these arrangements concerned the stage before the
establishment of control within the meaning of the Merger
Regulation and that they are therefore not directly related to the
implementation of the concentration. (Case No COMP/JV5, Decision of
4 August 1998)