On March 17, 2011, the German Federal Cartel Office
(Bundeskartellamt) rejected plans by German broadcasting groups RTL
and Pro7Sat1 to launch a joint venture for the creation and
operation of an online video platform. This decision illustrates
how in Europe, particularly in Germany, antitrust authorities tend
to look at media markets very narrowly and to be skeptical of
traditional efficiency arguments.
RTL (owned by Bertelsmann) and Pro7Sat1 are the two largest
free-to-air television broadcasters in Germany. In unrelated
proceedings, the Federal Civil Court recently found that RTL and
Pro7Sat1 have a combined share of approximately 80% of the
television advertising market in Germany and that they form a
dominant duopoly. RTL and Pro7Sat1 proposed to create an internet
platform financed by advertisements and targeted at German and
Austrian consumers for reruns of television content within a seven
days ("catch up") period after the program has initially
been broadcast in free TV. The internet platform was intended to be
open to other content channels, against payment for use of the
The parties filed their project with the EU Commission in August
2010 for antitrust approval. Germany and Austria requested a
referral, saying that the project would harm competition in their
jurisdictions. The Commission referred the case to Germany and
Austria in September 2010, noting that the project raised
"significant competition concerns."
The Cartel Office found that the joint venture would strengthen the
duopoly of RTL and Pro7Sat1 in Germany and would, in addition, very
likely result in collaboration between the joint venture partners
in their broadcasting business outside the joint venture's
In its assessment, the Cartel Office took the potential
procompetitive effects of a new video-on-demand platform into
consideration, in particular, the improvement in terms of
video-on-demand offers and also in relation to navigation through
available content (the platform would have been the first one-stop
shop platform for free content in Germany). However, RTL and
Pro7Sat1 failed to convince the Office that these effects outweigh
the restraints of competition the platform would entail. In
particular, the Cartel Office remained unconvinced that RTL and
Pro7Sat1 would operate the platform in an open manner, and that the
platform would indeed be limited to providing purely technical
services to content providers.
Therefore, the Cartel Office concluded that the joint venture
"would further strengthen the existing dominant duopoly
between the two broadcasting groups in the market for TV
RTL and Pro7Sat1 have one month to appeal to the Higher Regional
Court of Düsseldorf.
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