German cartel office clears Liberty cable deal

BERLIN -- Germany's federal antitrust watchdog, the Bundeskartellamt, has approved Liberty Global's 3.16 billion ($4.1 billion) acquisition of regional cabler Kabel Baden-Wuerttemberg. Liberty is planning to merge Kabel BW with its Unitymedia, Germany's second-biggest regional cabler, which John Malone's company acquired in 2009 for some $5 billion. The watchdog said on Thursday that it had cleared the deal "subject to conditions and obligations." In October the cartel office expressed concerns about the deal, saying that it could strengthen the oligopoly in the nationwide licensing market currently dominated by the country's biggest cable operator, Kabel Deutschland, Unitymedia and Kabel BW. While the antitrust regulator said the planned merger would have a negative impact on the feed-in market characterized by the competitive relationship between the cable network operators and TV channels, it added that Liberty had agreed to a number of commitments that would increase competition opportunities of third providers. Housing associations in Unitymedia and Kabel BW's areas of operation will be granted special contract termination rights, making it possible for them to look for less expensive cable providers. "Liberty undertakes to grant special termination rights for large contracts for retail TV services and to end its encryption of digital free TV programs. The company has also agreed to forgo certain exclusivity clauses and ownership claims or rights to dismantle household cable connections," the watchdog said. Bundeskartellamt prexy Andreas Mundt added, "This merger could only be cleared with far-reaching commitments by the companies involved. We now see the chance of more competition in the cable markets. With the obligation to open up large long-term contracts with the housing industry, and give up further contractual rights as well as the basic encryption of digital free TV programs, the negative effects of the merger are compensated." For Liberty, the victory comes a decade after cartel regulators foiled Malone's plan to buy Germany's entire cable system for $5 billion from telco giant Deutsche Telekom. Contact Ed Meza at staff@variety.com