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German watchdog barks at Liberty sale

Cartel regulator uneasy about cable acquisition

For John Malone, it probably seems like a bad case of deja vu.

Germany’s federal antitrust watchdog, the Bundeskartellamt, has expressed concerns about the planned €3.16 billion ($4.4 billion) acquisition of regional cabler Kabel Baden-Wuerttemberg by Malone’s Liberty Global.

In 2001, cartel regulators foiled Malone’s plan to buy Germany’s entire cable system for $5 billion from telco giant Deutsche Telekom.

A decade later, the watchdog is again wary and on Friday it informed the parties of its misgivings in its preliminary legal assessment of the new deal.

Liberty hopes to merge Kabel BW with its Unitymedia, Germany’s second-biggest regional cabler, which Malone acquired in 2009 for some $5 billion.

Chief among the cartel office’s concerns is the fear that this would strengthen the oligopoly in the nationwide licensing market, dominated by Kabel Deutschland, Unitymedia and Kabel BW.

All three cablers operate in distinct geographical regions and do not compete with one another for licenses outside their distribution areas.

But the cartel office said it would be technically possible and economically viable for the operators to supply premises throughout Germany — and merging Unitymedia and Kabel BW would reduce the oligopoly from three to two companies.

“Under these circumstances it would be even more unlikely for KDG and Unitymedia/Kabel BW to engage in competition with one another,” the watchdog said.

Liberty has submitted a commitment proposal to the cartel office to dispel its concerns. The watchdog has yet to comment on that proposal but will subject it to a market test and obtain opinions from third parties to assess whether it alleviates the problems.

The office has extended the deadline for a final decision to Dec. 15.

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