EU threatens German merger

AFTER a week of manoeuvring by top executives and officials, the European Commission is poised to block a digital television alliance between Germany's two biggest media companies, Bertelsmann and Kirch Group.

At a meeting in Brussels on Friday, EU competition commissioner Karel Van Miert rejected a last-ditch proposal from the two companies to save the merger, paving the way for an outright veto of the deal by Brussels on 27 May.

An EU ban of the proposed alliance would send shock waves through the boardrooms of Europe's other large media companies, such as France's Canal Plus, as it would show Mr Van Miert's determination to thwart any attempts by the giants to pre-empt competition in fast-growth media markets.

According to sources inside the Commission, Bertelsmann, which recently bought the publisher Random House, and Kirch have only one way to avert a humiliating defeat at the hands of Brussels regulators - they can withdraw the alliance proposal entirely, giving the Commission nothing to veto. "Either they withdraw or Van Miert will definitely propose a negative decision," said the Commission source.

On Thursday, Bertelsmann and Kirch sent a last-minute proposal to the Commission in a bid to alleviate the competition concerns. The details were not revealed, but EU officials said it was "too little, too late".

If Mr Van Miert does follow the recommendations of the Commission's draft decision to block the deal outright, he would be going against the wishes of his boss, Commission President Jacques Santer. The Bertelsmann-Kirch venture would have been marketed under the banner of CLT-Ufa, a joint venture between Bertelsmann and CLT, the biggest company in Mr Santer's native Luxembourg. "I have never seen a case so heavily lobbied" said one EU insider. "Santer is panicking a bit."

The Commission says the deal is unacceptable because rivals would effectively be barred from Germany's digital television market as the two companies would control access to the set-top decoder box viewers will need to receive programmes.

Competition officials in Brussels also believe the venture would dominate the most lucrative pay-TV content, as Kirch has worldwide broadcasting rights for World Cup soccer and big Hollywood films.

Canal Plus lobbied the Commission to approve the deal because it fears a veto would set a precedent in regulating the new European television landscape.

Observers say the decision on Bertelsmann is unlikely to affect an upcoming Brussels decision on the joint digital TV venture between British Sky Broadcasting and British Telecom, British Interactive Broadcasting. The Commission is expected to grant conditional approval this month for BIB, an interactive home shopping and banking service due to launch later this year.

BIB, which already has clearance from the UK regulators, is a key part of the plan to launch up to 200 digital satellite channels in the UK in June.

Mr Van Miert has been concerned that BIB would create a dominant player that could prevent competitors entering the market. Brussels has been reported as insisting that BT's local phone network, which provides the link for the interactive services, should be available to rivals at fair prices.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Digital Marketing Exec / Online Marketing Executive

£35 - 40k: Guru Careers: Our client has a new role for a Digital Marketing Exe...

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Management Accountant

£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

Day In a Page

General Election 2015: ‘We will not sit down with Nicola Sturgeon’, says Ed Balls

'We will not sit down with Nicola Sturgeon'

In an exclusive interview, Ed Balls says he won't negotiate his first Budget with SNP MPs - even if Labour need their votes to secure its passage
VE Day 70th anniversary: How ordinary Britons celebrated the end of war in Europe

How ordinary Britons celebrated VE Day

Our perception of VE Day usually involves crowds of giddy Britons casting off the shackles of war with gay abandon. The truth was more nuanced
They came in with William Caxton's printing press, but typefaces still matter in the digital age

Typefaces still matter in the digital age

A new typeface once took years to create, now thousands are available at the click of a drop-down menu. So why do most of us still rely on the old classics, asks Meg Carter?
Discovery of 'missing link' between the two main life-forms on Earth could explain evolution of animals, say scientists

'Missing link' between Earth's two life-forms found

New microbial species tells us something about our dark past, say scientists
The Pan Am Experience is a 'flight' back to the 1970s that never takes off - at least, not literally

Pan Am Experience: A 'flight' back to the 70s

Tim Walker checks in and checks out a four-hour journey with a difference
Humans aren't alone in indulging in politics - it's everywhere in the animal world

Humans aren't alone in indulging in politics

Voting, mutual back-scratching, coups and charismatic leaders - it's everywhere in the animal world
Crisp sales are in decline - but this tasty trivia might tempt back the turncoats

Crisp sales are in decline

As a nation we're filling up on popcorn and pitta chips and forsaking their potato-based predecessors
Ronald McDonald the muse? Why Banksy, Ron English and Keith Coventry are lovin' Maccy D's

Ronald McDonald the muse

A new wave of artists is taking inspiration from the fast food chain
13 best picnic blankets

13 best picnic blankets

Dine al fresco without the grass stains and damp bottoms with something from our pick of picnic rugs
Barcelona 3 Bayern Munich 0 player ratings: Lionel Messi scores twice - but does he score highest in our ratings?

Barcelona vs Bayern Munich player ratings

Lionel Messi scores twice - but does he score highest in our ratings?
Martin Guptill: Explosive New Zealand batsman who sets the range for Kiwis' big guns

Explosive batsman who sets the range for Kiwis' big guns

Martin Guptill has smashed early runs for Derbyshire and tells Richard Edwards to expect more from the 'freakish' Brendon McCullum and his buoyant team during their tour of England
General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'