NMa wants to investigate Dutch telecom company KPN’s acquisition of cable company CAIW further

Having conducted a preliminary investigation in the notification phase, the Netherlands Competition Authority (NMa) has concluded that the acquisition of cable company CAIW by telecom provider KPN could seriously impede competition. Cause for concern is the fact that the acquisition would result in a situation where both the cable network and the copper-line network in CAIW’s catchment area (predominantly in the densely populated western part of the Netherlands) would fall into the same hands. Such a situation would reduce consumer choice with regard to television services, internet access, and telephony services.

The NMa has decided that further investigation is needed before it can rule on the planned acquisition, and that the merging parties need a license for their concentration. The Dutch Independent Post and Telecommunications Authority (OPTA) agrees with the need to investigate further, and has indicated in its opinion that it shares the NMa’s concerns. If KPN and CAIW parties indeed apply for a license, the NMa is then required to render a decision within 13 weeks on whether the concentration is cleared or not.




Competitive pressure

KPN’s acquisition of CAIW could reduce competition in the areas in which CAIW is currently active. In these markets, CAIW and KPN’s competitors, such as Tele2 and Online, may not be able to exert enough competitive pressure by offering the range of different services. Moreover, they depend on access to KPN’s infrastructure to be able to offer consumers television services, internet access, and telephony services.




Open access model

In connection with KPN’s acquisition of CAIW, its current owner, CIF, imposed an obligation on KPN to make its current cable network and optic-fiber network (current and future) available to other companies that want to and are able to offer their services on both infrastructure networks. The NMa has its doubts about whether potential clients, and thus, competitors of KPN and CAIW, are interested in this, and whether KPN will make them an attractive enough offer.




Competition between KPN and cable companies

In recent years, competition between KPN and cable companies has led to faster download speeds and new television services. All of these companies have made substantial investments in upgrading their networks, and in converting to digital infrastructures in order to offer consumers the best television services, internet access, and telephony services available. Cable companies, such as CAIW, started to offer internet and telephony services, while KPN has launched its own television services.




Merger review

When reviewing mergers and acquisitions, the NMa assesses whether effective competition in the market is significantly impeded, particularly when a dominant position is created or strengthened. Such a dominant position can have negative effects on the price, quality and range of the products or services offered on the market. Were that to happen, the NMa could attach conditions to the planned concentration or block it altogether. It is prohibited to go through with a concentration before the NMa has ruled on it.