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District Court Rotterdam upheld the ACM's clearance decision in telecoms merger KPN/Reggefiber

District Court Rotterdam upheld the ACM's clearance decision in telecoms merger KPN/Reggefiber

District Court Rotterdam upheld the ACM's clearance decision in telecoms merger KPN/Reggefiber

02.06.2016

On 12 May 2016, the District Court of Rotterdam ("District Court") upheld the ACM's decision to allow incumbent KPN B.V. ("KPN") to acquire sole control over Reggefiber Groep B.V. ("Reggefiber") without imposing conditions. The appeal was lodged by Vodafone Libertel B.V. ("Vodafone"), one  of Reggefiber's downstream customers of unbundled access to its fixed fiber-optics network.

In essence, the District Court upheld the ACM's conclusion that regulatory obligations imposed on KPN by the national telecommunications regulator would restrict its ability to significantly impede competition, despite acquiring a market share of "close to 100%".

This case has its roots in an earlier decision adopted by the ACM in 2008, following which KPN and Reggeborgh acquired joint control over Reggefiber, subject to strict remedies. Coinciding with the ACM's 2008 decision, the Dutch telecommunications regulator imposed similar conditions on the joint venture because of KPN's pre-existing position as an undertaking with significant market power ("SMP conditions").

In the case at hand, KPN intended to purchase Reggeborgh's remaining shares in Reggefiber. The ACM cleared the acquisition. This time, however, it did not impose any remedies. Vodafone appealed this decision by arguing, amongst other things, that the ACM had erroneously concluded that SMP conditions can sufficiently remedy the structural competition concerns likely to arise following the concentration.

The District Court rejected this line of argument, upholding the ACM's decision insofar as it found that (existing) SMP conditions imposed on KPN would render it unable to significantly impede competition. The District Court also concluded it was sufficient that the ACM could (and would if necessary) impose an unbundling requirement "should regulation prove to be inadequate".

A noteworthy aspect of the judgment is that the District Court agreed with the ACM's conclusion that the remedies imposed in 2008 would become "devoid of purpose" as a result of KPN's acquisition of sole control, since the original concentration "ceased to exist". According to the District Court, the only manner in which these remedies could have remained binding on KPN would be to explicitly re-impose them in any subsequent concentration.

In summary, the two key takeaways from this fact-specific case are: (i) existing merger control remedies are rendered "devoid of purpose" following subsequent concentrations, and (ii) regulatory obligations can play a significant role in the ACM's assessment of concentrations.

This article was published in the Competition Law Newsletter of June 2016. Other articles in this newsletter:

  1. General Court rejects Trioplast's action for annulment of a Commission notice to pay interest
  2. Commission blocked Hutchison's proposed acquisition of Telefónica UK
  3. General Court confirmed that German law on renewable energy amounts to State aid
  4. European Commission publishes guidance on the notion of State aid
  5. Rotterdam District Court considered "franchise agreements" in breach of competition law in launderette cartel case
  6. UK High Court held that territorial limits apply to EU cartel damages claims

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