UK’s Fair Trade office Refers Ericsson-Red Media merger to Competition Commission
London, UK, October 1, 2013 — United Kingdom’s Office of Fair Trading has referred the acquisition by Telefonaktiebolaget LM Ericsson of Red Bee Media Limited to the Competition Commission (CC).
OFT, which is mandated to make sure businesses are in open, fair and vigorous competition in order to protect consumers, said it found that the merger might lead to an increase in prices or a worsening of service levels in the supply of linear playout services in the UK.
In July this year, Ericsson announced its intention to acquire Red Bee Media from an entity controlled by Macquarie Advanced Investment Partners, L.P. Red Bee maintains contracts with the BBC, as well as providing services for companies including Canal+, Chellomedia and Channel 4, amongst others. It also has facilities in France, Germany and Spain.
Ericsson said the acquisition supports the company’s strategy to grow in the broadcast services market and takes advantage of its technology and services leadership to help broadcasters and content owners address the convergence of video and mobility.
It envisioned the combined Ericsson-Red Bee media employees to grow to around 4,000 employees, with facilities in France, Germany, Spain and Australia, and with UK becoming a global media hub.
“Although a minority of broadcasters provide playout services themselves, and all UK broadcasters self-supplied before 2005, the OFT did not consider that the threat to take these services back in-house would be sufficient to prevent prices from rising in the short to medium term. A number of broadcasters and competitors have complained about the merger and the loss of choice it entails,” said OFT’s news release.
Ericcson and Red Media representatives have offered remedies to alleviate OFT's concerns. But OFT said the remedies offered were insufficient in terms of scope and certainty of outcome to offer a clear cut solution to competition concerns.
Clive Maxwell, OFT Chief Executive said not only is there the possibility of price rises as a result of the merger, there is a risk the most complex channels will suffer a reduction in quality in their service levels.
“We are therefore referring the anticipated merger to the Competition Commission for an in-depth investigation,” he said.
Related Articles:
- Ericsson Mobility Report: LTE and Smartphones Driving Video Traffic Growth
- Ericsson Closes Acquisition of Microsoft Mediaroom
- Ericsson to Acquire UK’s Red Bee Media
- Ericsson Acquires Microsoft Mediaroom
