EC Says German Regulator Must Decide on Cable Monopoly

The European commission has left the decision on plans to create a single television network in Germany to the local competition watchdog.

Brussels said yesterday the Kabel Deutschland's plans to spend €2.7bn (£1.8bn) buying its three rivals should be decided by the federal cartel office.

If the deal gets the nod it will reverse the fragmentation in the German cable industry.

The country's cable network was installed by Deutsche Telekom in the 1990s, when it was a state-owned monopoly, as part of government plans to increase competition in the television sector.

The system was kept separate from Deutsche Telekom's fixed-line network, which carries voice and data traffic.

After privatisation Deutsche Telekom decided to divide its cable operation into individual businesses and sell them off. The last part, Kabel Deutschland, was sold last year to Apax Partners, Goldman Sachs Capital Partners and Providence Equity for more than €1.7bn.

Kabel Deutschland subsequently announced plans to buy the three other cable firms: Iesy, owned by a group of investors including Pequot capital; Ish, owned by a group of banks, and KabelBW, which is owned by private equity firms including Blackstone.

Together the four companies serve about 27m households and the cartel office has expressed concern that it could affect competition.

German newspapers have suggested that the regulator could look favourably on the deal if Kabel Deutschland offered rapid internet access and telephone services across the network - areas where the cartel office is said to be keen to see greater competition.

Expanding the services would mean heavy investment. Kabel Deutschland has said it will invest €500m over the next three years.

The commission said the German authorities were best placed "to analyse the stated preliminary competition concerns, as this requires the examination of local markets and specific national circumstances".

No one at Kabel Deutschland was available for comment.