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Ericsson–Red Bee takeover referred to Competition Commission

Ericsson logoThe UK’s Office of Fair Trading (OFT) has referred Ericsson’s buyout of Red Bee Media to the Competition Commission over fears that the deal could drive up the cost of playout services in the UK. 

In a statement, the UK’s consumer and competition authority said that it was concerned that the deal “might lead to an increase in prices or a worsening of service levels in the supply of linear playout services in the UK.”

The OFT, non-ministerial government department, said that a number of broadcasters and competitors have also complained about the merger and “the loss of choice it entails.”

Though a minority of broadcasters provide playout services themselves, the OFT added that it did not consider the threat of taking these back in-house would stem price rises in the short and medium term.

“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,” said OFT chief executive Clive Maxwell.

Ericsson agreed to buy UK-based TV technology and media services company Red Bee Media from Macquarie Advanced Investment Partners in July. The move will see it further strengthen its broadcast services business, which it started in 2007 and expanded in 2012 with the acquisition of Technicolor’s Broadcast Services Division.

The deal, which is expected to close later this year if it meets regulatory approval, will give Ericsson an additional 1,500 employees, as well as media services and operations facilities in the UK, France, Germany, Spain and Australia.

Linear playout services ensure that television programmes, advertising, and other television content are lined up and ready for broadcast, according to the programme schedule. Playout service providers also manage the fluctuations around the schedule according to the broadcaster’s wishes, for example in reaction to live sports.