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German broadband association calls on EC to prohibit Vodafone-Liberty deal

German alternative broadband operators association the Bundesverband Breitbandkommunikation (BREKO) has called for the EC to say no to Vodafone’s proposed acquisition of Liberty Global’s German subsidiary, Unitymedia on the grounds that it would severely restrict competition in the broadband market.

BREKO argues that the merger would effectively create a duopoly in the broadband market between Vodafone and Deutsche Telekom, with the pair jointly holding a market share of around 70%.

Stephan Albers

The association said that this level of concentration would carry a “high risk” of harming competition and would lead to reduced investment in fibre.

Under such a duopolostic scenario, says BREKO, Vodafone and Telekom would shut out other fibre providers, and would not have much incentive to invest in fibre themselves, allowing them to maintain their HFC and copper plant.

According to BREKO, the merger would also have “a particularly negative effect” in competition in the market for housing association contracts, giving Vodafone a 75% share that would likely have a negative impact on consumers by strengthening Vodafone’s bargaining position.

BREKO also argued that the deal would have a negative impact on fibre construction in western Germany by eliminating competition between Vodafone and Unitymedia in the latter’s home states of North Rhine-Westphalia, Hesse and Baden-Württemburg and by giving Vodafone a market share of over 50% in a number of regions.

BREKO managing director Stephan Albers said that the organisation’s analysis showed that the acquisition would “not only have a significant impact on the television market, but would also significantly affect competition in fibre expansion”. He said that Germany could “no longer afford further delays” in fibre deployment, which was being driven “almost exclusively” by alternative network operators. “The EU Commission must prohibit the proposed acquisition,” he said.

BREKO’s intervention follows that of Telefónica Deutschland CEO Markus Haas, who argued that the merger would damage competition in the cable and fixed broadband markets.

Deutsche Telekom itself has also vigorously opposed the merger on the grounds that it would reduce competition in the TV distribution market. Other opponents of the deal include fibre-to-the-building operator association the Bundeslverband Glasfaseranschluß (Buglas).