France probes 2006 merger between TPS and Canal Satellite

France’s competition authority will conduct a detailed examination of the 2006 merger between DTH operators TPS and Canal Satellite, lasting up to 65 days. This follows the decision in 2011 by the Autorité de la Concurrence to reverse its authorization of the merger on the grounds that Canal Plus had failed to honor commitments made in return for the go-ahead at the time.

“As part of the file review, and following an initial consultation of market participants, the Authority considers that the transaction raises serious doubts of barriers to competition and requires the opening of a detailed examination phase,” the Commission stated.

This move came as a surprise to some observers since it appeared that there was growing sympathy within the commission for Canal Plus’ argument. This was that the country’s successful IPTV sector demonstrated that the regulator’s decision to penalize it retrospectively was outdated, since failure to invest more as promised in its existing channels merely reflected a commercial decision to switch resources in line with the market.
This all relates to one of the regulator’s original demands at the time of the merger that Canal Plus unbundle channels and make them available to rival and emerging pay TV operators, particularly in the IPTV arena where France has since led the world in subscription growth. The regulator decided that, although France had indeed developed a healthy IPTV sector, Canal Plus had still reneged on some of the commitments it made, purely for its own self interest.

The authority was also concerned that Canal Plus relaunched its Canal Sat service in March 2007 before making the unbundled channels available to rivals, therefore gaining a head start over them. This second complaint ultimately led to Canal Plus being fined €30 million in September 2011 and being required it to resubmit the merger nearly six years after it had originally been approved. Canal Plus then won the support of Guillaume Cerutti, the former head of competition policy, consumer affairs, and fraud control. Cerutti criticized the regulator’s handling of the affair, arguing that events had moved on too far to cancel the green light for the merger after five years.

But, the current authority believes that, irrespective of the situation now, Canal Plus cannot get away with breaking earlier pledges, and that the situation must now be resolved once and for all to determine whether any additional sanctions are required on top of the fine.