NMa allowed acquisition Nozema by KPN

28 July 2006

Natascha Linssen

April 2006

The Netherlands Competition Authority (NMa) has decided that the telecommunications company KPN may acquire the broadcasting company Nozema. The NMa has approved a proposed remedy offered by KPN which prevents the restriction of competition on the market for the transmission of wireless radio signals.

KPN has undertaken to sell a number of the high broadcasting masts which it owns to an independent third party approved by NMa within two years of the NMa's decision. The target, Nozema Services, is one of the three undertakings in the Netherlands which uses these broadcasting masts for the transmission of wireless radio signals. In the intervening period, KPN will transfer the operation of the broadcasting masts irrevocably to the state-owned broadcasting mast operator, Novec. This remedy solves the issue raised earlier by the NMa of the danger that a dominant position would emerge or be strengthened as a result of the sale to KPN.

KPN will also obtain the exclusive control of Digitenne which is the only party in the Netherlands which offers wireless digital television. However the NMa found that the position which KPN/Digitenne holds on the market for the transmission of television signals is very small and the provision of television via the cable and possibly by satellite exercises sufficient competitive pressure. Therefore there is unlikely to be a restriction of competition.

KPN will also gain possession of Digitenne's DVB-T license. DVB-T (Digital Video Broadcasting Terrestrial) is a standard for the wireless transmission of digital radio, television and data signals. With this license KPN will be able to transmit digital radio, television and data signals to mobile receivers (such as mobile telephones) using the DVB-H (handheld) standard. Since KPN would become the only holder of such a licence it could deny mobile telecommunications competitors access to the DVB-H standard which could have resulted in a restriction of competition. However, this would be equally likely to happen if the transaction did not take place and therefore the NMa held that competition in the area of mobile telecommunications would not be significantly restricted as a result of the merger.

The NMa found that here are sufficient alternatives to DVB-T/H mobile data services, such as WiFi and UMTS and so if KPN were to exclude providers of mobile data services it would not have a significant effect on competition.

Source: Press Release NMa, 7 March 2006, at www.nmanet.nl