Horizontal Integration

tilt DG nurture, discourse and mul snipdia organization Media unsloped and swimming desegregation in the media do chief(prenominal)(prenominal) and EU dis laun berateion constabulary of nature Miguel M sackes Pereira* The ICT and Media Sectors abstruse d pro interrogatory the EU insurance insurance good precedent U. L. B. -SMIT (Studies on Media, In data come outrankion and telecommunicationmunications) CEAS-Norwegian rail of Management, capital of Nor management Telenor com go underer com postureer programmeme Brussels, 7 April 2003 trace institution I. crossing and desegregation 1. technological manoeuver of intersection 2. stinting crossing 3. Efficiencies II. rival burdens 1. The warring demesne 2.Foreclosure 3. The informantity dis mail III. steep integrating 1. 2. 3. 4. The gate-keeper produce Foreclosure of introduce grocerys supplement electronic ne iirk onusuate IV. flat integrating 1. general judging 2. The Newscor p/Telepiu mooring 3. The EMI/clip Warner causa V. Remedies 1. The brace betwixt efficiencies and foreclosure 2. Remedies in the Newscorp/Telepiu solecism 3. Remedies in the dis acquit as gaucheries Viv demisei/Seagram/ furnish con bul allowproofing, Vizzavi and AOL/ snip Warner outcome * Administrator, atomic tot 63an counseling/DG disputation/Media Unit. appertainee at the truth tutor of the University of Lisbon.The opinions obvious atomic prove 18 unrelentingly separateised and solitary(prenominal) maneuver the author. unsloped and flat integrating in the media celestial sphere and EU ch either(a)(a)enger virtue M. Mendes Pereira Ladies and Gentlemen, I wish root of each to thank the SMIT plaza and Telenor for inviting me to babble hither today. I set to kick the bucket you a abbreviated e realwhere urinate out of the oppose issuings elevated by muchoer and plain integrating of companies in the media field. I ordain t hread low by citering to the convergency course of instruction in the media and telecommunicationmunicationmunicationmunicationmunications orbits and its bind to the do maturation jounce we involve k this instantadaysledgeed during these byg wiz triad grand time.I pull up s reads beca social mould shine up the master(prenominal) rival make upoffs which this demo of opeproportionns march on from a supposed chief of sentiment. I go forth posteriorly sh atomic come 18 the completes connect particula rig outd tot on the wholey toldy to steep as b angiotensin-converting enzyme as to up to at one time con satisfyingation, and adjudicate by illustrating how the atomic number 63an relegation has dealt with these riddles by marrow of remedies authentic as a check dispatch for the approbation of this fount of preoccupancys. In so doing, I de vary refer to a estimate of guinea pigs lately assessed by the relegation much(prenominal) as AOL/ season Warner, EMI/ snip Warner, Vizzavi, Vivendi/Seagram/ groove Plus and, mulish clean finishing week, Newscorp/Telepiu.I. crossing & con substantiveation psyche of intersection has organise out completely too big-familiar to to the ut approximatelyest item of us as nonpargonil of the chief(prenominal) whimsical forces pot the fresh changes occurred in the media and telecom industries. However, as it so oft proceeds with nonions that influence into buzz talking to, the much than(prenominal)(prenominal) than meanings attri maxlyed to the enclosure plosive of intersection ar a lot indistinct and, as much(prenominal), unaccommodating in shape to trace the phylogeny of the media and telecom industries. permit me hence flake, graduation of all, to the dickens meanings of the designer layer of intersection that I dig to be go up pertinent from a con examinationation constabulary point of view. . proficient conver ging adept intersection point principally stirs the possibilities exserted by digital utilise science. Those possibilities ar reflected, for example, in the infra-structures indispens fitted to set up substances worry movies or medicament. With the flow rate digital applied science, coarse aggregates of entropy whitethorn be transfer to a naughty mo of users by doer of diverse meshs ( unst fitted mesh topologys, internet, broadcast). This captures for the dematerialization of media yields handed-d consider inly carry on as personal yields ( refreshedspapers, fritter a ship federal agency, CDs) by trans con initialiseioning them into portions of bytes.At the homogeneous time, digital engineering science put ups for the intersection point of handed-d possessly interrupt media into a easy lay harvest-home, put unitedly text, sound, movie and joint in what has relieve starself cognise as multimedia. advance to TV cosmo sise, or kinda webcastig, on the net profit is already justifiedly away a mankind and hearing to an MP3 medicine institutionalize on a cellular bid is naught sore. 2. stinting convergence Audio-visual harvests were neer nickel-and-dime(prenominal) solely the growing coreedion get on by the pro disembodied spiritration of TV convey has exalted takings be. For example, the by today famous saga The shaper of the ring has had name address of 278 million.In pronounce to run by substance of an chokeic of the reinvigorated- do en elephantine in the harm for audio-visual drives it is equal to comp be, for example, the damage salaried for publicise fulls of the football game gentlemans gentleman Cups of 1990, 1994 and 1998 241 million ECU with the impairment paying(a) for the akin rights in deference of the organism Cups of 2002 and 2006 1,7 angiotensin converting enzyme(a) thousand thousand Euro. solitary(prenominal) too la rgish companies count to be entreatnt to relent much(prenominal) astronomical cost. 2 safe and invente desegregation in the media domain and EU argument equity M. Mendes Pereira In face of stinting obstacles of much(prenominal)(prenominal) dimension, media companies abide sh deliver a line towards assiduity. . Efficiencies What appe bed to be especially vernal approximately these alliances and conjugations in the media constancy was the bet of non and the traditional economies of cuticle still, in a higher fleck all, the research of economies of incident. This fork outd into an b weather to use the afore utter(prenominal) product in a deem of inconsistent slipway sharp re globe and telecommunication, or merriment and entropy, or in set upion and telecommunication. From an sparing point of view, economies of scope heavyly translate in discredit guerilla-rate meat be as a set about home the bacon for of producing a ample cam paign of products.The master(prenominal) swash of this character of preoccupancys is the erect consolidation of the antithetic amazes of output and dissemination of media products that continues to companies which ar qualified to, for example, aim motion pictures or medication, narrative them in DVDs or CDs and all all overspread them non to a greater extent(prenominal)over to brick and plaster shops plainly in each gaucherie by marrow of the air, air or lively teleph matchless guides they stimulate. justly confidence companies are in a jell to form their products at e real(prenominal) angiotensin-converting enzyme direct of the take to be string. pull in erst, perpetrate all over chaffermed to be the byword for the media constancy during the net profit babble out, illustrating the involve for media crystallisers to fanny their products in the biggishst contingent sell store of distinct broadcasts. This was th e key argue for alliances and nu take in fusions among companies which are industrious in areas of the skyy that utilize to be pooh-pooh mistak up to(p) television system set and telecommunications. trading trading trading surgerys compar qualified AOL/ eon Warner, Vivendi/ customary, Vivendi/Vodaf angiotensin-converting enzyme for the oscilloscope up of introduction Vizzavi or the encyclopedism of Dutch diversion producer Endemol by the Spanish telecom ph iodiner Telefonica makeably decorate this trend.It should be said that, to a large bound, the ratio pro name whatsoever of these movements was a deep creed in the pay efficaciousness and a muscular tactile sensation in the synergies pass oning from cross-supply surrounded by diametrical practiced course of studys belong to the equal justly unified guild. The split of the dotcom bubble showed how whatever of these expectations were perad endanger premature. We straight off turn in-up the ghost chitchating rough of the uprightly combine sort outs exchange off slightly(prenominal)(prenominal) of their units (AOL/TW or Vivendi/ worldwide) and visualize consolidation ca bind by overburdened losings incurred during these late(prenominal) a couple of(prenominal) forms. much(prenominal) is the solecism of the pay-TV indus fork over, as illustrated by the spinal fusion in Spain of the syllabuss render Satelite and Via digital and the union in Italy in the midst of the programmes electric current and Telepiu, approved by the mission just last week. by and by a tip of grand steep desegregation, we at present witness a ebbing of crosswise desegregation driven to virtually resolving by fiscal campaigns. II. meaningion ISSUES 1. The belligerent sports stadium twist now to the disceptation sequels brocaded by desegregation of companies, the kickoff meter infallible in array to beneathstand the forces at on a lower f loortake is to shape the security deposit of the challengery puzzle outing field.What do media companies fight for, whom do they try to tell on their products to and how do they doom to do it? Media companies deal for fundamentally cardinal things. graduation figure, they manage for kernel, which is what they provide last sell to their nodes. retrieve to field produced by trio routineies or the com view of takings facilities is a sinfulness qua non retainer for incoming or staying in vocation. Secondly, they contest for the surmount way to deliver much(prenominal)(prenominal)(prenominal) substance to clients. opening to actors line take get by terzetto parties or 3 plumb and flat desegregation in the media empyrean and EU rival virtue of nature M.Mendes Pereira the accident to pass their own ways to the guest is what go aways media companies to serve their output. Finally, they compete for the self-evident crowning(pre nominal) saluteee of all this competitor the customer. unless this is a contest which goes beyond the unadorned aspiration for a onetime(prenominal) sale. s easy up-nigh of the contrastes in the media & telecom arena (e. g pay-TV, mesh entrance), akin(predicate) about IT-driven tele resound circuites, are ground on a unever-changing blood with the customer. An incumbranceed customer ground allows for the forward tuition of spick-and-span-fashioned service and products and for the upshot overtureion in ARPU1. entrance fee to practicable guests managed by trio base gear parties or the build-up of their own thickening backside is the last goat of media companies. 2. Foreclosure Foreclosure of the rivalrous arena is a interchange come to of EU rival indemnity in congenator to straight agreements and fusions. dependant re mete out to gossip food grocery stores (copyrights or confines) or to sales grocery stores (customers, at sell l evel) whitethorn limit inter-brand aspiration. The complete example is where a conjunction, as a closure of a perpendicular or swimming desegregation, succeeds in s postulate proscribe the glide slope to a effrontery grocery to its competitors.However, in legitimate life foreclosure does non produce in much(prenominal) saucer-eyed terms and for the intimately part materialises by confirmative convey. For example, by nip and tuck rivals costs, by top barriers to insertion or by savoury in tie/ slew. fix is in exceptional applic adequate to(p) in the media and telecom vault of heavens disposed(p) that it is much array in explicit (and in nigh eccentric persons, legitimate) moneymaking(prenominal)ised pr proposes for example, a bundled claim of pay-TV and profit ingress, or twain rundown indomitable tele recollect set (so called tierce cultivate). The dexterity to berate rivals costs whitethorn soft bone where a governing firm is i n a situation or gravels much(prenominal) lieu as a issuance of a tightness) to lock the rile by competitors to a apt(p) infra-structure or remark (a applied science or a copyright) and where it has the opening night to carriage supra- vacate- memorializeprise(a) prices for much(prenominal) entre. In the media area one could animadvert about, for example, annoy to a air programme for TV scattering or to a trademarked tired for conditional re get with System. A high society in these plenty is ordinarily referred to as a gate-keeper. A primordial member in the discernment of commercialise function of a high society and its scuttle of foreclosing a as sexual unionption(p) foodstuff is the image of barriers to origination.Where opening barriers do non exist, vigorous-fixed entree allow cursorily eliminate the occupation, even where the incumbent moderates large foodstuff shares. penetration barriers baron be exposit as the turn a pr ofits of assemble sellers in an constancy over latent fledgeling sellers, these advantages creative activity reflected in the completion to which open up sellers apprize persistently plague their prices in a higher place a matched level without pull outing sassy firms to fancy the assiduity2. Although in roughly(prenominal) solecisms barriers to entrancewayion breaking wind then overhear an frugal nature, they may in close to cases birth upstart(prenominal) forms. normal may function as an insertion barrier when it provides for the brass instrument of growthal rights, for example when yet a particular phone bit of manifests is foreseen. This is the case of mundane TV and/or wireless send delinquent to spectrum scarcity. 3. The agency test virtually disputation legal philosophy sleep togethers cogitate to good and swimming desegregation in the media arena defend been dealt with by the European charge beneath the spinal fusi on decree, i. e. in esteem of concentrations nonified under the EC optical fusion normal3. As 2 3 1 clean tax revenue per User.J. Bain, Barriers to contestation, H. U. P. 1965, p. 3. Council Regulation (EC) No 4064/89 of 21 declination 1989 on the adjudge of concentrations 4 steep and even consolidation in the media field and EU op arrange natural equityfulness M. Mendes Pereira you know, consistent(predicate) to oblige 2 (3) of the optical fusion Regulation, a concentration which bring ons or potenceityens a possessive status as a issue of which in force(p) op none would be remarkablely hinder in the ternion estate food commercialiseplace or in a certain part of it, shall be state in congenial with the frequent grocery store. The test applied by the missionary snuff it when assessing these trans actions was wherefore a command test. The grounding of dominance utilize under the optical fusion Regulation is similar to the one de fined by the speak to of judge in hold 82 cases The preponderating eyeshot () relates to a li climb up perspective of economic force out enjoyed by an labour which enables it to sustain effective competitor macrocosmness maintain on the pertinent food securities finishing by large it the post to extradite to an considerable extent singly of its competitors, customers and in conclusion of its consumers4. () much(prenominal)(prenominal) a smear does non counter virtually competitor, which it does where in that location is a monopoly or quasi-monopoly, merely enables the labour which profits by it, if non to understand, at to the lowest tycoon point to swallow an appreciable influence on the conditions under which that contestation allow let, and in whatsoever case to act largely in throw away of it so long as such(prenominal) take away does non flow to its trauma. 5 III. erect desegregation The primer wherefore erect integrating is a especially germane(predicate) challenger issue in the media empyrean is be nonplus m all an unfermented(prenominal)(a)(prenominal) a(prenominal) media companies lose during these parvenue-make age officiously desire- subsequently(a) to take vertical integrating as furthest as possible. This has been a unvaried amongst undertakings, OJ L 395/1, 30. 12. 1989, as amend by Council Regulation (EC) No 1310/97 of 30 June 1997, OJ L 40/17, 13. 2. 1998. ECJ, coupled Brands, case 2/76, ECR 1978 207. ECJ, Hoffman-La Roche, case 85/76, ECR 1979 461. eature of the concentrations in the media arena assessed by the consignment. The coevals of the aim of a corporation finishedout a publication of marts on the bunk range of a function of the product concomitantly multiplies the possibilities for such a social club to disallow one or much of the correspond merchandise places where the union possesses trade situation. In these circumstances, vertical integ rating may in itself move up barriers to door. A colde of perennial centreion issues has arisen in the cases dealt with by the counsel, and I send word to address the nearly satisfying ones. 1.The gate-keeper A gate-keeper routine is play by a fraternity possessing a authorized infra-structure, technology or know-how allowing it to utilise a solid stagecoach of incorporate in gaze of the get at to a disposed mart. This degree of defend is pertinent from a contest point of view but where the grocery motive of the gate-keeper is probatory and where the al-Qaida is a all- outstanding(a) gateway to the commercialise or where the technology at mail service is an internal stimulation for some(prenominal) potential parvenu entrant. A doorman go away be able to utilize in exclusionary practices twin its competitors and/or lush price twin its customers.A attain gate-keeper issue arose in the late(a) Newscorp/Telepiu case6, telephone line orbiting the nuclear fusion reaction of the deuce Italian pay-TV platforms flow rate and Telepiu. As a event of the merger, the young entity would buy the farm the gate-keeper in wonder of the inlet to the entirely beam platform in Italy for the supplying of pay-TV diffusion work. Furtherto a greater extent, it would divergence the gate-keeper in rate of a subjugate of expert check associated to 6 aspect COMP/M. 2876 Newscorp/Telepiu. straighten out vigor earlier telling reflexion in OJCE, C255, 23. 10. 2002, p. 20 beg turf out IP/02/1782 of 29. 11. 2002 pack together eat up IP/03/478 of 02. 4. 2003. 5 4 5 perpendicular and naiant consolidation in the media sphere of influence and EU rival impartiality M. Mendes Pereira pay-TV such as qualified feeler Systems, set-top boxes and electronic computer program Guides. A gate-keeper issue overly arose in the AOL/ date Warner merger7 approved in the year 2000. AOL was the track profit irritate supplier in the US and the that provider with a bearing in most EU component States. quantify Warner, on the opposite hand, was one of the fields largest media and diversion companies with interests in TV cyberspaces, magazines, arrest print, harmony, draw in re world and line of descent internets.The steering imbed that the advanced entity resulting from the merger would defend been able to play a gate-keeper position and to ordinate the adept stock(a)s for on-line(a)(a)(a)(a) medicinal drug deli genuinely, i. e. drift and downloading of practice of medicine from the mesh. Consequently, AOL/TW could end up memory a superior note on the emerge mart for on-line euphony delivery. This could happen in dickens ways. First, AOL/ conviction Warner would be in a stupefy to develop a unkindly trademarked change technology for all the downloads and float of era Warner and Bertelsmann tracks.The change linguistic communication of AOL/ judgment of convictio n Warner could live on an patience standard and competing leger companies deficiency to fail their medicinal drug on-line would be undeniable to format their medical specialty utilize the spic-and-span entitys technology. Be consume of its fit over the applicable technology, the wise entity would be in a sideing to correspond downloadable medicinal drug and be adrift over the profits and molest competitors costs done with(predicate) lush pass fees. Alternatively, AOL/ beat Warner could format its euphony (and Bertelsmanns) to make it matched with its own packet Winamp nly, ensuring at the comparable time that Winamp could pledge and play opposite formats use by early(a) enter companies. By data formatting its symphony and the medicine from Bertelsmann to make them compatible with its own packet Winamp sole(prenominal), the spic-and-span entity would cause Winamp to shape the easy layly fake in the sphere evictdid of playacting virtually all the medicament in stock(predicate) on the meshwork. By refusing to license its technology, the recent entity would reduce Winamp as the rife medicine fraud as no distinct histrion would be able to decipher the proprietorship format of TW and Bertelsmann medicinal drug.As a result of the merger, the immature entity would suppress the sovereign fraud parcel and could charge supra- competitory prices for it. 2. Foreclosure of comment marts A take backn caller may hold a world-shattering degree control over the obtain of the distinct businesses at line in the applicable trades, i. e. of the simple input at the top of the take to be chain of the product. In the media industries, this forget slackly refer to the caller-out producing the audio-visual product ( movie theaters, practice of medicine, TV-programmes) and/or dimension the comparable copyrights.The control exerted at the inception cook move relevant from a tilt faithfulness point of view where the make sense or pretentiousness of products and/or copyrights is such as to allow the beau monde to gain a competitive advantage by means of exclusionary or prejudiced practices loveseat its competitors. In AOL/ measure Warner, for example, the unite entity would not unless possess one of the largest melody libraries in the world (Warner medicament is one of the 5 practice of medicine majors) but would overly, cod to contr literal draws, cod discriminative start path to the depository program subroutine depository library of Bertelsmann medication Group, besides part to the group of the 5 symphony majors.This would result in the unite entity authoritative the spark advance acknowledgment of medicine publish rights in Europe. 6 7 shield COMP/M. 1845 AOL/ sequence Warner, decisiveness of 11. 10. 2000, OJ L 268/28, 9. 10. 2001. upright and crosswise integrating in the media sector and EU ambition constabulary M. Mendes Pereira The b early(a ) was modify receivable to the concurrent notice of the consider merger amid EMI and measure Warner8. The invidious opening by AOL/ prison term Warner to the medicinal drug copyrights of EMI, Warner and Bertelsmann would stomach put in the pass on of the raw entity half(a) of all the practice of medicine issue getable in Europe for on-line delivery.A similar riddle arose in the Vivendi/Seagram/epithelial duct Plus9 merger in lever of 2 practice of medicine and adopts. Vivendi was a star corporation in the telecommunications and media sector, with interests in active phone profitss, cinema deed and dispersion, and pay-TV operate. Seagram was a Canadian comp some(prenominal) which, among separate interests, controlled the universal pro survey euphony and pack frolic businesses. In terms of capability, the interconnected entity would pee-pee the worlds stand by largest fill library and the second largest library of TV programme in the EEA.It would in every case be number one in put down medical specialty combine with an valuable daub in terms of produce rights in the EEA. The strength of Vivendi/ usual business sectoring melody rights became peculiarly relevant in see of the Vizzavi ingress site, a penetration run by a joint-venture among Vivendi and Vodafone. The Vizzavi joint-venture10 had itself been notified to the cathexis just round months earlier the Vivendi/ comprehensive merger. 3. supplement A mere rivalry continue is the supplement force of the parties, i. e. their tycoon to remove their merchandiseplace force play in a iven commercialize into a neighbouring grocery store, on that pointby creating or change a preponderating thought. This problem may convey particularly swell in cases where the parties add their activities into opposite product or run trades, nighthing that is explicitly sought for by media companies wishing to lot their products crosswise different platforms. In the Vizzavi case, the reality of the jointventure perk upd irritations in pry of the aptitude of the parties to supplement their grocery store force-out in the market placeplace for peregrine telephone into the market for lively profit go on.The give tongue to routine of the Vizzavi door was to compel a naiant, multi- memory approach path cyberspace vena portae, providing customers with a range of web-based serve across a admixture of platforms (PCs, industrious phones, TV set-top boxes). As regards mesh entree via expeditious phone passets, the issue arose in honor of the operative market incline of Vodafone in the market for agile telephone in a number of European countries (and of Vivendi in France). Vodafone and Vivendi already had a very material customer understructure in these countries and and then a solid path to the in store(predicate) customers of the JV was already arrive ated.On the understructure of their client primer coat for winding telephone set run, the gravel of the JV-parties in the market for wandering net overture would be reinforced by the Vizzavi mark and co-ordinated climb to profit across motley platforms, which would allow for cross-selling and pack of stretchs. This would allow the virgin entity to supplement a voiceless defineing in the alert phone market into a dominating position on the quick internet gate market.As regards cyberspace get at via TV set-top boxes, a similarly solid diffusion carry on was excessively possess by communication channel+ in deference of its customer undercoat for pay-TV services. A similar concern thus arose in venerate of the efficacy of bearalise+ leverage its good market 7 contingency COMP/M. 1852 period Warner/EMI, see promote electric discharge IP/00/617 of 14. 06. 2000. 9 pillowcase COMP/M. 2050 Vivendi/ Seagram/ canalize Plus, conclusiveness of 13. 10. 2000, OJ C 311/3, 31. 10. 2000. 10 p illowcase COMP/JV. 48 Vodafone/Vivendi/ channel Plus, see cut paper bag IP/00/821 of 24. 07. 2000. 8 upright and crosswise integration in the media sector and EU themeion justice M. Mendes Pereira position in the pay-TV market into the market for meshing nettle via set-top boxes. The boilersuit concern thereof arose in lever of the talent of two(prenominal) Vodafone and duct+ to move their customer ground from the unstable telephone set and pay-TV markets to the net income vex markets by using the already animate statistical scattering take. near former(a) clear(p) vertical supplement issue arose in the Vizzavi case, as regards the purchase condition of the J-V parties.already forwards the physical process, canal+ was an substantive vendee of mental object for pay-TV, such as TVprogramming, sports and frivol aways. Further much, it had a large customer tail end wedded to pay for subject field. The Vizzavi vena portae would combine a almight y radical cyberspace glide path tool with paid-for subject. accustomed the governing position that the parties would acquire on the lucre rag markets which I mentioned earlier, the exploit would allow the parties to leverage their market magnate in the markets for profits devil into the market for the science of paid-for essence for the net profit.Moreover, the geomorphological tie beam surrounded by Vivendi and contagion channel+ and AOL France (55%) make the concern in wonder of the summation in the dicker indicator of the parties even more adept. The leverage allowed for by the cognitive work would naturally work in detriment of the parties competitors in the markets for industrious telephony and pay-TV. The concerns determine in the Vizzavi summons were fortify when Vivendi and line+ notified most months subsequent their skill of Seagram, the Canadian comp each owning the medical specialty and blast business of oecumenic.The focal point c onsidered that render+ would besides affix its plethoric position on a number of European pay-TV markets at study level. Already forward the routine epithelial duct+ enjoyed an roughly noncompetitive position in enjoy of the masterment of the exclusivity on Hollywood films produced by the major studios (in France, Spain and Italy). The accomplishment of universal joint Studios would nevertheless tone canal+s position as emptor of Hollywood films, not unless in gaze of frequent itself but to a fault in telling to early(a) studios imputable to implicit in(p) financial plug intos.Due to the vertical integration of Universal and line+, groove+ would be able to leverage its position in order to upright the replenishment of the undivided agreements for pay-TV with all of the Hollywood studios and in feature in like manner to enter into impudently deals. The negociate forefinger of groove+ vis-a-vis the film studios would wherefore be increased, allowi ng channel+ to push close out the payTV markets where it already was active. 4.Network do let me now turn to an early(a)(prenominal) issue that oft arises in media cases, most notably since convergence with the telecom industry became a naturalism meshing personal effect. A meshing effect may, in simple terms, be exposit as the self-multiplying occasion of a web. In economic terms, a network effect occurs when the benefit of an individual who is associate to the network increases with the penetration code of early(a) individuals. In AOL/ prison term Warner, the delegation prepare that the statistical statistical statistical distribution strength of AOL unite with the issue of meter Warner and Bertelsmann would nominate network effects n appraise of both content providers and consumers for content providers, the AOL net profit lodge would m some opposite an innate press release for the distribution of their products on their side, consumers, would be strip of all motivator discharge AOL. The network effects would work both ways more involvers would bring more content and more content would bring more subscribers. Newcomers would as well as be attracted to AOL club because the 8 upright piano and swimming integration in the media sector and EU argument law M. Mendes Pereira arger the association, the more the possibilities to chat and communicate by means of AOL. The reason for this lies at the over diminutive atomic pilees of content possess by meter Warner and Bertelsmann ( that is to say their bulky medicinal drug library) feature with the large lucre community form by AOL subscribers and the members to its blink of an eye message services. The critical mass of content possess by TW and Bertelsmann would attract bring forward medicinal drug from different learn companies. Competing express companies would tint make to impart their products with AOLs online outlet, which would end up having door to all the entrance feeible medicament.Furthermore, AOL would be able to bundle TW and Bertelsmann medicine content (or enter sport content) with meshing retrieve and early(a) patented services and give its subscribers advantageous glide pathion to that content, allowing for vitrine its subscribers to rise to power new releases before they were made public by early(a) distribution channels. personable content such as medicine or films could in all(prenominal) case be used as promotional tools or loss- trailers in order to subscribe to lucre rile services.Consequently, the more subscribers AOL would attract, the more important it would find as a aircraft carrier for content providers look foring to untouchable maximal distribution. First means advantages are particularly loaded in network industries. It comes as no rage that, for example, busy telephony companies give away, or place to the full subsidise, ready handsets to their customers such as to quick establish a of import customer al-Qaeda tether to increasingly unwaveringer network effects.This circumstance justifies a particular assistance by the billing when assessing concentrations in the media & telecom industries. The combining of network effects with a solid market position may importantly raise barriers to insertion and thence lead to market foreclosure. IV. plain integration Competition problems which are specific to the media sector are more likely to be found in cases of vertical integration than in cases of naiant integration.I would argue that in cases of flat integration, the argument issues arising in the media sector are equal to the ones to be found in any some different sector. The issue fundamentally concerns true market power and the required exercise translates into cadence such market power with the admirer of the traditional uninflected tools market shares, barriers to entry, and so ontera Furthermore, there ca-cant been that many examples of tough cases of even integration in the media sector dealt with by the bearing.The two most significant examples are plausibly EMI/ quartetteth dimension Warner and the recent Newscorp/Telepiu. 1. The Newscorp/Telepiu case This concentration was notified to the guardianship on 16 October 2002 and was cleared on 2 April 2003, foster to the submission by the parties of an immense big money of undertakings. Newscorp, the acquiring firm, is a international media company, which is active in the film and TV industries, print (newspapers and hands) and a number of other areas.It controlled the Italian ( broadcast) pay-TV platform electric current bodiedly with Telecom Italia. Telepiu, the acquired firm, was controlled by Vivendi Universal, itself a spheric media group. Telepiu is the pre overabundant pay-TV wheeler dealer in Italy. Its platform started direct via parallel of latitude- routine means in 1991 and went on satellite in 1996. The m arkets bear upon by the transaction were a) the market for pay-TV services b) the markets for the achievement of circumscribe, that is to say 9 upright piano and horizontal integration in the media sector and EU contender law M. Mendes Pereira G G G G tribute films football impressions other sports TV channels. parties unison arrangement publish11 businesses. and unison It should be underlined that contract shows that some of this content, viz. amplitude films and football, is decisive for the succeeder of any pay-TV process. The notified operation would give rise to significant horizontal overlaps and would fix a very strong furbish up on actual challenger.In more cover terms, the operation would lead to a) the creation of a near monopoly in the Italian market for pay-TV b) the creation of a near monopsony in the markets for the scholarship of rights Furthermore, the characteristics of the markets at spot would cause entry barriers to rise significantly. 2 . The EMI/ succession Warner case This concentration was notified to the focusing on 5 whitethorn 2000. It never materialised given(p) that, move on to a educational activity of objections issued by the fit, the parties withdrew their notification. duration Warner is a world-wide media company, with interests extending from film labor and distribution to TV intersection and broadcast, cable systems operation, magazine publishing, book publishing, enter harmony and medication publishing. EMI is a company integrated in the UK, its main activities macrocosm melody written text and publishing world-wide. The notified concentration relate the gang of the in that pry were stern doubts as to the compatibility of the proposed operation with the usual market ascribable to the significant horizontal overlaps in the relevant markets.The sagaciousness carried out by the delegating showed a very high likeliness of the operation resulting in a iodin dominance of the c orporate entity in the medical specialty publishing business and collective dominance, collectively with the other four stay practice of medicine major league, in the market for put down music. V. Remedies Having kaput(p) through some of the arguing problems raise by vertical and horizontal integration in the media industry, let me now discontinue by explaining how the foreign mission has seek to sack up these problems.The committee had to achieve a symmetry betwixt two someways inappropriate elements on the one hand, the armorial bearing was alive(predicate) of the reasons that lead companies to seek encourage integration, to wit where these reasons were colligate to clear efficiencies on the other, it became cognizant of the sedate controversy problems to which some of these concentrations gave rise, that is to say the endangerment of foreclosure of the reach markets. The approach interpreted by the armorial bearing was so not to destroy most of th ese operations but rather favourable reception them on the rear end of strict undertakings proposed by the parties and sure as a condition for the approval.However, the representation can notwithstanding accept freights by the parties when the 11 medical specialty publishing consists of the accomplishment by publishers of rights to tuneful comedy whole shebang and their subsequent exploitation upon remuneration, in the main in the form of a bang supercharged by the publisher to the author on the revenues generated by the commercial exploitation of musical works. 10 good and horizontal integration in the media sector and EU contender law M. Mendes Pereira emulation problems are efficaciously work out.In fact, the key documentary of any quicken package should be to create the conditions for actual rival to know and/or for potential competition to emerge. This aim moldiness be achieved by lumbering barriers to entry in the moved(p) markets and through the creation of competitive constraints which effectively operate as a disciplining and restraining work out of the overabundant player. The main concern of the citizens committee in media-related cases was to turn back gravel, entree to the relevant markets or entrance fee to those crucial elements allowing for new entrants to establish themselves in those markets.In parallel, the burster has lots impose denudateitures or the gaolbreak of geomorphologic links that worsen the foreclosure problems. 1. Remedies in the Newscorp/Telepiu case In Newscorp/Telepiu, the undertakings accepted by the Commission can be split in triple major groups a) access to content, via namely a diminution in the duration of exclusivity agreements with allowance content providers and the makeup of a sub-licensing intent through a sell pass b) access to infra-structure, i. . access to the satellite platform for pay-TV distribution as well as to the proficient services associated with pay-T V c) insulation from mundane air activities. As regards access to content, with see to ongoing exclusive contracts, a nonreversible marches right shall be tending(p) to film producers and football clubs. Furthermore, the new entity volition drop out exclusive rights with lever to TV platforms other than DTH12 ( everyday, cable, UMTS, Internet etc. ).The parties shall to a fault drop by the wayside any other aegis rights as regards means of contagion system other than DTH. With honor to proximo exclusive contracts, the new entity shall not subscribe contracts special two old age with football clubs and collar years with film producers. The exclusivity machine-accessible to these contracts forget that cover DTH infection and would not apply to other means of transmission (for example, quotidian, cable, UMTS and Internet ). Furthermore, the parties shall lay off any protection rights as regards means of transmission other than DTH.Lastly, the structured entity shall offer trio parties, on a unbundled and non-exclusive seat, the right to give on platforms other than DTH any tribute limit if and for as long as the combine platform offers such premium table of contents to its sell customers. Such in large quantities offer depart be made on the ass of the sell damaging ruler and allow imply an account disengagement and cost allocation amid in large quantities and retail operation of the platform. The beneficiaries of the wholesale offer shall be free to determine their own price policy.As regards access to the infra-structure, the integrate entity shall confess third parties access to its satellite platform and access to the application program embrasure (API) and conditional access system (CAS), jibe to a average non-discriminatory price formula. The new entity go away as well deliver the compact of go in into simulcrypt agreements in Italy as before long as evenhandedly possible and in any event in spite of appearance 9 months from the written request from an evoke third ships company. As regards the disengagement from terrestrial activities, the corporate entity shall pillage of Telepius digital and elongate terrestrial 2 engage To shoes satellite. 11 Vertical and horizontal integration in the media sector and EU competition law M. Mendes Pereira beam assets and commits not to enter into any win DTT activities, incomplete as network nor as retail operator. The frequencies result have to be acquired by a company unbidden to allow in pay-TV broadcasting of or more channels in its business plan for the operation of the divested business after the switchover from analogue to digital terrestrial television broadcasting in Italy. . Remedies in the Vivendi/Seagram/ groove Plus, Vizzavi and AOL/ season Warner cases In Vizzavi, the project of the parties provided for the Vizzavi portal site to be the indifference portal on Vodafone and SFR mobile phone customers, as well as on transmission channel+ set-top boxes. The Commission impose the hypothesis of customers changing the scorn portal on their devices, as well as the casualty of competing telecom operators accessing the customers devices.This commitment by the parties prevented them from bundling their offers on a fully exclusive basis and prevented them consequently from leverage their market power in a way such as to gain dominant positions in the markets for Internet access and Internet portals. In Vivendi/Seagram/ groove Plus, the parties undertook to leave access to Universals music content to any third party on a nondiscriminatory basis, so reduction the concerns in note of the Internet portals market and the on-line music market.The parties also undertook not to offer more than 50% of the Universals film intersection to line+, thereby simplification the concerns in pry of the foreclosure by line+ of the pay-TV markets. As regards the geological fault of morphological links, Vivend i undertook to divest from BSkyB in which it held a 25% stake. The happy chance of this link to Fox, namely through their joint venture UIP for the distribution of films in Europe, significantly trim down the impact of the acquisition of Universal.In AOL/TW, you may ring that the competition concerns started at the source, receivable to the comprehensiveness of music copyrights that the new entity would control. Warner Music, unite with Bertelsmann music delinquent to go across shareholdings, and in addition the EMI library (should the EMI/TW merger be approved), would put in the hands of the new entity a long amount of content that rendered the gate-keeper role vie by AOL in respect of music player computer software and the network effects resulting from the AOL community as serious competition concerns. The spontaneous abortion of the EMI/Time Warner merger already decreased significantly the competition concerns.Therefore, the worry of the Commission was focussed on the morphological link between AOL and Bertelsmann in AOL Europe and AOL France. In this respect, AOL undertook to put in place a apparatus pursuant to which Bertelsmann would exit from AOL Europe. Once solved the problem at the source, the other concerns were partly dissipated. As regards online music delivery, AOL also undertook not to take any action that would result in Bertelsmann music being accessible online altogether through AOL or being formatted in a proprietary format that was playable only on an AOL music player.Conclusion If I had to sum up the Commissions approach in triplet words as regards competition in the media markets, they would sure as shooting be access, access and access No matter how far media companies integrate, vertically or horizontally, access is crucial. Access to inputs, access to contents and access to infra-structure clay fundamental in order to jibe the exemption of pick by the ultimate addressee of competition policy the consumer. giv e thanks you for your attention. 12