EU set for Bertelsmann /Kirch showdown
biz.yahoo.com
BRUSSELS, Dec 5 (Reuters) - The European Commission and German media firms Bertelsmann AG (BTGGg.F) and Leo Kirch on Friday appeared set for a showdown over the marketing by pay-television company Premiere of Kirch's decoder box.
Despite a warning by the EU executive earlier this week that they risked fines if the practice was not stopped by Friday, Bertelsmann and Bavarian media mogul Kirch had not budged by midday, a Commission source said.
There was no fresh information afterwards.
Bertelsmann, the world's third largest entertainment concern after Time Warner Inc (NYSE:TWX - news) and Walt Disney, and Kirch brought down the Commission's wrath upon them after they begun cooperation on digital television without first securing European Union regulatory approval.
The Commission took aim at the use and marketing by their jointly-controlled Premiere of Kirch's technology to sell its own digital platform. Decoders are used to unscramble encrypted programmes carried by pay-TV channels.
The move followed a decision by the two firms to end years of rivalry and pool forces together to get digital TV off the ground.
Kirch launched a digital TV channel, DF1, last year, but the project was largely unsuccessful, and Premiere Digital was likely to see the same fate unless the two partners agreed to use the same set-top decoder box.
Although the Commission seems to recognise the need for big alliances to share the heavy cost of launching digital television, it insists on scrutinising such deals to ensure they do not close off the emerging market to future newcomers.
''We have nothing against alliances, but there is a potential problem with the decoders. Is it open-ended or is there a gate-keeper function?'' the Commission source said, referring to Kirch's d-box.
The Commission said in a rare statement on Monday that it could fine the companies if they did not stop their marketing campaign, adding that it had received several complaints by rival firms.
Speculation that the companies would continue with the campaign during the crucial Christmas sales period because the fines would be only symbolic was quashed by the Commission source.
Under the European Union's merger control law, the Commission can fine companies up to 10 percent of turnover for implementing a deal without prior regulatory approval. It can also resort to daily penalties of up to 100,000 European currency units, the source said.
The merger between Bertelsmann and Kirch was filed to the EU only on Monday, despite being announced last summer. Under the merger rules, the Commission has now a month to decide whether to clear or start a detailed probe, which could take another four months. |
