On this decision, Nova's previous owner, Swedish entertainment company Modern Times Group (MTG), was finally able to sell the TV network and exit the Bulgarian market, after having been prohibited from doing so by the CPC in July 2018.
Nova TV and its affiliate TV channels comprise the largest media conglomerate in Bulgaria, having a market share of approximately 40% in the TV distribution and advertising markets. In July 2018 the CPC issued an unprecedented decision prohibiting the investment group PPF, which is owned by Czech businessperson Petr Kellner, from purchasing the TV network.
The decision was delivered after a detailed phase-two inquiry that lasted approximately two months. Nevertheless, there was a lot of criticism suggesting that the decision lacked valid economic arguments due to the fact that PPF had not participated in the relevant markets and had only a negligible presence in the e-commerce market, in which Nova TV had a presence of around 5%. This was the only market on which the activities of the two undertakings overlapped. Thus, it was not entirely clear how the CPC reached the conclusion that Nova TV's acquisition would lead to a strengthening of PPF's dominant position in the relevant market for the distribution of TV services and thus impede effective competition.
Alongside the fact that it concerned a politically sensitive sector such as media, the rather unconvincing decision led to much speculation as to:
- whether the CPC's decision was entirely justified; and
- who the eventual successor of MTG, as the owner of Nova TV, would be.
In early 2019 it became clear that the entrepreneurial brothers Kiril and Georgi Domuschievi, who operate multiple businesses ranging from construction to football clubs, were the firm favourites to buy the network.
No anti-competitive concerns
In contrast with earlier CPC proceedings regarding the acquisition of Nova TV which took considerable time, in this case the proceedings were initiated on 6 March 2019 and the decision permitting the transaction was delivered approximately two weeks later.
The CPC was adamant that Advance Media Group's acquisition of Nova TV would not cause anti-competitive effects in the TV distribution marke because the two companies are not direct competitors; rather, they have a de facto vertical relationship (ie, Nova TV purchases TV content rights and Advance Media Group produces such rights).
This is evidenced by the fact that Advance Media Group, through its subsidiary Football Media Group, is the exclusive producer and rights holder of the Bulgarian football league, the rights of which were bought in and have been broadcast by Nova TV's sports channels since 2016. Further, even though these circumstances were mentioned and assessed in the decision, the CPC found no evidence of any anti-competitive concerns. In fact, the CPC established only a "partial overlap" between the activities of the participants in the concentration, which seemed unproblematic.
Notably, partial overlap was one of the main reasons for rejecting PPF's bid to acquire Nova TV in July 2018. Moreover, in the 2018 decision prohibiting the transaction, the CPC concluded that there were "significant entry barriers on the media markets", including the licence to operate as a TV operator.
However, in its recent decision, the CPC held that the media market has entry barriers, which may be overcome, and it is therefore accessible for new market participants. An important difference between the two decisions is that the 2018 analysis started with an assessment of Nova TV's leading position in the media market and referred explicitly to its market shares in the relevant markets; alternatively, in the recent decision, Nova TV's leading position was not discussed and the analysis focused only on the partial overlap.
Many Bulgarian outlets believe that this decision has huge political significance. Ultimately, it remains to be seen how the Bulgarian market for the provision and distribution of TV services will shape up following this concentration.
Co-authored by Rosen Manchev (Trainee, Schoenherr Bulgaria).
This article first appeared on International Law Office.
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