Prohibited transaction in 2018
In July 2018, following an in-depth investigation and in a rather hasty and controversial decision, the Commission on the Protection of Competition ("CPC") prohibited the acquisition of the largest media conglomerate in Bulgaria, Nova Broadcasting Group AD ("Nova TV" or "Nova"), by PPF, owned by Czech businessman Petr Kellner.
The decision came under fire for its lack of valid economic arguments. It was not clear how the CPC concluded that the acquisition of Nova would lead to a strengthening of PPF's dominant position on the relevant markets. The CPC claimed that the transaction would impede effective competition, but the acquiring entity had only a negligible presence on the market where their activities overlapped (0–5%). Also, in its prohibition decision the CPC underlined the significant power of Nova, but failed to explain how this position would change if the acquisition by an insignificant market player is cleared.
Different purchaser and merger clearance in 2019
Less than a year later, a new merger filing for Nova's acquisition was submitted, this time by Advance Media Group EAD, owned by the popular Bulgarian businessmen Kiril and Georgi Domuschievi, who operate multiple businesses ranging from construction to football clubs. This time, the CPC cleared the transaction unconditionally. Thus, the previous owner – Swedish entertainment company Modern Times Group – was finally able to sell the TV network and exit the Bulgarian market.
In contrast with the previous CPC proceedings, the clearance decisions came in approximately two weeks only. This time the CPC was adamant that the planned acquisition of Nova would not lead to anti-competitive effects on the market. This is because the two companies, namely the target company Nova and the acquirer Advance Media Group, are not direct competitors on the TV distribution market but are in a de facto vertical relationship, as the former is a purchaser and the latter a producer of TV content. This is evidenced by the fact that Advance Media Group, through its subsidiary Football Media Group, is the exclusive producer and rightsholder of the Bulgarian Football League, the rights of which are bought and broadcasted by the sports channels of Nova TV since 2016. Although this was mentioned and assessed in the decision, the CPC found no evidence to have any anti-competitive concerns.
Also, in the clearance decision, the CPC discusses a "partial overlap" between the activities of the participants in the concentration, but such overlap seems unproblematic. This is surprising given that in the prohibition decision the CPC discusses the "partial overlap" combined with the "significant experience" of Nova on the Bulgarian market as reasons to prohibit Nova's acquisition by PPF.
Furthermore, in the 2018 decision which prohibited the transaction, the CPC concluded that there are "significant barriers to entry on the media markets", among others the licence to operate as a TV operator. In its new decision concerning Nova TV, however, the CPC states that the media market has barriers to entry which may be overcome and is therefore "accessible" to new market participants.
Another important difference between the two decisions is that the 2018 analysis starts with an assessment of Nova TV's "leading" position on the media market, with explicit reference to its market shares on the relevant markets, while in the new decision the company's leading position is not discussed at all, the analysis instead focusing only on the partial (and insignificant) overlap, even though the CPC does not quote exact or approximate market shares.
Significance of the clearance decision
Many Bulgarian outlets commented that this decision is of 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 that concentration.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.