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E.U. Investigates Telecom Firms Over Internet Access

July 11, 2013 by Leave a Comment

BRUSSELS — European Union antitrust authorities said Thursday they had carried out investigations of major telecommunications companies, including Deutsche Telekom of Germany, on suspicions that the companies were using their dominant market positions to limit Internet providers’ access to their networks.

The European Commission, the executive arm that oversees antitrust policy across the 28-member bloc, did not identify the companies or say how many had been inspected in the operation, which took place Wednesday. But Deutsche Telekom confirmed on its Web site that a raid had occurred, adding that data and e-mails were seized as part of the inquiry. Reuters reported that the authorities also raided the offices of the French company Orange and Téléfonica of Spain.

Big telecommunications companies provide the networks that link smaller sites, like movie-streaming services, to the Web, effectively acting as a gateway. In a statement, the commission said it was concerned that the companies may have violated antitrust rules “that prohibit the abuse of a dominant market position.” Those companies provide services “crucial for the functioning of the Internet” so that consumers can access “Internet content with the necessary quality,” it said.

Inspections are a preliminary step in an antitrust investigation. Companies found to have broken European Union competition law can be fined up to 10 percent of their annual global sales.

Cogent Communications, a company based in Washington that sells Internet access to third parties, said the inspections were probably linked to complaints it had filed in Germany against Deutsche Telekom and in France against Orange, previously known as France Télécom.

Dave Schaeffer, the chief executive of Cogent, said by telephone that the major telecommunications companies in France, Germany and Spain were impeding his business by refusing to upgrade congested networks. The result, he said, was that Cogent clients like Netflix, the film-streaming service, or YouTube, the online video-sharing site, would find their services slowed or difficult to access.

He gave the example of DailyMotion, the French video-sharing site that is owned by Orange. “For example, Orange owns the direct competitor to YouTube,” Mr. Schaeffer said. Orange “wants French consumers to use DailyMotion instead of YouTube.”

The French state holds a stake of about 27 percent in Orange. Earlier this year, the government of President François Hollande expressed its objections to plans by Yahoo to buy a controlling stake in DailyMotion.

Mr. Schaeffer said his company had discussed the matter with the commission but that Cogent had not submitted a formal complaint. He said national authorities in France and Germany had rejected his company’s complaints against Orange and Deutsche Telekom but that Cogent was appealing the French decision. Cogent has also had difficulties in Spain, but had not filed a complaint there.

Deutsche Telekom said on its Web site that it was “surprised by the initiation of further investigations by the commission into the global market for Internet traffic, since previous allegations have all turned out to be unfounded.”

“Similar investigations carried out by national regulatory bodies, who have also dealt with the issue in great detail, have also been abandoned,” it said. “This market is dominated by major providers based in the United States, which means we are not the right target for these investigations.”

Orange and Téléfonica could not be immediately reached for comment.

Article source: http://www.nytimes.com/2013/07/12/business/global/eu-investigates-telecom-firms-over-internet-access.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

U.S. Regulators Approve Random House Merger With Penguin

February 14, 2013 by Leave a Comment

PARIS — The U.S. Justice Department has cleared the proposed merger of Random House and Penguin, which would create the biggest book publisher in the world, their parent companies said Thursday.

The Justice Department imposed no conditions on the German media company Bertelsmann, which owns Random House, and its British counterpart Pearson, the parent of Penguin, thereby removing a significant hurdle to the deal. Still, the proposed formation of Penguin Random House faces other regulatory reviews, most notably by the European Commission.

“This positive first decision by one of the antitrust authorities is an important milestone on the path to uniting two of the world’s leading publishing companies into a truly global publishing group,” said Thomas Rabe, chief executive of Bertelsmann, in a statement.

Bertelsmann and Pearson announced plans last year to merge the two publishers into a single concern that would have about 25 percent of the English-language consumer book market. Under the agreement, no money is changing hands, but Bertelsmann is set to control 53 percent of the combined entity.

Executives say greater scale will help the publishers develop new digital publishing models, as they hope to profit from the growth of e-books. It would give them greater heft to negotiate with Internet giants like Amazon, Apple and Google, which play an ever more important role in the distribution of books. Penguin and Bertelsmann say they also hope to expand their presence in emerging markets.

“Penguin Random House points the way to the international future of the book,” Mr. Rabe said.

Analysts had generally expected the U.S. antitrust authorities to approve the deal, saying Europe was more likely to pose problems. The European Commission scrutinizes any merger in the culture sector with special care, as evidenced by the tough conditions it recently imposed on Universal Music Group in its purchase of the recording company EMI.

Executives of Pearson and Bertelsmann have said they will seek to wring cost savings out of the combined back-office operations of the two publishers, without cutting from the editorial operations.

Both companies said Thursday that they still expected the agreement to close in the second half of this year.

Article source: http://www.nytimes.com/2013/02/15/business/global/us-regulators-approve-random-house-merger-with-penguin.html?partner=rss&emc=rss

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DealBook: U.P.S. to Withdraw $6.9 Billion Takeover of TNT Express

January 14, 2013 by Leave a Comment

European antitrust authorities have raised concerns over U.P.S.'s proposed $6.8 billion takeover of TNT Express.Peter Dejong/Associated PressEuropean antitrust authorities had raised concerns over U.P.S.’s proposed $6.9 billion takeover of TNT Express.

7:38 a.m. | Updated

LONDON — United Parcel Service announced on Monday that it would withdraw its $6.9 billion takeover offer for TNT Express, a Dutch shipping company, after European antitrust authorities told U.P.S. that they would block the deal.

The announcement is a blow to U.P.S.’s expansion outside of the United States as the deal for TNT Express would have given the American company a larger presence in European and emerging markets.

Since first announcing the deal last March, U.P.S. had faced difficulties with European regulators, who feared that the takeover would hamper competition.

To appease antitrust concerns, U.P.S. had agreed to sell a number of business units and to grant access to some of its airline network to rivals. TNT Express also said it would sell its own airline operations as part of the antitrust concessions.

The company had been locked in negotiations with European regulators since November, but was told late last week that its proposed concessions did not meet authorities’ demands. U.P.S. had tried to convince regulators that selling assets to the French shipping company DPD would create enough competition to satisfy regulatory concerns.

The steps did not go far enough.

Competition authorities at the European Commission informed both companies that they would not approve the multibillion-dollar takeover, according to separate statements from U.P.S. and TNT Express on Monday. European officials have until early February to rule officially on the proposed takeover.

“We are extremely disappointed with the European Commission’s position,” U.P.S.’s chief executive, D. Scott Davis, said in a statement. “We proposed significant and tangible remedies designed to address the European Commission’s concerns with the transaction.”

The failure to reach an agreement comes at a difficult time for TNT Express, which has reduced its operations across Europe and faced a series of setbacks in emerging economies like Brazil and China. While the Dutch company has large operations across Europe, analysts say it would need a large injection of investment to expand globally.

Potential new suitors could include FedEx, whose European business is smaller than that of U.P.S., while a potential deal with the European shipping giant DHL would raise too many antitrust concerns, according to analysts.

Shares in TNT Express fell 40 percent, to 4.94 euros, or $6.60, in morning trading in Amsterdam on Monday. U.P.S.’s failed offer for the Dutch shipping company was 9.50 euros for each share in the Dutch shipping company.

The stock price of PostNL, the largest shareholder in TNT Express, also dropped 35 percent in morning trading on Monday.

“The European Union‘s decision is very disappointing,” said Stephen Furlong, an analyst at Davy Research in Dublin, who rates TNT Express as underperform. “It’s hard to see the company being bought by anyone else.”

After failing to win regulatory approval, U.P.S. has agreed to pay a 200 million euros, or $267 million, termination fee to TNT Express, according to a company statement. The takeover would have been U.P.S.’s largest acquisition in the company’s 105-year history, according to the data provider Capital IQ. U.P.S. will continue to look for opportunities to grow organically and through acquisitions, according to a company spokeswoman.

U.P.S.’s acquisition of TNT Express is the largest failed takeover since the European aerospace giants BAE Systems of Britain and European Aeronautic Defense and Space, or EADS — the parent of Airbus — ended their proposed $45 billion merger talks in October after local politicians and shareholders balked at the deal.

The decision against U.P.S.’s takeover of TNT Express also is the latest move by European competition authorities to thwart multibillion-dollar deals that they believe are against consumers’ interest. Last year, NYSE Euronext and Deutsche Börse called off their planned $9.2 billion merger after European antitrust regulators opposed the deal.

Morgan Stanley, UBS, Bank of America Merrill Lynch and the law firm Freshfields Bruckhaus Deringer had advised U.P.S., while Goldman Sachs, Lazard and the law firm Allen Overy had advised TNT Express and its supervisory board.

Article source: http://dealbook.nytimes.com/2013/01/14/u-p-s-to-withdraw-6-9-billion-takeover-of-tnt-express/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

DealBook: Ryanair Offers $883 Million for Aer Lingus

June 19, 2012 by Leave a Comment

LONDON — The European low cost airline Ryanair offered 694 million euros ($883 million) to buy the Irish carrier Aer Lingus, the latest in a number of deals in the fast-consolidating airline industry.

Ryanair, which already owns a 29.8 percent stake in Aer Lingus, said on Tuesday that it had bid 1.30 euros for each share in the carrier. The offer represents a 38 percent premium on Aer Lingus’ closing share price on Tuesday.

The announcement comes a day after Britain’s antitrust regulator said it would investigate Ryanair’s minority stake in Aer Lingus. Concerns has been raised that the low cost carrier’s share ownership could stifle competition.

Faced with continued high oil prices and a reduction in consumer spending, Western airlines have been striking deals in a bid to remain profitable.

International Airlines Group, the parent company of British Airways and the Spanish carrier Iberia, agreed last year to buy British Midland International from Lufthansa of Germany. US Airways also has been considering a merger with AMR Corp., the bankrupt parent of American Airlines.

Ryanair, which made an unsuccessful takeover approach for Aer Lingus in 2006, said its new bid would help the carriers compete with larger rivals.

“This offer represents a significant opportunity to combine Aer Lingus with Ryanair to form one strong Irish airline group capable of competing with Europe’s other major airline groups,” Ryanair’s chief executive, Michael O’Leary, said in a statement.

A potential deal for Aer Lingus may face tough opposition from antitrust authorities, which blocked Ryanair’s previous bid for the Irish carrier.

The Irish government retains a 25 percent stake in Aer Lingus, but plans to sell its shares as part of the bailout it received from the International Monetary Fund and the European Union. Etihad Airways also holds around a 3 percent stake in the Irish carrier.

Ryanair said it would be willing to work with an investor, such as Etihad Airways, that may acquire the government’s stake in Aer Lingus. The low cost carrier also said it would be open to selling its stake in Aer Lingus to the investor if both sides could agree on a price.

A representative for Aer Lingus was not immediately available for comment.

Davy Corporate Finance and Morgan Stanley are advising Ryanair.

Article source: http://dealbook.nytimes.com/2012/06/19/ryanair-offers-883-million-for-aer-lingus/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,